The Long, Tough Road

Carl Metzelthin counts himself among the lucky ones in over-the-road transport. Metzelthin closed his Brass Leasing Inc. trucking company on July 1, 2008 - what he considers to be just in the nick of time.

"I couldn't figure out how to make money anymore," said Metzelthin, a 20-year trucking veteran, who sold his equipment piecemeal, leased his building and, ultimately, emerged debt-free.

In the months before, client after client had moved overseas, and Metzelthin said he was forced to continually drop rates to remain competitive.

Fewer loads and intense competition are at the forefront of most trucking company decisions today.

The American Trucking Association reports total truckload loads down 19.5 percent between Aug. 31, 2008, and Aug. 31, 2009.

John Hancock, director of recruiting at Springfield-based Prime Inc., said companies are responding by lowering freight rates.

"And it doesn't matter how aggressive you get competing. If there is less freight to pull, somebody's going to lose out," he said.

It doesn't appear as if Prime is losing out too much. According to Transport Topics 2009 Top 100 For-Hire Carriers, Prime recorded revenues of $850 million in 2008, compared to $778 million in 2007. The company is No. 32 on the list.

Steelman Transportation Inc. President James Towery said the Springfield-based company has sacrificed its revenue per mile - down 11 percent compared to last year - to keep trucks loaded and moving. Still, 12 percent fewer Steelman truckloads are going out this year compared to last - from 6,901 loads in 2008 to 6,054 loads in 2009 - and sales for the durable goods transporter are down 30 percent from last year.

TCSI-Transland Inc. also is battling decreased sales. President Mike Walker said TCSI management is reinventing the Strafford-based company to cut costs in order to make money in a difficult environment.

"We probably are going to look to haul more freight in a regional capacity that will allow us a higher revenue per mile, in contrast to the traditional long-haul business," Walker said, noting that many of the commodities that were traditionally driven cross-country by truck are now being delivered by train in domestic stack containers.

TCSI-Transland's sales this year are down more than 15 percent after fuel adjustments, and without adjusting for fuel, sales are off about 30 percent, he said, declining to disclose revenues.

H.E. "Spook" Whitener, chairman of Trailiner Corp., said revenues through Aug. 31 are flat at $34 million. Now, fuel expenses are top of mind.

"Our biggest cost is fuel," said Whitener, noting that between Jan. 1, 2008, and Aug. 31, 2008, Trailiner spent $8.4 million on fuel. During the same time this year, he said, the company has spent $3.9 million on fuel due to a combination of lower diesel prices and changes to decrease the amount of fuel consumed by its trucks.

For instance, auxillary power units have been installed in every truck allowing functions such as air conditioning and heat to run without burning fuel.

Granted, that change was made to comply with an influx of anti-idling legislation adopted at various state and local levels. Trailiner trucks now burn 75 percent less fuel per hour.

Lower fuel prices this year don't necessarily mean trucking companies are saving money. Fuel surcharges have been lowered, and in some cases, shippers are demanding even greater concessions, Towery said. Fuel surcharges at Steelman are down by 69 percent, he said.

Larry Daniel, president of The Daniel Co. at 3725 W. Division St., said revenue per mile is down about 8 percent compared to last year, and the company's fuel charge has been cut in half. Daniel Co.'s clients - mostly in general commodities and produce - are spending less because they're producing less, he said.

In response, Daniel said the company has expanded its geographic reach to include the eastern U.S.

Trucks that are moving need drivers behind the wheels.

Whitener said Trailiner has 79 employees in the shop and office, 2169 E. Blaine St., 127 company drivers and roughly 100 owner-operators on board. In 2009, four staff members were added to shop and office positions. Driver numbers haven't changed.

"Our turnover has always been below the national average," said Trailiner Safety Director Liz Whitener, who is married to H.E. Whitener.

She attributes the positive rate to such policies as weekly stops at home for drivers, payment the day of deliveries and health insurance coverage based on miles logged per month.

On a national level, driver turnover is extremely low for the industry. According to ATA Media Assistant Connie Heiss, driver turnover at large truck carriers in second-quarter 2009 was 52 percent. During the second quarter of 2008, turnover was at 85 percent.

Small truckload carriers also are seeing lower turnover - 42 percent in second-quarter 2009, compared to 76 percent in second-quarter 2008.

Catering to drivers, Prime made changes last month to its reimbursement plan. Drivers can now earn a guaranteed $90,000 for every 100,000 miles driven or 72 percent of the amount Prime invoices its customers - whichever amount is greater.

"How that contrasts to some of the other carriers is that many of them pay a flat rate per mile, but there are some loads that (carriers) make a bunch of money on and the operator pulling the freight doesn't get to," Hancock said.

Daniel said his company hasn't seen a significant change in employment. He said his driver pay plan was revised to compensation by the day versus by the mile a few years ago, and it seems to be well accepted.

Walker said TCSI is hiring strategically, for qualified drivers. Altogether, Walker said staffing has decreased nearly 12 percent from roughly 240 TCSI employees in 2008.

As for Metzelthin, he closed his business with no plans to reopen.

"I'm 64 years old," he said, "Luckily, I did well (in) trucking. But I wasn't going to spend good money hoping I can outlast it."[[In-content Ad]]