~Big Brothers For Little Fleets~
The last few years have been devastating for small trucking companies. High costs and the scramble for freight drove thousands to shut their doors. "Many of them didn't go broke, they just decided it was too hard to make a living doing this," says David Owen, president of the National Assn. of Small Trucking Cos. (NASTC), a Hendersonville, Tenn.-based purchasing group for small truckload long-haul carriers.
NASTC's own numbers dwindled significantly, but enrollment has been breaking records since last spring. "We're still going to lose companies," he said. "People get old, or tired, or they wise up. But I think the attrition has pretty much stabilized."
Freight business may be improving but many of the other problems continue, like high insurance premiums and increasing demand for sophisticated communications and security systems. That leads many to speculate that we'll see fewer and fewer small carriers operating entirely on their own - and we'll see more and more large companies welcoming them into the fold.
Cooperative buying groups come and go in this industry, but NASTC has been operating since 1989. Currently the organization targets fleets with five to 100 trucks but is planning to open membership to the one to four market sometime next year. Services include receivables factoring, log auditing, fuel tax reporting, drug and alcohol testing and group discounts of fuel. NASTC also has set up group plans for driver payroll services, truck and medical insurance.
"We do all the operational things. Our members concentrate on managing their drivers, maintaining their trucks and getting the freight," Owens explained. "Until they get to 20 trucks they don't need to hire anyone but a dispatcher and a maintenance man."
Other small fleets have found comfortable niches hauling for other carriers. Wilma and Larry Peters started Peters Truck Line with one truck in 1994. Today they have 19 tractors and 13 bulk cement trailers. The trailers and most of the tractors are leased to TXI Transportation.
"They take care of our accounts receivable," noted Wilma. "We get paid twice a month, right on time. That's important. We don't have accounts out there that don't pay. We don't have that headache."
But they have other headaches. Despite a low accident rate, truck insurance is expensive. The Peters pay health insurance premiums for their drivers and give them the option to buy dependent coverage. But because their group policy is small and they have several older drivers, premiums are high. In fact, some drivers have been able to find less expensive family coverage on their own. Larry takes care of routine truck maintenance. Wilma handles the paperwork.
"You have to be very frugal," she said of making it in trucking. "Most of the money we make goes back into the business. We don't live in a big house or drive big cars. In fact, I think some of our drivers live better than we do."
As for growth, "we'll see where it goes," she said. They're satisfied with TXI and, if they can find a driver, they'll lease another truck to the carrier. In the meantime, however, they've decided to diversify. About two years ago, the Peters started a bulk-liquid hauling business with a partner. "We realized that all our security depended on one company," Wilma recalled. "We'd like to get enough trucks on the other side so if something happens with TXI we can stay alive long enough to regroup."
"I think there's a place for the small fleet," said Mark Murphin, sales and marketing vice president for Ruan Transportation Management Systems. At Ruan, that place may be getting bigger.
The company's stock in trade is finding the most cost-effective way to move products through supply chains. Sometimes that means advising a customer to get rid of its own trucks. Sometimes it even means something other than Ruan trucks.
"We realized that there are multiple modes of transportation and the way to be the most efficient for the customers is to be able to pick the proper mode to move the product, whether it's our trucks, a for-hire carrier, a dedicated fleet, rail or air," Murphin explained. Today, partnerships with outside carriers are part of Ruan's growth model and they are actively pursuing ways to make the union attractive for small fleets.
"Capital for small companies in transportation will continue to be tight," he noted. "Technology will also be a barrier for small folks. So in some of our logistics solutions we're building information technology systems that will enable a carrier with 10 or 15 trucks to access our system via the Internet and perform as if they have a large computer system. My personal opinion is that this is a window of opportunity in the marketplace."
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