Acquisitions Strengthen Competitive Position of Liquid Transport Corp

Oct. 1, 1999
A COUPLE of strategic acquisitions over the past two years vaulted Liquid Transport Corp, Greenfield, Indiana, into position as one of the 15 largest

A COUPLE of strategic acquisitions over the past two years vaulted Liquid Transport Corp, Greenfield, Indiana, into position as one of the 15 largest US tank truck carriers. In addition, relentless pursuit of the latest technologies and management techniques have made the carrier a fierce competitor.

With revenues of $84 million, Liquid Transport ranked 12th in the 1998 Modern Bulk Transporter Gross Revenue report. Two years earlier, the tank truck carrier was ranked 24th in size with revenues of $52.6 million. Management is determined to break the $150 million barrier by the end of 2000.

"Ten years ago, we put together a long-term strategy to be in the $75 million to $100 million range by 1999," says Lanny Wilhelm, Liquid Transport president. "We have achieved that goal and will be at around $105 million by the end of the year.

"We realized when we assembled the plan that Liquid Transport had to get bigger to be a major factor in the tank truck industry. We needed to expand in the Midwest, and we had to increase our customer base. We wanted to diversify into new types of business.

"In addition, we want customers and potential customers to see us as a carrier with staying power. We believe the chemical manufacturer ranks will continue to shrink over the next three to five years. We want to be attractive to these much-larger shippers."

Success came through several avenues. Topping the list were two strategic acquisitions over the past two years. Liquid Transport purchased Kaw Transport Company, Kansas City, Missouri, in April 1998. Mississippi Transport Inc was added in January 1999.

Kaw Transport was fully integrated into the Liquid Transport operation, while Mississippi Transport has been left as a free-standing division.

With the Kaw Transport and Mississippi Transport fleets added in, the Liquid Transport fleet now stands at 700 power units and 1,275 trailers. The fleet is dispersed among 26 terminals across the eastern half of the United States.

"These acquisitions were crucial to our growth plan," Wilhelm says. "It just takes too long to achieve significant growth through internal efforts alone. We want to expand by about 8% to 10% a year, which means we'll be making more acquisitions in the future.

"We're concentrating on candidates in the Midwest and Gulf Coast for the next round. We want well-managed companies with good financials and good equipment. We're looking for similar traffic lanes that will let us increase productivity."

Alliance Potential Rex Ecoff, Liquid Transport chairman, adds that the carrier also will pursue alliances and other joint marketing programs. "We believe we'll need to align with other bulk carriers to compete effectively in the future," he says.

Alliances will be evaluated just as carefully as mergers and acquisitions. Each arrangement must enhance Liquid Transport's ability to compete.

For instance, the Kaw Transport deal brought in petroleum, asphalt, and dry bulk business, along with two rail transloading facilities. Mississippi Transport added still more petroleum business, as well as an entree into cryogenic products.

Responsibility for evaluating the merits of each acquisition opportunity falls on a skilled management team. Every member of the Liquid Transport management team is an industry veteran with years of experience.

The management team also leads the way in communicating the quality and customer-commitment messages to all levels of the organization. The company no longer has a free-standing quality department. Today, every employee is expected to be a quality manager, and the quality focus starts at the top.

"It's the way we have to do business today," says Pete Legere, Liquid Transport vice-president of training & development. "Management still tracks, measures, and benchmarks, but quality is everybody's job today. Customers want performance rates of 98% to 99%, and that calls for a sophisticated approach to quality control and improvement.

"Customers want proof that we have a working quality program. They want to know that frontline managers are involved and that the employees in the field have a good understanding of expectations."

Quality Certification A few years ago, ISO 9002 certification was part of the proof that was called for. Legere says that the emphasis today is on ensuring that tank truck carriers are ISO-ready. "We see the whole ISO-9002 concept evolving into something far different in the future," he adds. "The concept will be absorbed into the way companies do business, much like what has happened with many quality programs."

Still, Liquid Transport has obtained ISO-9002 certification at four terminals: Pleasant Valley and Kansas City, Missouri; Shreveport, Louisiana; and Pasadena, Texas. Rail transloading is performed at the Kansas City location, and the other facilities handle tank containers, as well as tank trailers.

The carrier also has qualified as a Responsible Care Partner. The performance-based program was developed by the Chemical Manufacturers Association in 1988.

Meeting customer needs and expectations has been a key factor in Liquid Transport's effort to aggressively expand services and adopt the latest technologies. "Shippers' transportation departments are getting smaller and smaller," says Arthur G Bortolini, Liquid Transport vice-president of finance. "We're trying to help them handle business without spending hours on the phone. Our goal is to be a single-source supplier as much as possible. We are the single-source carrier for 20 customers."

