Schneider National Bulk Carriers To Meet New Market Opportunities

Carefully planned growth coupled with a close eye to opportunity has been the hallmark for Schneider National since its inception. That strategy carries over to Schneider National Bulk Carriers where managers are projecting a continuation of the 20% revenue growth achieved in 1998. The confidence lies in the parent company's solid foundation that supports the bulk division in its plans to expand in today's changing marketplace.

"Chaotic growth, or growth for the sake of growth, is what gets so many companies in trouble," says Don Schneider, president and chief executive officer of the Green Bay, Wisconsin, company. To avoid those pitfalls, Schneider National, with revenues of $2.75 billion in 1998, has been built with a philosophy of increasing efficiency. But at the root of the philosophy are the spirit, energy, and willingness of employees to subscribe to the concept, he says.

Schneider National Bulk Carriers managers say they are committed not only to efficiency, but to maintaining a competitive, low-cost position. With all of that in place, the bulk division is well-prepared for the new tank truck marketplace where many carriers are being merged, acquired, or sold. In addition, alliances are adding a new twist to the market mix.

"There is a lot of confusion created by mergers and acquisitions," says Scott Arves, vice-president and general manager of the bulk division. "The companies involved in these changes are internally focused. We think that gives us an edge in the marketplace. We are excited about the possibilities of gaining new business because with Schneider National's firm foundation, willingness to invest capital, and the bulk division's steady growth, we know we can expand significantly without compromising our quality of service. We are in an extremely enviable position."

But what about the other side of opportunity? Has the company considered joining an alliance? "We looked closely at the possibility, but we don't want to go in that direction," says Arves. "Our customers have sent us strong signals that they want us to handle their freight, or may allow us to broker freight to carriers they approve. They do not want to be told who we want to use for their freight. Because of the unique requirements of each customer, the bottom line is we don't trust our customers' freight to anyone but us."

The company is prepared to fill market and service voids that it expects to occur as the tank truck sector changes and reorganizes. Schneider National Bulk Carriers managers see an opportunity to solicit new customers who may be breaking ranks, or who are at least uneasy, with carriers that have chosen the road to various consolidations. At the same time, the managers say they feel confident Schneider National Bulk Carriers can deliver on promises made to new customers because of the division's success - $91.2 million in 1998 revenue - and Schneider National's stability and reputation.

"We are committed to the bulk division," Don Schneider points out.

Mergers and Acquisitions Because of the mergers, acquisitions, and alliances, Schneider's managers are anticipating that some companies will experience personnel problems, technological glitches, terminal closings, and other reactions to changes that will occur in the reorganization process. Problems may arise when long-time employees are retired or transferred so that customers are suddenly dealing with unfamiliar personnel.

An extreme example, albeit it a different transportation mode, is the Union Pacific Railroad-Southern Pacific Railway merger that brought incompatible computer systems and labor unions. Unreliable service that resulted from the restructuring angered chemical shippers and caused major transportation problems in the Gulf Coast area.

Those situations, if they prove true for the tank truck industry, will give Schneider National Bulk Carriers an opportunity to emphasize to prospective customers the company's steady workforce and its recent history of success as the fastest growing division of Schneider National, handling 280 loads per day in the United States with additional loads going into Canada and Mexico.

Specialty Products Schneider National Bulk Carriers has achieved success transporting specialty chemicals, petrochemicals, hazardous wastes, and more than 5,000 commodity chemicals. It is both ISO 9002 certified and a Chemical Manufacturers Association Responsible Care partner.

Throughout the bulk division's history, it has gradually acquired a strong shipper base, culminating in several large company accounts. The division's major customers include Nalco, Exxon, BASF, Safety Kleen, and Calgon. Schneider National Bulk Carriers hauls products from these companies, and others, to paper manufacturers, auto industry businesses, various manufacturing facilities, and public utilities.

"We have expanded offerings from primarily network long-haul to local, regional, and dedicated services," says Steven Gomoll, vice-president of sales and marketing. "We are also expanding our services to Mexico and developing new markets in the southeastern United States, Ohio, and California."

The company has been a partner with the Mexican carrier, Transportes Autotanques Ochoa SA de CV (Atosa), since 1997. About 100 loads per month are handed off to Atosa at locations along the US/Mexican border. Products being transported include latex, lubricating oil, oil additives, and water treatment compounds.

The bulk division has grown nearly 50% in the last two years, a large part of that growth based on customer service, says Scott Kluesner, bulk division director of customer service.

"First impressions are lasting," he adds. "Our approach to service is to start an account off right from the very first load, and continuously monitor it for good service in the future. We dedicate drivers whenever feasible."

Exxon honored the company recently with a supplier excellence award. "Fifteen thousand suppliers were nominated," he says. "We were one of six finalists selected and the only transportation company."

Customer service has been centralized since 1992. All order processing and dispatching are centered in Green Bay. Drivers are dispatched around the clock via Qualcomm's satellite communication systems. Schneider National was Qualcomm's first mobile information management system customer, signing on a decade ago. "This system has really improved our utilization, load ratio, and service," says Kluesner.

While order processing and dispatching are consolidated in Green Bay, 11 operating centers provide local customer support, on-site management, and equipment maintenance. "Our New Orleans facility also has an on-site tank wash service," says Kluesner. The centers are located in Atlanta and Augusta, Georgia; Chicago, Illinois; Houston, Texas; New Orleans and Baton Rouge, Louisiana; Pittsburgh, Pennsylvania; Rahway, New Jersey; Louisville, Kentucky; Green Bay; and Buffalo, New York.

Core Value Joining customer service at the top of the priority list is the company's core value of safety, according to Gomoll. The bulk division is proud of its safety and service record, which has garnered several awards.

