Douglass Distributing started out with a single bulk plant and that same bulk plant plays a core role in the company's current business operations and serves as its headquarters location. As the company history notes, in 1947 Exxon established a railroad bulk plant in Sherman and Gainesville, Texas. On July 1, 1981, Bill Douglass bought out this Exxon consignee in Sherman, Texas. Included with the purchase was an Exxon Transport division, an Exxon Tank wagon division, an Exxon Lubricants division and a TBA (Tires, Batteries & Accessories) division.
In 1983 the operation expanded into retail with its first store (Lone Star #4) located at 1716 Texoma Parkway in Sherman, Texas. In 1988, Exxon withdrew from the delivery of fuel and Douglass Distributing Carrier, Inc. was established and began transporting fuel.
Today, Douglass Distributing moves 130,000,000 gallons of fuel annually. In addition the company distributes lubricants, propane and DEF. The carrier group consists of 15 trucks that run 24 hours a day/ 7 days a week with drivers on staff with access to all local terminals. Douglass also maintains a maintenance staff of eight full-time technicians, which are also available 24 hours a day/7 days a week. The retail division now owns and operates 14 co-branded sites and employs over 200 team members.
"We literally started with the bulk plant that was built in 1947 by Exxon Company USA and came complete with the overhead tanks and was originally served by rail," said Brad Douglass, the company's second-generation owner. "By 1981 when we started, the rail was gone, but it still operated as a bulk plant in that we were bringing in transports and then breaking bulk into tank wagons. At that time our business was very much agriculture-based, but as the farms were being bought up in the 1980s and 1990s for residential real estate development, we had more and more of our trucks move to off-road." Douglass noted that this required the changeover from smaller 2,000 gallon tank wagons to larger 4,500 gallon tank wagons.
"When we started, everything was top loading, but of course, we're now all bottom loaded," said Douglass. "And we bottom load them here at the office, and we take the fuel out, and we can load it at the pipeline terminal and either bring that product back here or route our trucks in such a way that we can keep them bouncing around the Dallas-Fort Worth area."
Geographically, the plant is at the northern tier or top of the triangle the company serves that encompasses Fort Worth, Dallas and Sherman. That area includes multiple pipeline terminals the company can pull product from, helping to reduce inefficiency as the trucks can bounce between these and the plant.
As is common, the bulk plant serves a core role supporting commercial operations in addition to helping facilitate the supply of smaller marinas that can be found on a number of area lakes. There is still an agricultural business although that is a declining part of the company's portfolio. Construction is the largest market segment and involves going onto the property and fueling equipment or fueling tanks, which Douglass Distributing supplies.
Douglass Distributing also blends ethanol into conventional gasoline and biodiesel into petroleum diesel at its bulk plant to take advantage of RIN opportunities. Douglass noted that, "The ability to get the biodiesel RINs has been an absolute bonus to our commercial division."
On the commercial fleet fueling side, Douglass Distributing services a variety of smaller fleets with its tank wagon operation. The larger commercial trucking companies typically have storage with 10,000 gallon or 12,000 gallon tanks, which can be served directly through transport delivery. "As consolidation has gone through the industry, the tank wagon side is actually now a good, profitable business and one that we are investing back into with newer trucks and tanks for our customers," Douglass said.
It's not uncommon for the bulk plant component of a marketer’s logistics operations to be a bit more dated than other components, such as the trucking fleet or retail operations. As noted earlier, Douglass Distributing has been reinvesting in both the bulk plant and the broader logistics operation.
There is 126,000 gallons of storage – all of that is now below ground – with a modern loading rack featuring electronic meters as would be found at an electronic pipeline terminal. Douglass operates storage areas for propane with one at the bulk plant featuring two 30,000 gallon propane storage tanks and four in satellite locations. The propane is delivered using 3,500 gallon bobtails.
To modernize the commercial supply logistics, each commercial tank, such as those left at construction sites, has a GPS/tank monitor on it. "What happens is these construction companies will move the tank without telling us about it…every morning we get the reading at about 5:00 a.m. so we know what's in the tank, so we don't make a dry run," said Douglass. "And if it's been moved, it will red flag us to let us know that the tank’s in a different place. So we know what the load, how much the load and that helps us in our logistics."
Douglass Distributing also subscribes to DTN Telvent's private weather service and integrates that within its delivery operations. The Dallas-Fort Worth area gets occasional ice storms in the trucks can be rerouted on-the-fly using up-to-date weather maps. "We can tell within 15 minutes when these storms hit and we can say, ‘Alright guys, we can make one more run to load up and come back heavy,’ because if they need to go out, if you have an empty aluminum trailer on ice, you'll just skate away." That capability even came into play during the recent tornadoes that hit the Dallas-Fort Worth area where the company was able to watch the storms move in and track the trucks with GPS and get the trucks out of the way of the violent weather.
The company also uses technology, from such providers as Liquid Controls, to provide for full product reconciliation so that the gallons that go out through the meters are then compared to the handheld devices in the tank wagons to make sure that it delivers all that was loaded with daily reconciliation.