Diverse Capabilities Liquid Transport has become much more than a traditional tank truck carrier. Intermodal operations are expanding steadily. The carrier now has rail transloading yards in Worcester, Massachusetts, and Kansas City. Intermediate bulk containers are being handled at locations in West Virginia, and tank container drayage continues to grow.

"We're handling 50 to 100 tank containers a day out of each of our six tank container depots," says John Miskimen, Liquid Transport vice-president of operations. "The depots are in Charleston, West Virginia; Houston, Texas; Kansas City, Missouri; Cincinnati, Ohio; Jacksonville, Florida; and Charleston, South Carolina. Each has lift and storage capabilities. Distributed among them are 200 dropframe tank container chassis, including seven with hydraulic hoists."

With its Logistics Group, the carrier is providing a variety of in-plant services, such as scheduling tank and packaged freight shipments and loading shipments. Liquid Transport employees are even in place at some customer locations.

Liquid Transport recently initiated a new on-site logistics operation at the Equistar plant in Tuscola, Illinois. In addition to handling all outbound bulk trucking shipments from the plant, the carrier was awarded control of scheduling for outbound package shipments, production scheduling, and rail inventory. The carrier is tied into the Equistar SAP computer system.

The most comprehensive single-source program is in place at the Albright & Wilson Americas plant in Charleston, South Carolina. Services include operation of a Trackmobile 4500 TM vehicle for moving rail cars within the Albright & Wilson plant. Liquid Transport actually bought the Trackmobile unit, which is operated by two Liquid Transport employees.

Responding to customer requests for still more services, Liquid Transport executives are well into the planning process for a major chemical distribution facility that will be located in the Southeast. Plans are to break ground in early 2000, and the facility should be operational in about 13 months.

Tentative plans call for the facility to have aboveground storage of around 2 1/2 million gallons. Additional services would include warehousing with packaging capabilities, along with tankcar cleaning and repair.

"It will be another added value for our customers, and a new source of revenue for us," Miskimen says. "It's another way to enhance our trucking services. We already supply storage tank trailers, and we have up to 200 trailers in storage service every month. We've had that for years, and it's a good source of revenue."

Technology has become a crucial tool in Liquid Transport's efforts to provide more customer-friendly services. The Internet has been especially important. Liquid Transport's web site ( has been operational since 1994 and is being constantly expanded and enhanced.

"We were one of the first tank truck carriers to have a web site," Bortolini says. "From a marketing standpoint, it helps us get a foot in the door. A lot of potential customers contact us through our web site asking for information on our services. We've gotten new business over the Internet. We've quoted business, sent contracts, and done it all without any live contact.

"We believe we'll benefit even more from the Internet in the future, and we're looking at new ways to do web site marketing. We have one major customer that uses our web site to track shipments. We'll see more of that in the future, and we believe the Internet will replace EDI (electronic data interchange)."

The Internet isn't the only tool used in the marketing effort. Rita Datzek, manager of customer service at Liquid Transport, has developed a very effective telemarketing program built around GoldMine software. The program has built-in sales forecasting, opportunity management, quota management, and leads analysis. The software can automatically capture sales leads generated by the web site, and the e-mail component links messages to customer records. Datzek also uses a chemical company database on CD-ROM.

"We've had the telemarketing program in place for about nine years, and it has brought in quite a lot of new business," she says. "We target areas where we have a surplus of trucks."

McLeod System Marketing efforts have been enhanced by a new computer system that was installed this year. The new system has been especially beneficial for the Load Planning Center, which has the responsibility for coordinating fleet operations throughout the system. The center was moved to Charleston, South Carolina, a year and a half ago so it would be closer to the carrier's major customers.

The computer system selected by Liquid Transport is McLeod Software's LoadMaster transportation management program, which is running on an IBM RS 6000 mainframe. Desktop PCs throughout the Liquid Transport system are networked through frame relays.

"The software was heavily modified to meet our needs, Bortolini says. "This new system was a big investment for us, but it was part of our effort to serve customers at the lowest cost.

"One of the most important features of the McLeod system is its document scanning ability. Our goal is to eliminate all paper documents, and we have made considerable progress. We create a file for each customer on our system, and we store all applicable electronic documents in the file.

"Unfortunately, we haven't yet reached a point of being able to reduce the driver's paperwork. Many customers use our drivers as part of their plant quality process to prevent shipping mistakes. They want the drivers to have hard copies of the shipping documents."

Satellite Tracking Drivers are becoming more and more involved with computer technology on various levels. For instance, the carrier has installed satellite communication units in some tractors. "We're putting these units in tractors where it's required by our customers," Miskimen says. "It would be a tremendous investment if we were to equip the whole fleet."

Earlier this year, the carrier began testing the Pre-Pass system, which reduces the need to stop at weigh stations in participating states. States in the program include California, Arizona, Indiana, Ohio, West Virginia, South Carolina, Georgia, New Mexico, Tennessee, and Texas. The Pre-Pass system consists of transponders in vehicles and receivers placed above the highway at scale entrances.