"All of our people are part of a team," says Don Schneider. "Their safety record is just outstanding."

Safety is managed on a number of fronts: careful driver selection, training, incentive and awareness programs, driver empowerment, and the methodology built into the dispatch system. "Quarterly driver meetings include topics on safety, company information, and customer information," says Tom Culver, director of operations.

Training programs vary, based on the employee's experience, and include unloading techniques designed to prevent spills, work methods aimed at avoiding injuries, and defensive driving techniques, including practice on a skid pad. Winter driving is reviewed each fall.

"Drivers are focused on safety and servicing the customer," says Culver.

Drivers are judged on their record of no preventable accidents, no driver-related service incidents, and driving skills related to economy and speed. Annual awards banquets are held to recognize qualifying drivers. Monthly newsletters include driver recognition articles. In addition, drivers are paid a $400 quarterly bonus for exceeding safety and customer service standards. A driver of the month and year is honored at each operating center.

Wireless Information Schneider National offers all its drivers a CabCARD from Qualcomm Inc. The wireless information technology linked via computer gives drivers telephone and e-mail access. "This dovetails nicely with our overall communications strategy and plans for improved driver services," says Don Schneider.

CabCARD is a pre-paid service providing discounted long distance phone rates, voice-mail capabilities, driver e-mail, and phone-to-e-mail messaging.

"Our turnover is low because of the way we treat our drivers," says Culver. "We have had waiting lists of potential hires at some of our operating centers. We hire 70% experienced drivers and 30% inexperienced. Currently, we have 80 contract drivers, 630 company drivers, and we plan on growing by another 100 drivers in 1999." Drivers are coordinated from the company's operating centers (terminals).

"We are in the process of opening an operating center for Los Angeles, California, that we expect to be up and running fully later this year," says Culver. "We also have plans to open an operating center later in Ohio."

Company History All of this business acumen of Schneider National began with its founder, A J Schneider, in 1935 when he sold the family car to finance an Olson Transportation lease, says Gomoll. Thirty-four years later in 1969 with Don Schneider leading the company, the bulk division was established with 50 trucks. The bulk division fleet has since multiplied to 1,130 tank trailers and 700 tractors. Add to that count plans to purchase in 1999 an additional 204 Brenner tank trailers and 90 Freightliner tractors.

"A recent arrangement with Brenner makes Schneider National Bulk Carriers the tank manufacturer's largest customer," says Gomoll. "We like the ease of maintenance with Brenner trailers, their accessibility to Green Bay in Fond du Lac, Wisconsin, and the location of their repair center in Houston, Texas, which is another active area for our operations."

The company's latest purchases are insulated DOT407 stainless steel tank trailers with a 7,000-gallon capacity. Center discharge and rear discharge configurations are specified. The majority are single compartments, while about 10% are compartmentalized.

Tank trailers are equipped with Betts valves and manways and Girard pressure-relief vents. They have Reyco 21 BF suspensions and Eaton axles. Lights and wiring are from Truck-Lite.

Freightliner is currently the primary supplier of tractors. The tractor is specified to handle Schneider National's maintenance service intervals. Using Freightliner power units allows the maintenance department to reduce parts inventory, a cost-saving factor, says Douglas Kading, maintenance manager.

The Freightliner tractors have Cummins ISM 370-horsepower engines and Fuller 10-speed transmissions. Meritor RT40-145 drive axles with a 2.79 ratio complete the drivetrain. Steering axles are from Eaton.

Hydraulically driven Blackmer pumps and Drum compressors are mounted on the tractor. A Drum Hydrapak is used for cooling. Schneider National Bulk Carriers chooses the hydraulic system over direct PTO-drive for durability, as well as versatility for use with various trailers, says Kading.

Schneider National owns about 12 tank container chassis and leases 50 tank containers, primarily from Transamerica Leasing, and the other chassis that are used to serve three major customers and a few smaller companies. The equipment is used primarily to move product from Chicago to the West Coast and from the Gulf Coast to the West Coast. Bulk managers aren't predicting significant growth in the container market, but want to continue offering the service for customers who request it.

Shop Maintenance Maintenance on equipment is conducted in a network of 24 company shops. Bulk division dedicated shops are in Atlanta, Houston, New Orleans, and Chicago. Maintenance in other areas is by contract.

Well-trained mechanics maintain and inspect equipment. Four mechanics are certified to perform vessel welding at two R-coded shops-two in Chicago and two in Baton Rouge, Louisiana.

Team leaders at each shop conduct training. Mechanics eventually receive a rating based on job performance.

Mechanics are recognized individually for safety and customer service performance. Excellent overall performance by mechanics is also rated by shop.

Some of the shops have an express bay designed for quick inspections and repairs that take only about 45 minutes. "This keeps drivers near the units and returns the truck to the road quickly," Kading says. Trailers are inspected every time they are at an operating center and receive preventive maintenance every 90 days.

Kading points out that Schneider National's database lists more than 26,000 vendors that can be called upon for emergency service, one more way the parent company's foundation aids its bulk division. Added to that is the expertise of engineers, purchasing personnel, and warranty specialists. "We look to them for consultation and support," he says.

Another part of the foundation is Schneider National's ability to manage logistics, says Don Schneider. Recently, professors from Purdue University conducted a study of the company's logistics management. "They said they were impressed with our management, but they were equally impressed by the spirit, energy, and quality of the people. I told them that's really what makes us."

Arves agrees that performance has shaped the company since its founding. The bulk division practices service and cost-effective transportation by providing appropriate equipment and accessories, utilizing safe handling techniques, and knowing and abiding by regulations, he says. Efficiency is a company by-word.

With Schneider National's financial strength and stability in place, Arves says the bulk division is confident it can meet the demands of the marketplace today and in the future.

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