DURING the coldest winter months, vehicle downtime becomes a critical factor in a propane transporter's ability to meet customer needs. Lost business can never be regained, and the impact on customers can be severe.
These concerns were key factors in helping Hercules Transport Inc to develop a maintenance strategy that offers maximum flexibility. The Choudrant, Louisiana-based tank truck carrier uses a combination of in-house shops and outside contractors to meet its needs.
“Downtime costs everybody money, and this includes our drivers, some of them owner-operators,” says Tom O'Neal, Hercules Transport president. “This is such a challenging market today that we must do everything in our power to protect the business we have. The last thing we want is to have a shipment stranded en route to a customer.”
The attention paid to issues such as maintenance has helped ensure steady growth for the 29-year-old tank truck carrier. From just a couple of propane transports, the company built a fleet that now consists of 75 tractors and 120 trailers distributed among four terminals in Louisiana and Texas.
With the growth came a need to consolidate the corporate management team in a central location. “We moved the Hercules Transport main office from the Baton Rouge (Louisiana) area to Choudrant in the second half of 2001 because we needed better control over the fleet and O'Nealgas, both of which are owned by my family,” O'Neal says. “We were able to put all of our corporate officers together in one location. It was a challenge to manage effectively when we were spread out. For instance, I was in Baton Rouge, and our CFO (chief financial officer) lived in Choudrant. Now, we have a more effective management team, and we're better-positioned for future growth.”
The carrier came into being after O'Nealgas purchased Hercules Underground Storage in 1973. O'Neal Gas is a thriving retail propane distributor in north central Louisiana. It sells approximately 4.5 million gallons of propane annually, and is a top 20 customer for Hercules Transport.
Propane remains important for Hercules Transport, but it is hardly the sole product focus. The carrier also hauls butane, propylene, and anhydrous ammonia in its MC330/331 transports. Oil well drilling chemicals are providing further growth opportunities.
“We've benefited from steady growth in demand for propane, and that trend doesn't seem likely to end,” O'Neal says. “The population continues to grow in Louisiana and other southeastern states, and residential demand for propane has increased steadily over the past couple of years. More people are moving into rural areas to get out of the cities.
“Trucks remain a crucial component in the propane distribution process, especially in the winter. The pipeline infrastructure hasn't been enlarged enough and can't keep up with demand. The railroads also can't keep pace.”
Success as a transporter of propane brought opportunities for growth into other products. First came anhydrous ammonia. “This was a natural because anhydrous ammonia, like propane, is refined from natural gas and petroleum,” O'Neal says.
Most of the anhydrous ammonia hauled by Hercules Transport goes into fertilizer. However, one customer is using ammonia to scrub emissions from a refuse incineration process.
Petrochemicals were another outgrowth of the propane business. First came propylene, followed by other petrochemical products. “We've lost some of our propylene business to pipeline, but we're benefiting from the continued overall growth in petrochemicals,” O'Neal says. “The petrochemical industry is down right now, but hopefully it should recover by next year. We should see significant demand for tank truck transport at that point. It just takes staying power, which we think we've got.”
This is certainly a challenging time, though. Chemical activity began to slow in the last half of 2000, and the sluggishness has placed significant downward pressure on tank truck rates. “The tank truck industry has been a low-margin business in recent years, and it's worse today,” O'Neal says. “You have to be smart to survive.”
Low freight rates aren't the only difficulty. Insurance rates that began rising in late 2000 surged following the terrorist attacks of September 11, 2001. “Our liability and health insurance will increase by $350,000 this year, or about 40%,” he says. “We expect a 20% to 40% increase in worker compensation coverage even though we have a good safety record.”
Higher insurance rates and other cost pressures have brought home the importance of a good maintenance program for Hercules Transport. “The last thing any fleet wants is to have equipment broken down out on the road,” O'Neal says. “That can become expensive very quickly.”
To meet its needs in the most cost effective manner, Hercules Transport uses a combination of its own maintenance facilities and commercial shops. The in-house capability gives the carrier an opportunity to keep a closer eye on maintenance costs.
In-house maintenance is provided at the company terminals in Baton Rouge, Choudrant, and Rayne, Louisiana, and LaPorte, Texas. The Baton Rouge shop is the largest with four mechanics. The largest terminal is in LaPorte.
“We've got 20 tractors and 49 trailers at the LaPorte terminal,” says terminal manager Robert Phillips. “Virtually all of the Hercules Transport chemical hauling is out of this terminal.”
