Differences Aside, Tank Truckers Have Common Interests in US, Europe

Jan. 1, 1998
Digest of the keynote speech given by Thomas Hoyer November 3, 1997, at the National Tank Truck Carriers Inc fourth annual Executive Strategies Forum

Digest of the keynote speech given by Thomas Hoyer November 3, 1997, at the National Tank Truck Carriers Inc fourth annual Executive Strategies Forum in Chicago, Illinois. Hoyer is managing director of Hoyer GmbH Internationale Fachspedition, Hamburg, Germany.

ALMOST 20 years ago, in 1978, I spent a year with Mason & Dixon Tank Lines in Kingsport, Tennessee. That year J B Hunt started with his first truck and Mason & Dixon employed more than 4,000 people. Today Mason & Dixon is gone and you all know what has happened to J B Hunt.

In those days, I thought our industry in Germany was heavily regulated until I saw the way things were in the United States. Mason & Dixon functioned almost like a public utility, as did other for-hire trucking companies. We dealt with endless paperwork, tariff books, hearings in Washington, batteries of lawyers, grievance committees, and so on. After President Jimmy Carter signed the (trucking industry) deregulation bill in 1980, many operators were not able to cope with the ice-cold wind of deregulation. In Germany, we had exactly the same situation 10 years later.

In 1987, DuPont invited me to a National Tank Truck Carriers conference in Toronto (Ontario) Canada, and I was asked a series of questions. Many points raised are still valid, though some are of less concern today.

What product transfer devices are in common use in your business environment? What is your experience with skid-resistant brake systems and jackknife protection systems? How is your business affected by the use of computers and electronic data interchange?

To what extent do national and local governments regulate hazardous materials, and what is the impact on your business? To what extent do drug and alcohol abuse present problems for your industry? Are language differences a problem in communication and documentation?

How do you deal with tank cleaning and the disposal of effluent? What types of intermodal transportation systems are prevalent in your operating environment? Do you view intermodal transportation as growing in importance in your market?

Do you seek longterm contractual relationships to meet the special needs of your customers? Do you view your customers as partners in reaching mutually beneficial goals?

Let me briefly introduce my company to you as a way of answering some of those questions. Hoyer is a family-owned bulk transportation and handling company that started out in 1946 hauling milk between Hamburg and Berlin in northern Germany. My father was from Hamburg, and our head office is there. He still comes to the office almost every day.

We run a fleet of about 1,500 tank transports and more than 5,000 tank containers. We have numerous cleaning facilities, workshops, storage terminals for liquids and dry bulk products, drumming facilities, intermediate bulk container (IBC) logistics, shredding plants for plastic drums, and so on. All functions add value to our core business which is bulk liquid, dry bulk, and gas transportation. Total sales this year will reach about US $500 million.

Our company mission statement contains the following: The strategic aim of Hoyer is to achieve qualitative market leadership globally in each business segment. All activities are geared to providing longterm customer satisfaction and meeting customer requirements in accordance with contracts.

I have found similar mission statements with larger US carriers. I feel that written mission and strategy statements are very important. We have a variety of cultures in Europe and many strong, independent managers in various countries who sometimes get funny ideas about where to make a buck!

We are a Total Quality Management (TQM) driven company. That includes everybody from the CEO to the driver. Hoyer was the first ISO 9002 certified transport company in Germany, and we are very much involved in the SQAS (Safety and Quality Assessment System) program launched by the European chemical industry council (CEFIC). Our latest move was to achieve ISO 14001 environmental certification.

Only a small portion of our business is contract based. The majority is still what we call spot business. Spot business is when we pick up a load, deliver, clean the tank, and look for a return load. This business in Europe is under tremendous price pressure. Despite a strong economic climate in the chemical industry, rates are still going down due to over-capacity in the market, EU deregulation, and the opening of the Eastern Bloc Countries.

Deregulation will commence in July 1998, and prohibitions against cabotage will end. The only capacity quotas will be between EU and non-EU countries. However, they won't have much effect on prices due to sufficient tank capacity.

With this bleak prospect in mind, we had two choices: to leave this market, which is our core business and competence, or to increase productivity and work smarter. We developed Hoyer Central Dispatch (HCD), a concept that is very familiar to US tank truck carriers. I remember that Matlack and Chemical Leaman called this function central control.

