Specialized Carriers: And Now for Something Completely Different
From traversing the tundra to White Glove residential deliveries the last mile is the most important.
Somewhere out there right now an 88-foot-long, 43-foot-high, 41-foot-wide, 275,000-pound flue-gas scrubber tower sits on a heavy-lift ship en route from Map Ta Phut, Thailand, where it was fabricated, to the Port of New Orleans.
When it reaches the United States, it will be transloaded onto a barge and hauled against the current and under the bridges to a refinery up the Mississippi River. Once there, it will be lifted off the barge and inched inland to the spot where it will be installed.
All in a day’s work for TransGroup Worldwide Logistics, Seattle, Wash., one of the highly specialized third-party logistics providers that handle “project cargo.”
Romance might be gone from the open highway, but there is increasing business to be won where the road is not long and straight, or where there is no road at all.
As sophisticated logistics practices have narrowed the competitive advantage between local and national operators, and as railroads have recaptured significant long-distance business, some line-haul truckers are turning to complicated operations requiring specialized equipment to differentiate themselves and to build long-term business.
Such services encompass a wide array of operations. Some major mainline highway haulers are pushing into the first and last mile, equipping conventional dry van trailers with specialized cargo handling equipment.
Other regional players are moving to second-generation power and trailers, custom-made new to replace general service units modified for specialized conditions such as poorly maintained highways or temperature extremes.
Specialized or project cargo falls into three general categories:
Special services, which usually cover value-added operations in handling conventional freight.
Special conditions, which usually cover both conventional and unusual freight in unconventional circumstances.
Special cargo can be long, tall, heavy, or delicate—even if it moves only 100 miles down an interstate highway.
Specialized services have grown quietly, but are becoming important profit centers for third-party logistics companies.
To be sure, specialized equipment is more expensive to buy or build and maintain. And while 3PLs can charge more for them, specialized services are not necessarily a major source of premium profit.
The importance of specialized equipment and services is that they build long-term customer loyalty and often generate new volumes of non-specialized traffic.
Players say there is no way to quantify the volume of specialized or project cargo; the market is too fragmented. But the growth of TransGroup’s project division illustrates its potential.
“TransProject was established nearly four years ago with one employee—me—and grossed 2 million the first year,” says Sue St. Germain, director of projects for TransGroup.
Therein lies one complication of project freight. The expense of acquiring and operating specialized equipment, and of training drivers, may be obvious.
But for a carrier or a specialized logistics firm to be successful, it needs highly trained workers at every level.
“It is a difficult hiring market for all carriers,” says St. Germain, “but it is even more difficult for us. A mistake can be devastating for a customer. So we maintain very stringent requirements for joining the company, then train up from there.”
Another complication is insurance.
“Our carriers drive into working refineries or power plants, and onto construction sites,” says St. Germain. “Some operators with the equipment we need do not have the necessary insurance. So we established a process to qualify new trucker partners.”
Getting carriers involved is often one of the last steps in the process.
“We often start working with customers when they are still trying to get the bid,” she says. “We support the bidding process, and advise them on everything from purchasing to fabrication to engineering studies of roads and bridges along the projected route. By the time the client gets the bid, our work is often half completed.”
In one recent case, TransGroup moved 60 turbine blades for a wind farm from a fabricator in North Dakota to the Port of Duluth, Minn., where they were shipped overseas. TransGroup got the bid the Friday before Independence Day, and had two weeks to complete the job.
“Each blade measured 122 feet long,” recalls Shirley Castaing, TransGroup’s senior project manager. “We found a way to put two blades, rather than just one, on each truck, and that made all the difference. But it was still a 24/7 job for two weeks.”
While TransGroup owns and operates some specialized trucks, it does not have turbine carriers, and no one company had enough.
“We had to pull in assets from four different truckers,” she says. “That is the advantage TransGroup brings. If the client had to canvass the industry for the assets, the project might never have been completed.
“We formed the task force, contracted with the motor carriers, and chartered the ships. We also worked with the carriers overseas to get the blades to their final destination.”
While moving turbine blades, refinery units, or power-transmission equipment is the high-profile and high-growth end of the specialized cargo business, slightly less exotic—but still specialized—hauling is also showing significant growth.
Lightening the Load
One simple form of specialization is lightening a standard trailer so it can carry extra weight.
“It’s more likely to cube out a standard 53-foot trailer before weighting it out,” says Brad Hicks, vice president and general manager of delivery services for J.B. Hunt, Lowell, Ark.
“But if the shipment consists of soda or beer, you can reach the maximum gross weight before the trailer is filled.
“We lighten the trailers through modifications such as aluminum wheels. Instead of the traditional 42,000 to 44,000 pounds of payload, we can get 48,000 to 50,000 pounds,” Hicks says.
In J.B. Hunt’s dedicated division, specialized vehicle business is a strong growth center, and in the past few years has increased to about 40 percent of total dedicated work, Hicks says.
Dedicated usually refers to a single client—and that represents the desirable long-term business. But it also refers in some cases to dedicated lanes, regions, or types of service attracting enough customers to justify equipment and driver training investments.
“The capital investment can be considerable,” says Hicks, “so we need a partnership, or at least the expectation of a partnership. While it can be just a transactional arrangement in a dedicated region or with certain equipment, we prefer a three-year contractual agreement. If that’s in place, we will acquire or modify any type of equipment.
“For example, we have a fleet of dump trucks,” Hicks adds. “Most people would be surprised to learn that J.B. Hunt runs dump trucks.”