A core focus at the company's logistics operation is safety. That not only helps keep valuable employees on-the-job, but provides some secondary financial benefits as well. Douglass Distributing is self-insured and every premium dollar that is not used for claims is rebated back through a dividend.
At the plant, the rack is set up electronically with a "groundhog" to take care of static electricity as would be found in a pipeline terminal so the trucks are grounded before they load. That system is inspected every day.
The company also set up its business model so that all of its drivers are paid on commission. “We get paid by gallons, and when you mix hours-of-time with gallons, there is a disconnect between the management and the drivers," Douglass said. "I don't need to have a supervisor to handle my tank wagon guys because they pull up the inventories, route themselves and their interests are aligned with my interest. And we do that with our transports also. And, obviously we have minimums in there if we have an ice storm or tornadoes or whatever that might get in the way of doing normal business."
The company also works hard to make sure it avoids seasonal idleness as best as possible. "We balance our workforce and cash flow, and gasoline and diesel are generally a seasonal business,” said Douglass. “So in the winter we take those guys and ship them over to the propane side of our business; so we’re able to take that skill set of the driver and move it to a different product line—propane—for our short three-month winter that we have here in North Texas. This balances our cash flow at a time when our commercial diesel sales would be decreasing and that rides out until springtime when construction restarts. And, it keeps our guys paid year-round."
Trends in Bulk Plant Operation
A lot has changed over the decades most bulk plants have been in operation. <i>NPN Magazine</i> decided to ask some industry experts in the know about what they are seeing as trends in that segment of the logistics operations. Our panel includes:
Terry D. Cooper, president of Acterra Group, a diversified energy services firm based in Iowa with offices throughout the Midwest.
Jeff Rizner, product manager at Liquid Controls, which manufactures high quality flow meters and accessories for liquid
and gas measurement.
Brian J. Savage, president of the international fueling logistics consultancy Savage Associates.
What are the plants being used for?
"The typical jobber with a bulk plant is not using that phrase gas station business, but it's going to commercial accounts and farm accounts and things along that line and making deliveries along that basis. The typical gas station now has capacity for not just for 10,000 gallon tanks, but for four 20,000 gallon tanks, which is something that is more than your typical bulk plant's delivery capability."
"The bulk plant community tends to revolve more around the smaller marketers since larger marketers tend to look at storing their product to terminals under an allocation plan. The smaller marketers, though, need a place to store all of their product. We are finding that more and more terminals are being consolidated, but those are mainly for the 50-plus vehicle types of systems."
"Operations with large storage capacity can play the market when deals become available, but smaller operations equal to three or four trailer loads tend to be primarily driven by convenience. It's typically a satellite facility positioned to support the furthest reach in marketing of the product. In spotted areas, you're going to have a larger bulk plant where they are thinking about through-putting with their neighbors, who are competitors. You're talking a plant that has at least 100,000 to 400,000 gallons of storage."
How upgraded are the plants today?
"I would say that most bulk plants are up-to-date in the Midwest. The driving force in our business is typically regulatory and that's why the underground tanks have been looked at heavily because of the environmental impact. Consolidation is another area where the improvement in technology is very useful. We are seeing two or three operators go in together on one large bulk plant and use electronics to keep track of the inventory – both inflows and outflows – for their books."
"What we're seeing is more automation. What we are finding is that either our existing meters are being retrofitted with a pulser or being removed completely and updated including the meters so you can do things like blending on-the-fly and that particular plant is now capable of doing biodiesel or ethanol. That's where we are seeing our success right now. Build on your efficiency, maintain your accuracy, and verify your safety – all of which seem to become more important as the price of the products go up."
Who should consider a plant if they do not have one today?
"The primary motivation to acquire a new bulk plant should be anyone who is expanding territory. We finished a plant of the Northwest New Jersey. He had been going for two to three years offloading heating oil from the trailer to the delivery truck instead of driving the delivery truck an hour and a half to get 4,000 gallons of product. So he was renting and leasing a trailer to get three or four loads. So we got in an initial storage tank with the ability to add two or three more if required down the line. Why? Because in that particular area there is no natural gas just fuel oil and propane."
"A lot of times getting it from the pipeline takes longer, so if you have a customer with a 1,000 gallon tank, the customer may need that product right away. Also, you have the ability to split those deliveries because coming from the terminal, it's going to be a 7,500 to 8,000 gallon transport, and you're not going to want to stop in every 1,000 gallon account to deliver that fuel. You can deliver that to the bulk plant and the 4,500 gallon tank wagon can hit the 1,000 gallon tanks or the 500 gallon tanks or whatever is required and that's where he makes his margin for doing the original work of splitting that load up further."
"If I'm a small marketer, I might be conveniently located close to a terminal to pick up all of my fuel, so I need something that is going to give me the convenience of having supply locally. I can still buy in bulk so I can still get the costing structure I need and I can still make a profit."