MaineBiz: Technology drives growth at Bangor’s Hartt Transportation (May 14, 2012)

With high fuel prices, dwindling manufacturers, a headquarters at the far end of the map and a shortage of trained labor — but not of competition or regulation — there doesn’t seem to be a reason for a trucking company like Hartt Transportation to remain in business these days.

“People ask me all the time, how the hell are you guys still operating?” says CFO Joanna Bradeen.

But the family-owned, Bangor-based trucking company has managed to reinvent itself after 64 years in business by combining old-school methods — relationships and savvy customer service — with modernizing for efficiency. Attractive interest rates have also helped it leverage new technology and equipment.

The company lost its biggest customer five years in a row (two were paper companies) right at the turn of the century, but kept rolling. Bradeen says the company went from $10 million in revenue in the late 1990s to $130 million expected this year, when it will send about 3,600 truckloads of goods out of Maine every month from terminals in Bangor and Auburn. The company also operates regional hubs near key clients in Sumter, S.C., and Fulton, Ky.

“I have 774 loads right now that are unassigned,” she said recently, looking out at a desolate truck yard glazed with a layer of early spring snow. “Just a random Thursday in March.”

It was a situation perhaps unimagined when the company started in 1948 with a single truck to haul gravel and pulpwood. Since then, the interstate highway system has been built; fuel costs have risen 1,000%; the U.S. manufacturing sector has fluctuated wildly; and generations of new technology have come and gone.

“We’re as busy as we can be right now,” says company President Billy Hartt, whose father, Delmont Hartt, founded the company and still oversees operations. Billy directs the company; Judy Hartt, Billy’s sister, works in the operations department; and Debbie Swan, another sister, is freight auditor.

The family atmosphere permeates the company’s Bangor headquarters, where — inside a sprawling collection of log and steel buildings in a far-flung business park 8 miles from the nearest interstate — bouncing dots on a dispatcher’s computer screen represent hundreds of Hartt truckloads of goods going up and down the Eastern Seaboard.

The call of the road

Plenty of romanticism has followed the U.S. trucking industry, and while the image of the rebel trucker in movies like “Convoy” and “Smokey and the Bandit” is inflated, the profession does lure those seeking freedom in the form of independence, the call of the open road and a steady paycheck.

But the business is anything but romantic. It involves complexities of timing, procurement, logistics, technology and physics. It requires drivers to work long hours away from their families. There is a mountain of rules and regulations. And that says nothing about the condition of the overall economy, for which many consider the trucking industry a canary in the coal mine.

“Can I take a fuel price increase and pass it along to a customer?” Billy Hartt asks. “Not always.”

Hartt boils the operation down to a few basic truisms. He knows his costs are currently $2 per mile. He runs loads across 211,000 miles per day, on 251 business days. That’s 53 million miles of trucking expected for 2012. And $106 million in costs.

He can put his hands on 2,000 late-model, 53-foot air ride van trailers (the 18-wheelers normally associated with trucking), 50 flatbeds and 25 tri-axle trailers, backed by a staff of brokers, billers, mechanics, systems analysts, 400 staff drivers and a shifting crew of independent owner-operators.

What he doesn’t know, on a given day, is where the goods are coming from, or where are they going. He can’t predict the price of gas or the impact of ever-tightening rules on hours of operation, vehicle maintenance or emissions. And even in the midst of a lingering employment downturn, he says he often has to scramble to find drivers with the experience and qualifications to meet strict new safety rules.

“It’s always interesting,” he says with a smile. “If [a customer] has a job, I say yes. Then I figure out how. Most of the time it’s a win, sometimes it’s a loss. But I always make them happy.”

Keep on

Hartt isn’t alone in Maine’s trucking business — or even in Bangor’s.

Within a 10-mile radius of Hartt’s, there’s Pottle’s, A.O. Bouchard and Dysart’s, each of which have carved out niches or diversified in order to stay afloat. Across the state, there were 4,760 trucking companies in 2011, according to data from The Maine Motor Transport Association.