The logic is that specialized services and equipment have become one of the few differentiators left in the industry. “Any carrier can haul a truckload of cereal on a 53-foot dry van,” says Hicks. “But the dedicated division handles the creative equipment and services.”
Vehicle weights are also being reduced to accommodate the addition of forklifts or lift gates that facilitate self-loading and unloading.
“We use lift gates for residential deliveries,” Hicks says. “A lot of transportation has moved toward lower volumes with higher frequency. For more traditional cargo, we have seen growth in ‘last-mile, white-glove’ service, where we don’t just make the delivery, but go into the residence, uncradle, unpack, place, and plug in the merchandise.”
Other specialized carriers extend the same logic even further. Some operate full-length flatbed trailers with boom cranes—not just little hoists for unloading, but cranes capable of delivering pallets of lumber to the roof of a six-story townhouse under construction or renovation.
In addition to added lift gates and forklifts, trailers are also being equipped with electric pallet jacks for deliveries to sites without a forklift.
Some specialized carriers that handle furniture delivery and other high-value merchandise have developed a modular system of “demountable” half-length trailers.
These trailers are loaded as a normal full-length dry van would be for the line haul from manufacturer or port of entry. But then the halves or “pups” can be dropped separately onto their own struts, where they are picked up by a 20-foot straight-job chassis for the delivery.
This modular system requires specialized demountable vans and dedicated chassis, and enables direct deliveries when no cross-dock is available or when reloading is not an option.
Another popular modification is to retrofit conventional 53-foot trailers with adjustable but permanent horizontal load-bearing bars in the sidewalls. Called captive beams, they allow the truck to double-stack irregularly shaped or sized pallets that otherwise could not be so loaded.
“The retrofit can be expensive,” admits Hicks. “But it works well for cross-dock operations where ordinarily you would lose cube.”
One important factor that any operator or logistics provider must consider when offering specialized services or equipment is driver training. Given the shortage of skilled truck drivers, time out of service for training is a major factor in the success of a specialized or dedicated operation.
“Drivers become multi-skilled operators,” says Hicks. “They also become customer-service representatives of the manufacturer and the seller, as well as the carrier. J.B. Hunt works with clients and equipment manufacturers to train drivers on safety and customer service.”
Facing the Competition
On the national level, Hunt competes with other major carriers as well as local and regional operators.
“We face competition from the larger companies on easier business, but for the more specialized services our competition comes primarily from local companies,” Hicks says.
“Regardless of the competition, we are motivated to go after specialized business because the tougher the service, the more you endear yourself to customers,” he adds. “The more integral you are to their operations, the harder you are to replace.”
The growth in Internet commerce has also spurred an increase in specialized services.
Take hot tubs, for example. Hot tubs, or spas, used to be sold by local businesses in each community. Today, a consumer in Maine can order a spa from a company in California, and the spa itself is manufactured in Georgia. A specialized carrier driver can handle the trip from pickup to delivery, including placement and connection in the consumer’s home.
Sometimes the route, rather than the manifest, dictates the specialized services. Just ask Lynden Transport, Seattle, Wash., a full-service logistics operation specializing in handling truckload, LTL, flatbed, and temperature-controlled shipments to and from Alaska.
The lanes Lynden travels are anything but mundane. Any homeowner in a U-Haul can drive from Houston to Dallas, but Dallas to Edmonton is a considerable challenge. And Edmonton to Prudhoe Bay, Alaska, is seriously specialized haul—essentially mainline long-haul service over unimproved roads with precious few fuel or repair options and radical swings in temperature and weather.
Lynden also handles shipments from Los Angeles and the Pacific Northwest to Alaska by road, barge, and marine roll-on/roll-off vessel.
Lynden’s service has grown to the point where the company has just taken delivery of its first custom-built “tundra trucks.” The new units, which cost about $400,000 each, include complete weatherization and full sleeper cabs, and can handle trips from Prudhoe Bay to West Barrow. Lynden has put two units into service, and four more are on order.
Traveling the Tundra
The competition comes from rollogons with big, bulbous tires that can roll over the tundra, even without snow.
“Lynden’s sweet spot is ice and compressed snow. Without the big tires, tundra trucks can move a little faster and be more cost effective,” says Alex McKallor, president of Lynden Transport.
In this case, cost effective is a relative term. “Driving 500 miles on a dirt road is brutal on the equipment,” says McKallor. “It’s like sandblasting it with rocks.”
The Houston-to-Prudhoe run is the longest on the continent, McKallor notes, and is done with two-driver teams using conventional equipment as far as Fairbanks.
While McKallor agrees with other specialized carrier executives that long-term partnerships with shippers are the goal, he warns that being indispensable can place heavy demands on equipment and personnel.
“Last winter we handled about three or four times our usual level of business thanks to leaks and operational problems along the Alaska Pipeline,” he says.
As a multimodal operator Lynden has also been the go-to carrier for extraordinary movements.
For instance, the company recently moved the huge components of a refinery expansion from the fabricator in Bellingham, Wash., to Kenai, Alaska, acting as logistics planner and road carrier, and working with a charter firm for the marine move. The components were landed on the beach at Kenai, and moved down the road more than five miles to the Tesoro refinery.
“This was a tough job,” notes McKallor. “Some of those components measured 30 feet wide and 30 feet high, and weighed 250 tons. The whole move took one month—two weeks on the water, then another two weeks from the beach to the refinery.”
Just another reason why, when the going gets tough, the tough turn to specialized carriers.