Pace of Change Marches On

July 1, 2001
CHANGE is an inevitable part of life for every industry. Nothing stands still. Knowing that doesn't make acceptance any easier, especially when an industry

CHANGE is an inevitable part of life for every industry. Nothing stands still. Knowing that doesn't make acceptance any easier, especially when an industry is experiencing fundamental changes at a rapid pace.

The bulk logistics industry is experiencing just that type of transformation right now. Marketplace pressures are bringing changes that will have a profound impact on the way products such as chemicals and petroleum are distributed in the future.

Companies that can't adapt or can't react quickly enough are being swept aside at an accelerating pace. Size alone is no guarantee of survival, either. Big companies just make a big mess when they come apart.

Two recent industry meetings give a good snapshot of the changes being experienced in the bulk logistics sector. The first event was the National Tank Truck Carriers (NTTC) annual meeting in May in Boston, Massachusetts. The second was the Independent Liquid Terminals Association (ILTA) annual conference in June in Houston, Texas.

Coverage of the NTTC annual meeting starts on page 30 of this issue. We'll report on the ILTA meeting in the August issue.

This year's NTTC meeting was very subdued in comparison to past conferences, and attendance was off. Executives in attendance seemed preoccupied with the pressures faced by their companies. There was a sense of an era passing.

Indeed it has. Some of the best-known names in the tank truck industry have gone away in the past few years. These include Chemical Leaman, one of the pioneers of this industry. Matlack, another pioneer, announced recently that it is selling off virtually all assets. For many years, these two companies were the largest tank truck carriers in the business.

The industry also has lost a significant number of suppliers. Some cargo tank manufacturers have shut down while others were acquired. Overall, annual production capacity has been reduced by about 1,000 units.

The storage terminal industry is undergoing its own consolidation. GATX, one of the founders of that industry, exited the business earlier this year. Change in the industry was a leading topic of discussion at the ILTA meeting.

Consolidation isn't all that is occurring. The fundamental structure of surviving companies is changing. The family-owned business is giving way to more impersonal corporate structures that are increasingly obsessed with the bottom line.

The drive to boost profits has led to waves of corporate reorganizations and staff reductions. For instance, storage terminal operators have eliminated thousands of employees over the past few years. This includes many key managers with years of experience. The remaining managers and workers have significantly higher workloads.

At the same time, a new type of manager is arriving at tank truck fleets and storage terminal operations. This person has no particular loyalty to the industry he serves. His is a bottom-line, financial focus.

This person may not be particularly interested in learning much about an industry in which he may spend only a small amount of time. He sees little value in the associations that serve the industry.

All of these changes point to a challenging future for the tank truck and storage terminal industries. The sense of family, especially as it existed in the tank truck industry, probably is gone for good.

However, the larger, more impersonal corporate entities that are emerging still have many of the same needs as the smaller, family-owned companies that they supplanted. They still need to work together with other companies to address issues that have an industrywide impact. They need to maintain a dialog with other companies in the industry.

With the arrival of the Bush Administration, some industry executives expressed a hope that the tank truck and storage terminal industries would see a four-year vacation from new environmental and workplace regulations. It's clear now that is not going to happen. Plenty of regulatory initiatives are on the way.

The need for a united industry front is just as important as it was in the past. The associations help fill that role. They also make it easier for the member companies to maintain a dialog with each other.

The impact of staff reductions is still to be seen. The greatest risk is that safety could be compromised. This is especially true with regard to maintenance operations at tank fleets and storage terminals.

Change is inevitable. The challenge is to ensure that the changes make the industry better, not worse.

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.