This has been a long, cold, worrisome winter. The worry about this particularly mean season has made national headlines and seeped into the psyches of corporate executives. Some of the biggest stories in the last couple months concerned propane shortages in the Midwest. Pipelines serving those regions couldn't keep up with demand for heat. This not only had shivering residents worried, but farmers too because they had trouble finding enough propane to help dry out their bumper corn crops.
Those executives are worried about the cost of energy in general. According to research by PricewaterhouseCoopers (pwc), high and volatile energy costs topped the concerns lists of both industrial manufacturing and transportation & logistics CEOs. Seventy percent of the former and 76% of the latter put this concern toward the top of their list, equating it with an increasing tax burden. There's good reason for concern. Demand for energy is forecast to increase by as much as 50% over the next 15 years. That's why these CEOs are eyeing developments in the U.S. shale gas infrastructure.
And let's not forget propane. In fact, amidst all the news about the shortage of propane for heat this winter, I didn't hear about any shortages of propane for powering forklifts. I asked Tucker Perkins, chief business development officer for the Propane Education and Research Council (PERC) why we haven't been reading about any forklift fleets going dry, and he said it's because the managers of those fleets—manage.
His advice for those customers is to build a stronger relationship with their propane supplier. Help those suppliers understand your business and learn your supplier's ability to meet your needs. Find out the minimum inventory level you should maintain.
Perkins said that this winter taught the entire propane industry an important lesson about the value of a baseload (year-round) customer.
The propane industry is also becoming more sensitive to the energy concerns of those transportation CEOs pwc surveyed. In fact Perkins told me his industry sees opportunities to move into the larger gasoline and diesel trucks sector as engines become more efficient and those Tier 4 and 5 diesel engines the EPA is mandating become so complex. That will become even more important for the propane industry as the makers of electric forklifts continue to eat away at propane's share of that market.
Another company tuning into the energy sensitivity of forklift purchasing decision makers is Power Solutions International, makers of alternative-fuel and conventional power systems. PSI recently announced a multi-year supply agreement with NACCO Materials Handling Group, Inc. to supply that forklift producer with alternatively-fueled power systems. PSI earned EPA certifications for large spark-ignited engines for mobile applications running on propane and natural gas. By moving into the forklift market, this company is covering all of its bets.
So for those CEOs worried about their energy costs, keep an eye on what's happening in the forklift market. Your counterparts there are making waves that will be felt in all sectors.