The industry group says trucking provided 32,850 jobs directly or indirectly in Maine in 2010 — one of every 15 jobs in the state, with wages exceeding $1.3 billion.

Part of the success story for the state’s trucking companies is that, in Maine, as in most of the Northeast, competition from rail is miniscule. The Maine Motor Transport Association says trucks transported 90% of all manufactured tonnage in the state in 2010 — 133,469 tons per day. By comparison, prior to the recession, rails carried only approximately 18,000 tons of freight per day in 2007, according to the Maine Department of Transportation.

But competition among trucking companies is fierce, and carriers bend over backward to make sure their customers get their goods on time.

Hartt’s major Maine accounts — which in 1996 were 100% paper companies, says Hartt — now include Nestle Waters’ Poland Spring bottling plants statewide and Formed Fiber Technologies in Auburn, in addition to Lincoln Paper & Tissue in Lincoln, NewPage in Rumford and Verso Paper in Jay.

The company also runs 130 trucks out of its South Carolina base for Color-Fi, a producer of dyed polyester staple fibers.

“We’ve been able to prove we can compete,” Hartt says. “But we have to go where the manufacturers go, and generally, for us, that’s been trending south, to Auburn and beyond.”

Sixty percent of his routes go through the New York City metro area — the most heavily-tolled and heavily traveled stretch of road in America.

“You go where the market tells you,” Hartt says.

During the downturn, the company purchased 30 acres near the Kittyhawk Business Park and Maine Turnpike in Auburn, thinking it would build a new trucking terminal there to be closer to Formed Fiber, one of its best customers.

Now, it’s acting more as a developer and landlord. A Best Western hotel and restaurant will rise at the site later this spring or early summer (see “On the side,” at right).

Burn less, make more

Whether at the barrel of government regulation or the mercy of high oil prices, trucking companies like Hartt have had to invest heavily in efficiency and new technology to stay afloat.

Hartt says he’s installed Michelin “Super Singles” tires that yield 4% fuel savings by reducing truck weight and making rigs roll easier, and new TriPac auxiliary power units — essentially the batteries that power refrigerators, warm engines and keep operator cabs comfy for drivers — to reduce idling emissions by 10%.

“I can go sniff exhaust out of one of our stacks that is about as clean as the air going in,” Bradeen boasts on a recent visit to the Bangor truck yard.

Maine Motor Transport Association President and CEO Brian Parke says Hartt has made significant investments in reducing its environmental impact.

“There is no disputing the unbelievable commitment that Billy Hartt and his team has made to reducing their company’s carbon footprint,” Parke says. “I know they are proud of their involvement in this program, as they should be. They’re one of the most sophisticated trucking operations in the state.”

The company also jumped in front of increasing efficiency standards by becoming a SmartWay Transport Partner, a voluntary program among freight industry sectors and the U.S. Environmental Protection Agency that establishes incentives for fuel-efficiency improvements and emissions reductions.

By the end of this year, the initiative aims to reduce from 33 million to 66 million metric tons of carbon dioxide emission, and up to 200,000 tons of nitrogen oxide emissions, while saving companies the equivalent of 150 million barrels of oil.

Because squeezing more out of a gallon of fuel is so crucial to the bottom line, the company has adopted logistics technology that’s part George Orwell, part Adam Smith.

Trucks are fully networked with GPS monitoring devices that throw off reams of data dispatchers use to track shipments, assess traffic and advise on best routes. Truckers enter log book entries and delivery confirmations online, easing compliance and speeding the invoice trail. A bill is electronically sent to the customer for payment just hours after a shipment is delivered and confirmed — a process that previously took weeks, with obvious benefits for the company’s cash flow.

The company uses XATA mapping software that shows where every truck is, in real time, while calculating miles remaining per trip, gasoline still unburned (based on load weight and average trip speed), a driver’s in-service hours, estimated time of arrival and other key statistics.