You might wonder why we didn't get such a great idea until 1997. The answer is that Europe is not America. We deal in many cultures, languages, and systems. A standard chemical tank trailer based in Oregon looks pretty much the same as one run by a Florida company.

You should look at our fleet. A Norwegian trailer-I am slightly overstating to make a point-has about as much to do with a Spanish trailer as a horse with a donkey. I always refer to your paradise situation in this respect as the "McDonalds principle." Even within the EU countries we have not reached completely harmonized bridge formulas, total lengths, and total axle weight limits. Social costs, tax benefits, and truck taxes still differ within the EU, although Brussels (where the EU regulatory bodies are based) tries hard to harmonize.

Thank goodness we have tank containers. This brings me straight to the topic of intermodal transport, a field where we really differ from your country. A quick view at the European map makes it quite clear why Europe is so suitable for intermodal transport. Water is everywhere and the Alps are a natural barrier that helped lead to this development. Today, we move 95% of our business between continental Europe and Italy with tank containers on flatcars (COFC). Another intermodal technique is called "Rolling Highway." We put a complete tractor-trailer unit on a rail flatcar. This is a dying species, but it is still done to a degree.

The eternal fight between road and rail in Europe at one stage reminded me of some religious war from the past. Things have calmed down now considerably. Despite the fact that road transport still grows much faster than rail transport due to its flexibility, we believe intermodal transport offers tremendous future growth potential for our company. Only those operators that are able to offer an international network will be accepted by the shipping community in coming years.

Our partners in intermodal transport-the railroad companies-are basically still state-owned and state-run monopolies. Things are changing now, but very slowly. A big discussion going on at this very moment is about opening national tracks to third parties and how to price these tracks. I could spend the rest of my life participating in working groups, political discussions, and such on these matters.

Like many before us, we tried to introduce intermodal transport with tank containers to the US based on our European experience. I must admit we haven't had much success so far. Still, one doesn't need much of a vision to forecast that one day more tank truckloads from Chicago to Houston will move with a tank container on rail.

It took us in Europe almost 20 years to look at tank trailers and tank containers, not as opposites, but complementary tank vessels with their own individual advantages and disadvantages. Depending on the specific weight and other factors, a tractor with a chassis and a tank container can make a beautiful tank truck.

Unions do not really affect our operation. However, many blue collar workers are members of the Transport Workers Union. We never have had conditions like those described by US trucking executives, who have stated that the reason for running an operating ratio better than 90% had a lot to do with being a non-union carrier somewhere in the South and not a union carrier in the North.

How could one possibly talk about American and European tank trucking and not mention insurance and liability? We have done business in America since 1979. We started out hauling imported Bavarian beer in specially insulated tank containers for Anheuser Busch on the East Coast.

Believe it or not, we had to put on the tank a warning label stating that excessive use of this wonderful beverage might cause harm to pregnant women. You should have seen the face of the brewer in Wurzburg, Bavaria. That certainly wasn't the only reaction.

A year ago, we had two tragic fatalities at our cleaning plant in Houston, Texas. What a difference from Europe in the way we had to deal with such a terrible accident. As a matter of fact, we never before had a fatal cleaning accident. We had fewer than 10 drivers killed in 51 years of service.

I love to argue with American lawyers about your legal system, which is incomprehensible and unpredictable for every European businessman. The strange thing is that every lawyer agrees with me but doesn't do anything to change it.

Our insurance costs are very reasonable and are less than one percent of total sales. In Germany, for instance, a well established truck and car insurer-we are his biggest customer-provides coverage without limit for public damage and liability. With today's globalization and the world growing smaller and closer every day, I wonder where we meet at the end of the day between our two legal cultures.

Let me touch on one final huge difference between your country and our continent, and that is why I am here: The National Tank Truck Carriers! We do not have anything like it in our system, which is a great pity.

Over the years, I have enjoyed tremendously receiving your newsletters and communicating with the staff and members. After all, I am an NTTC regional director of a foreign region together with colleagues from Japan and Mexico. Maybe one day, on a Pan-European level, we will be successful in founding something like the NTTC in Brussels.