Truck Sales Rolling High With Tax Incentives, Cold Winter

“This is another one of those years where the calendar turned over without any lull,” said Tim Schweppe,

Co.’s general manager for the propane division (Minneapolis). “Running wide open for consecutive years takes its toll on the crew but we also know the flip side all too well.” After several years of warmer-than-normal winters, colder temperatures that started last fall, and new tax benefits beginning in early 2018 with the Tax Cuts and Jobs Act, kept sales strong. “The deduction limit for qualifying equipment and software went from $510,000 in 2017 to $1 million in 2018 and it will stay there for 2019 and likely beyond,” said John Hawkins, CEO of

. (Huntertown, Ind.). “We’ve never slowed down.”

Schweppe and Hawkins were not alone in their success. Every truck supplier BPN spoke with was enjoying strong sales volumes. “We have been extremely busy, possibly our biggest year ever—hired more people, worked a 60-hour mandatory week for months, and assembled a lot of bobtails, service trucks, and crane trucks. We actually turned some business away, as there weren’t enough fabricators, shop space, or hours in the day,” said Roger Smith,

(Marathon, N.Y.) vice president of sales and marketing. “There were companies that needed trucks by December 25, a date that retail marketers use as a drop-dead date they must have their truck. We politely turned them away to ensure our regular customers’ trucks were completed.”

Mike VanDenBoom, president of

(Clio, Mich.), explained, “The colder weather and steady propane prices have been the key factors for marketers to order trucks. We’re seeing a lot of activity early in the 2019 season. The chassis dealers are sending long lead times, as much as 12 months for orders placed today. It’s advisable for marketers not to wait until summer to make decisions about new equipment. Increased prices for products and materials have settled down in comparison to last summer and fall.” Mike Pitts, vice president of sales at

, said, “We’ve been very busy with larger customers, the majors. They’ve done a good job of getting orders in. They don’t wait until the third quarter.” Pitts added that while sales overall have been strong, Mississippi Tank has sold more trailers than bobtails.

“There was also a lot of pent-up demand before the weather and tax benefits change,” said Steve Bloomstrand, sales and marketing manager of

(Roberts, Ill.). “A lot of companies were about ready to make a purchase regardless of weather or tax changes.” Arrow Tank’s Schweppe was never certain such demand would last. “Previously we thought that acquisitions and mergers might reduce our bobtail business as a whole; quite frankly we’ve observed the opposite. Although the territories are served by less marketers, this shift has placed additional focus on delivery efficiency required to serve each area for each individual bobtail,” Schweppe explained. “The No. 1 requirement, I suspect, begins with capacity on board to satisfy the daily route between loads at the bulk plant. Second is the ability to pump at greater speeds and accurately track the delivery to improve the process to create more efficient routes. If executed and performed correctly, each bobtail serves more customers at a reduced cost, thereby adding growth to the marketer’s base.”

With demand up, new players have jumped into the fray, including

(Brighton, Colo.). “In 2018, we worked directly with our sister company,

, to manufacture three new trucks to meet the demand of the oil and gas and propane industry—the LPG Bobtail, the Refined Fuel Truck, and the LP Crane Truck. Sales on all three have been phenomenal and we’re receiving excellent feedback from our customers,” said Shawn Kellen, tank specialist at Transwest Trailers. “Our customers are excited to have these new options available with all the latest features designed to meet their specific needs. Reliability and safety were at the forefront of our minds when creating these new trucks and I think that’s showing.”

While truck sales seem to always have their peaks and valleys, the peaks can create new challenges: getting all components needed to fill the orders in a timely manner. “With high demand and so many industries busy, there is a lot of demand for chassis,” said Nathan Roberts of

(Columbus, Wis.). “We build service trucks for the propane industry as well as others. Customers are usually ready to buy when they are ready to buy, but we are

having to encourage them to plan out capital expenditures with longer lead times in mind.” He pointed out that with new steel and aluminum tariffs, there are also price changes to be aware of.