Overlaid on top of that is a program called “Expert Fuel” which tallies up-to-the-second fuel prices at stations along the route that can be relayed to truckers to direct them to the cheapest place to refuel. Over the course of 53 million miles, it adds up. And if fuel prices ease, the aggressive move toward efficiency could fatten operating margins even more.

Bradeen says the tracking system, Geologic’s MobileMax2, cost $1,750 per truck plus a small monthly online fee per unit, while the fuel optimization software was $42,000 — investments that pay off faster as the price of fuel goes up.

More seismic changes — such as the advent of natural gas-powered engines — are likely to worry operators like Hartt over the next five years, when some analysts predict volatile oil prices will force the industry to move toward 50% natural gas-operated fleets, depending on the supply infrastructure.

Hartt also realizes some operational savings through safety initiatives.

The company has been recognized by the American Trucking Association’s Safety Management Council, the Maine Motor Transport Association and Reliance Insurance Co. annually since 1991. Recently, it enrolled in a Federal Motor Carrier Safety Administration Program that stresses traffic enforcement and assesses companies with credits and demerits based on their drivers’ operating records.

Parke says, “Many of the leading companies are focusing on driver quality to force down insurance rates and improve on-time deliveries” while also saving on truck maintenance, damage repair and downtime due to accidents or overuse.

National Transportation Safety Board data puts the average cost per injury of an accident involving a tractor-trailer at $217,000; $3.5 million if it involves a fatality.

Hartt credits investments in technology — as well as diligent drivers — with producing an excellent safety record and a 98.7% on-time-delivery rate, perhaps the most important metric in the industry.

Hartt Transportation CFO Joanna Bradeen

Hartt Transportation CFO Joanna Bradeen. Photo by Tim Greenway.

Changing lanes

Reflecting the U.S. economy as a whole, trucking in Maine will remain in flux due to oil prices, a fledgling recovery and a fixer-upper highway infrastructure. Larger-scale operations such as Hartt will have advantages over the smaller players in managing fuel costs, expanding their client bases and leveraging efficiencies.

In a report by FTR Associates, industry consultant Noel Perry writes that the forecast for truckload growth nationally “looks very much like the GDP pattern,” and that a 4% truckload growth rate “should do more than enough to sustain prices and recovery equipment orders … maybe even enough to encourage fleets to order [new equipment] for growth.”

Hartt says he thinks roadway toll costs could double in the coming years. He’s also wary of insurance and workman’s compensation issues. And even amid a jobs-hungry economy, he complains he often can’t find qualified drivers.

According to Perry, the challenge of driver shortage will prove sticky, as the government adds regulations that could disqualify a substantial number of drivers.

In addition to new rules that take a closer look at drivers’ safety records and physical fitness, feds added “hours of service” rules that became effective Feb. 27, including:

  • an 11-hour driving limit that caps driving at a maximum of 11 hours after 10 consecutive hours off duty
  • a 14-hour limit that prohibits drivers from driving beyond the 14th consecutive hour after coming on duty, following 10 consecutive hours off duty. Off-duty time does not extend the 14-hour period.
  • a 60/70-hour on-duty limit that prohibits drivers from driving after 60/70 hours on duty in 7/8 consecutive days
  • a sleeper berth provision that requires drivers to take at least eight consecutive hours in the sleeper berth, plus a separate two consecutive hours in either the sleeper berth or off duty

Closer to home, Parke says plenty of goods are still made in Maine — he cites paper products, water and processed foods — and 90% of it will continue to be moved by truck, as opposed to a 70% freight trucking rate nationally.

That said, “most of our industry is small businesses, outfits with five units or fewer,” he says. “Quite often, it’s the smaller trucking companies that will go out of business because of higher fuel costs. I expect to see some of that occur if fuel prices stay high.”

That doesn’t seem to bother Hartt. “We hope to keep on truckin’,” Bradeen says.

 

To view the original article at MaineBiz, click here

.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s