As a vehicle approaches the scale, the transponder sends a message to the receiver to verify unit information, confirm all permitting, and indicate a satisfactory safety rating. Once all verifications are complete, a message is sent back to the transponder giving the driver a green light, which means he has permission to bypass the scale. A random number (approximately 5%) of verified vehicles are pulled over to the scale.

"The benefits to the drivers in eliminating delays are obvious, and the system is relatively inexpensive," Miskimen says. "We pay 88 cents for each successful bypass. The transponders are provided at no cost. We've decided to install them in all company tractors in over-the-road service. The program also is available to our owner-operators."

According to executives at Liquid Transport, there has been virtually no resistance to any computer technologies that have been proposed for the company tractors. In fact, quite the opposite is true.

"Many of these people are very technologically astute," Legere says. "The Internet is no longer a toy for them. It's a tool. Over half of recent applicants have looked us up on the Internet. A majority of our drivers have Internet access at home, and we know they are using that means for tracking 401K results. Perhaps a quarter of our owner-operators carry laptop computers with them on the road, and it's probable that they have e-mail accounts and Internet access.

"These are the technologically savvy drivers that we want working for this company, and we have put a lot of effort into creating an environment that will attract them. We believe we've been in the forefront of building a good environment for drivers. Every manager in the company is involved in some way."

To that end, Liquid Transport requires managers at all levels to attend Situational Leadership Training. "From lead dispatchers on up through the management chain, we're teaching them how to develop people, how to identify levels of expertise, and ways to resolve conflict," Legere says. "This enhances our ability to develop more new management level people from within, and it's one of the factors that attracts drivers to our team."

Most importantly, programs like the Situational Leadership Training play a role in keeping valuable employees. "People are our most important resource today," says Sarah P Shaw, Liquid Transport vice-president of human resources. "It's only recently that we have begun to believe that in this industry. At Liquid Transport, we've made it a top-down philosophy. It's paying off because our driver turnover rate doesn't exceed 43%."

A majority (65%) of the 700 drivers on the Liquid Transport team are owner-operators. "Owner-operators perform well for us," Legere says. "They are very good independent businessmen, and they are as attuned to safety as anyone in this company. We put owner-operators on some of the most sensitive business we handle."

Selection Criteria Basic selection criteria are the same for both owner-operators and company drivers. The minimum age is 25 years old. The carrier prefers applicants with at least four years of over-the-road truck driving experience, two of those with tanks. A commercial driver license with hazardous materials and tank endorsements is mandatory.

A good safety record is required. To be hired, an applicant can have no more than two moving violations and no chargeable accidents, driving-under-the-influence convictions, or license suspensions in the past 36 months.

In addition, Liquid Transport rejects applicants with more than three job changes in the past 36 months. "Besides a good safety record, we want stability," Legere says. "We look carefully at anyone with more than three jobs in the past 10 years. We want to know why they have changed jobs. It's important to hire the right person, because it's expensive to discharge or lose someone."

Liquid Transport recently began administering profiling tests to driver applicants. "The larger we get, the more we need these types of systems," Shaw says. "We have statistics that show which types of people will be successful in truck driving. Basically, we're looking at behavior patterns."

Besides the basic selection process, owner-operators have additional requirements. Owner-operator tractors can be no more than seven years old and can't weigh more than 19,500 pounds. The tractors must carry all Liquid Transport markings, and the owners must install two- or three-inch pumps and 30-cfm compressors.

Driver Training Whether owner-operator or company drivers, new hires attend a four-day orientation. Most orientations are conducted at the terminal in Charleston, West Virginia. Training facilities also are in Kansas City, and the carrier has a safety trailer that can be taken to any terminal in the system. Typical class sizes are 10-12 drivers. The orientation concludes with a 100-question test.

Newly hired drivers are expected to go through the formal orientation within 30 days of starting work for the company. In addition, a newly hired driver must complete three qualification trips before being sent out on his own. The training doesn't stop there. Hazardous materials training is repeated every three years, and other retraining is done as part of corrective action or at customer request. Safety is stressed throughout the training process. Safety meetings are held quarterly, and safe performance is promoted through a quarterly bonus program. Bonuses are calculated at 3% to 5% of the previous quarter's earnings.

Liquid Transport has a driver-of-the-year program. In 1998, honors went to Merle Hollingsworth at the Tuscola terminal. A Liquid Transport driver for the past 36 years, he received a plaque, special decal for his tractor, $500, and a driver-of-the-year jacket.

Hollingsworth wasn't the only Liquid Transport driver winning special awards last year. Lawsky Routh was named Indiana Motor Transport Association 1998 Driver of the Year, making him the third Liquid Transport driver to win the award in the past 12 years.