(Salem, Ill.) sales manager Tim Thrash noted that the lead time for chassis used to be six weeks but is now much longer in most cases. “We have more than a hundred chassis on order now. Customers are needing to order earlier and earlier to ensure they have the new truck they want by the first of September when many Midwest propane marketers like to have it for grain dryer deliveries. Companies in areas like California are usually fine with a truck delivery by the first of December, but most need it earlier.”

“Availability to purchase the needed parts to build the trucks is a big concern right now. We seem to move from one product shortage to another…tanks, pumps, internals, etc.,” said Smith of Kurtz. “Right now chassis manufacturers are having problems procuring the parts from their suppliers. Parts needed to build new truck chassis are causing delays and long delivery times due to engine shortages, axle shortages, etc. Manufacturers are telling truck builders delays are going to be a big problem in 2019, particularly class 8 tandem chassis.”

Brian Amthor, executive vice president at

(Gretna, Va.), said, “We have 35 to 40 chassis in the yard, every make, color, and shape. We are doing a $7-million expansion of our infrastructure to be able to double our output and serve more customers. All of this should be in place by March.” Schweppe of Arrow Tank said, “Having the chassis in stock appears to be the name of the game in 2019 and going into 2020. Truck manufacturer lead times have extended significantly beyond what the typical person expects. Planning purchases before having a grasp of the financials will force the marketer to consider stock units offered by the builder. Thankfully most builders have been proactive and have been planning throughout the year. Likewise, the chassis offered today by most builders are far beyond the old school ‘heater and keys’ and offer the creature comforts to attract and maintain drivers.”

Creature comforts, speeding up the process of propane delivery and tank setting, adding multiple purposes to trucks, making repairs easier, and safety appear to be key benefits truck buyers feel are important enough to pay more for lately. “Almost everyone buys automatic trucks now,” said Wayne Terpstra of

(Kansas City, Mo.). “Companies are realizing that attracting and keeping good drivers as well as capitalizing on efficiency are important for long-term profitability.”

Roberts of Fisk Tank Carrier agreed that with trucks for tank setting, getting in and out as fast as possible and trying to set three tanks a day with as few return trips as possible to get additional tanks are becoming two major goals for the service truck. “We are selling more boom trucks than ever before, especially in the western U.S. where early adopters to this kind of truck are more prevalent,” he said. “A lot of Midwest retail propane marketers still prefer to use tank trailers and their sales are up as well; last year their sales were the highest in 10 years.” Roberts noted weight savings in the structure of the truck beds allows them to be 600 pounds lighter than in the past while allowing for more weighty cargo without compromising the truck’s gross vehicle weight rating (GVWR).

For bobtails, a major shift in the past few years has been the shift to larger tanks. While there were concerns a few years ago that larger trucks would damage driveways and be hard to maneuver, it became clear that those concerns were overblown, according to Smith of Kurtz. “We don’t see much call for 2800-gal. tanks or lower,” said Terpstra of Custom Truck One Source. “There has been much more interest in 3200- and 3499-gal. tanks, as well as much larger.” Milt Swenson, truck and trailer division sales manager for

(Morris, Minn.), noted that a 12% federal excise tax is in place for trucks with tanks with capacity for 3500 gallons or greater. “More and more, retailers are feeling that the payback for the larger tank is worth the federal excise tax,” Swenson pointed out. “They have to take into account that it is tougher to get in and out of smaller areas.” However, for many, the larger tank allows for a full day of deliveries without returning to fill, and that pays dividends that may far exceed extra expenses, tax or otherwise, for the vehicle.

For Schweppe of Arrow Tank, larger tanks help improve efficiency, but high flowrate can also speed it up and reduce the time spent at each delivery. “All of our stock bobtails feature 3400- to 5300-gal. capacities, stainless steel deck and fenders, electronic register, five-function remote, toolbox, and MOFLO pumping, which maintains high flowrate throughout the delivery,” he said. “When it comes to getting the job done, Arrow Tank has made 80- to 115-gpm MOFLO bobtails on this big fella’s (5000s and up) standard equipment. This continues to be a big hit for those who look beyond the bottom dollar on the quote. For an extra $10,000 (and sometimes $18,000 more), it’s a no-brainer for those who look beyond the lowest price. Reducing 45 to 60 minutes on each load is a big number by the end of the year.”