One mechanic works in the carrier's single-bay shop at the LaPorte terminal. However, the 14-acre facility also contains a six-bay shop that is leased to Mobile Fleet Service, a commercial maintenance provider that handles most of the repair and service work needed by the Hercules Transport tractors and trailers domiciled at the terminal. A J Truck and Trailer, a CT-registered trailer shop, should be operational at the terminal before the end of February.
“We've had good success with Mobile Fleet Service, and we find it more cost-effective to use them, because they warranty all of their work,” Phillips says. “That's important, because the chemical loads we haul from the Houston (Texas) area are delivered to customers across the United States and Canada.
“Once A J Truck and Trailer is up and running, we will use it for tank tests and inspections. In addition to the federal CT number, they also have to obtain certification from the Texas Railroad Commission, which regulates propane trailers in this state.”
In addition to A J Truck and Trailer, Hercules Transport relies on a variety of commercial facilities for cargo tank service and repairs. These include Polar Service Center in Port Allen, Louisiana, and Brenner Tank Houston (Texas).
Tank trailers are serviced monthly, and tractors are on a 10,000-mile preventive-maintenance sequence. Tires receive close attention and are a key responsibility of the company shops. “If you take proper care of tires, you can virtually eliminate tire downtime on the road,” O'Neal says. “We're not there yet, but we're getting better.”
Keeping the correct air pressure in the tires and keeping vehicles aligned goes a long way toward eliminating flats, according to O'Neal. Laser alignment is done at the Baton Rouge shop.
Hoses, especially those on the MC330/331 trailers, also get close attention. The federal hose-testing requirement has been beneficial, O'Neal says. It has boosted safety awareness and probably has prevented some hose-related problems.
“Hoses are easy to overlook,” he says. “They are something that we all take for granted.”
The newest propane hoses being purchased by the fleet have the Smart-Hose passive shutdown system. These hoses are going on petroleum transports as they come due for the five-year pressure retest. Passive shutdown systems are required on new and used petroleum transports, and all retrofit must be completed by 2006.
“We feel that Smart-Hose is the most efficient, cost-effective choice for our fleet,” O'Neal says. “It doesn't require any equipment installation on our trailers.”
About 80 of the tank trailers in the Hercules Transport fleet are MC330/331 units. The newest transports were built by Mississippi Tank and have a 10,500-gallon capacity. They are specified with a 265-psi working pressure.
Product handling equipment includes hydraulically powered Blackmer pumps. The tanks also have Fisher and RegO valves.
The newest chemical trailers are 7,000-gallon DOT407 units. The carrier runs a varied chemical fleet that includes straight-barrel and double-conical units, insulated and uninsulated. A majority of the trailers are set up for bottom loading with Civacon API adapters and Scully overfill protection.
Freightliner Columbia conventionals are the newest tractors in the fleet. They were specified with 12.7 liter Detroit Diesel Series 60 engines rated at 430/470 horsepower, 10-speed Eaton Fuller transmission, and 40,000-lb capacity Eaton drive tandem.
“We took delivery on 10 of these new tractors over the past summer,” O'Neal says. “With the specifications we used, we were able to drop 500 pounds from the tare weight. Part of the weight savings came from a single 100-gallon fuel tank.”
The new tractors are part of an overall effort to provide a pleasant work environment for the drivers. “We've built a stable team of drivers, and we want to keep them,” O'Neal says. “They are the best group we've ever employed.”
Hercules Transport offers a performance-based, competitive pay structure. After five years with the company, drivers qualify for a senior driver bonus. Safety bonuses also are paid.
Building a strong driver team means finding the right people. O'Neal says the ideal candidate is a middle-aged driver with tank experience. The minimum age considered by the carrier is 25 years.
“We are bringing in less-experienced drivers and putting them through in-house training,” O'Neal says. “Some of them come out of Louisiana vo-tech schools. The schools have been very good at sending us some of their best graduates. We look for the ones who we feel are qualified to haul hazardous materials.”
New hires spend approximately 10 days in classroom training, learning about safety procedures, paperwork, product characteristics, and customer relations. At least three weeks are spent in on-the-job training with a driver trainer. The progress of the newly hired driver is evaluated throughout the training process.
As the initial training winds down, new drivers will work closely with a veteran Hercules Transport driver. “We'll piggyback the new driver with a veteran for two to three weeks,” O'Neal says. “We start our new hires on shorter hauls and keep it as simple as possible. Whenever possible, we bring new hires in during the slower times of the year.”
The driver team, combined with the well-maintained fleet, enables Hercules Transport to provide the superb service that customers have come to expect.