Safe Equipment Liquid Transport takes care of its drivers by providing them with equipment that is specified for safe and efficient performance. Company tractors also provide plenty of comfort.

The newest tractors in the fleet are Freightliner Century Class conventionals with 48-inch mid-roof sleepers. Weight with fuel and driver is approximately 17,000 pounds. Cab enhancements include National Cush-N-Aire II high-back, air-suspension driver seats, extra insulation, tilting-telescoping steering wheel, AM-FM radio with weather band, heated side mirrors, and tinted windshield.

"While we have a few team operations, most of our tractors are set up for single-driver use," says A Keith Lewis, Liquid Transport senior vice-president. "We believe more team operations may be needed after the new federal hours-of-service regulations are announced. The latest government proposal would cut productivity."

The tractors are powered by Cummins N14 engines rated for 435 horsepower at 1800 rpm. The engines are delivering 7 to 7.4 miles per gallon. Other drivetrain components include a 10-speed Meritor RM10-145A transmission, Meritor clutch, Meritor RT-40-145 drive tandem with a 2.80 ratio, and Meritor driveline. Synthetic lubricants are used in the transmission and differential.

Total fuel capacity is 180 gallons-a 110-gallon tank on the driver side and a 70-gallon tankon the passenger side. Among other components are a Holset 30-cfm compressor, Jacobs engine brake, Horton fan clutch, Phillips block heater, Delco Remy starter, TRW power steering, Bendix AD-9 air dryer, and Holland air-slide fifthwheel. Product handling equipment includes Roper pumps and Muncie PTOs.

The tractors come with four-channel Meritor-WABCO antilock braking and a 40,000-lb capacity air-ride suspension. Also part of the running gear are Alcoa aluminum disc wheels, Conmet aluminum hubs, and Michelin steel-belted radial tires.

Chemical Trailers The workhorse tank trailer in the fleet is a 7,000-gallon, single-compartment DOT407 chemical tank. Brenner Tank Inc is the primary supplier. Tare weight is around 11,800 pounds, and the trailers can carry a 48,000-lb payload.

"We have taken a number of steps to enhance the productivity of our standard trailers," Lewis says. "We specify stainless steel frames for low maintenance. We require a 300 degrees F temperature rating and 14-lb per gallon capability. This gives us more flexibility, and we've been able to do it without a weight penalty."

Constructed of 316 stainless steel, the DOT407 trailers are set up for rear discharge. Insulation is six inches of fiberglass with cork used over the bolsters. Hardware includes Betts six-lug domelids and Hydrolet discharge valves, Girard pressure- and vacuum-relief vents, and two cleanouts on top of the tank.

The walkway from the spill dam to the cleanouts is 19 inches wide. The curbside ladder has grabhandles at the top. Austin two-speed landing gear is standard on the trailers. A single 22-foot hose tube is mounted on each side at the rear of the trailer. Hoses are supplied by Hart Industries.

Running gear consists of Meritor axles, Reyco three-leaf spring suspension, Meritor S-cam brakes with automatic slack adjusters, steel disc wheels, and Michelin steel-belted radials.

Fleet Diversity With the recent acquisitions and through other growth, the trailer fleet is becoming more diversified. The chemical fleet includes multicompartment trailers with three to five compartments to meet special customer needs. Special cargoes include herbicides.

Recent equipment purchases include DOT406 petroleum transports from Polar Tank Trailer Inc and an order for 14 asphalt trailers that was split between Brenner and E D Etnyre & Company. The 9,300-gallon petroleum trailers have five compartments and are outfitted with Scully overfill protection, Emco Wheaton bottom-loading adapters, Knappco internal emergency valves, and Betts SmartVent domelids. The 7,500-gallon asphalt tanks are constructed of aluminum and have six inches of insulation.

Most of the dropframe tank container chassis have been supplied by Pratt Enterprises. Liquid Transport runs chassis with standard tandems, spread tandems, and triaxles. Three-stage hoists are specified on the chassis with lift capabilities.

Keeping the fleet in top running order calls for a strong proactive maintenance program. Liquid Transport has one "R" stamp trailer shop in Ashland, Kentucky, and six tractor shops.

The maintenance program ensures that equipment is ready to go to meet customer needs as safely and efficiently as possible. It is just one more factor that has made Liquid Transport a strong competitor.

About the Author

Charles Wilson

Charles E. Wilson has spent 20 years covering the tank truck, tank container, and storage terminal industries throughout North, South, and Central America. He has been editor of Bulk Transporter since 1989. Prior to that, Wilson was managing editor of Bulk Transporter and Refrigerated Transporter and associate editor of Trailer/Body Builders. Before joining the three publications in Houston TX, he wrote for various food industry trade publications in other parts of the country. Wilson has a bachelor's degree in journalism from the University of Kansas and served three years in the U.S. Army.