Arch Hudelson, special projects director, western region, at

(Fresno, Calif.), also pointed out that more than ever, customers are seeking to maximize capacity with the lowest possible gross vehicle weight (gvw). “Retailers are also trying to speed things up with electronic aids to help them deliver efficiently, driving fewer miles to drop larger loads.” He also noted that trucks can sometimes be convertible, or many trucks in one, and save money. (For details, see BPN, March 2019, p.24.)

Several truck builders mentioned an improved piping system for bobtails called Excela-Flange Piping, a product developed by

(Marshall, Mich.). The superintendent of truck building at Ransome Mfg., Ed Tovar, described a recent bobtail built for Crowley Fuel in Alaska. Due to the extreme temperature ranges in Alaska, a truck’s piping system can often become very difficult to take apart to do repairs if a lot of screw-in fittings need to be unscrewed. The range of temperatures often cause the screws to become impossible to budge. “With all Excela-Flange series plumbing, rather than having many screw-in fittings, a four-hole flange mount valve means only four screw-in fittings are needed for the unit. This means only four screws need to be removed with a socket wrench to allow access to the plumbing system for repairs,” Tovar explained.

Other innovations were noted by builders. Rob Vandemark, who runs the truck division at

; Byron, Mich.), mentioned a new feature more trucks are using that allows drivers to activate a dashboard switch that causes chains to flail out and pass between the tire and road surface. This can enhance traction in snow and ice, whether in forward or reverse. “This additional traction also reduces stopping distance in these slippery conditions,” Vandemark said.

Ed Hoffman, president of

(Ocean Springs, Miss.), added that propane-powered trucks are gaining more and more acceptance. “Especially as companies talk to fleet managers about using propane, it certainly helps if the propane representative drives up in a propane-powered vehicle.” Hoffman mentioned Freightliner has a truck with a dedicated propane engine and that Ford has F-150s and F-250s that can have a propane conversion engine put in. “Ford is creating a higher torque version than before. While propane-powered trucks have had some problems in the past, major improvements in service and support are making a big difference.”

(College Station, Texas) has designed a new style of bobtail and transport truck that are crafted with safety in mind. “We introduced a transport trailer with a lower center of gravity and several years later introduced a bobtail utilizing the same design principles in order to achieve greater volumes through load balancing,” said Yuval Doron, president of Exosent. “This can improve safety and potentially lower insurance premiums.” Doron noted that sales went up 32% from 2017 to 2018. “New units have been on the road and more visibility has led to increased acceptance,” Doron said. “Performance wind skirts we created have resulted in 17% fuel savings in addition to improved safety. We are pleased with the success of the transport and look forward to more of our bobtails hitting the road. The safety and welfare of the public is paramount.”

For Danny McElroy, executive vice-president/general manager of

’ Southwest Sales (Dallas), the biggest change he noted was the adoption by so many companies of extensive wraps to allow the truck to function as a rolling advertisement. “Some promote patriotism, others promote charitable institutions such as ‘Wounded Warriors’ or ‘Breast Cancer Awareness.’” McElroy said. “Truck builders work with a variety of outsources to create their unique advertisement to stand out.”

Innovation and success have made propane industry vehicles more accessible during recent years through rental options. Both Westmor Industries and Custom Truck One Source have rental programs for vehicles. “We only lease out 3700-gal. bobtails with a single-axle chassis,” said Swenson of Westmor Industries. “Customers must lease for a minimum of two months.” At Custom Truck One Source, 20 vehicles are available for lease. “Currently all 20 are rented out,” said Terpstra. “Sometimes customers get used to the bobtail, feel comfortable with it, and they go ahead and purchase it.”

Once again, putting in truck orders to beat the herd as much as possible is important to ensure a truck will be ready when you need it. —Pat Thornton