Indiana-based Koester Transport Operates with Family Philosophy

THE KOESTER family, owners of Koester Milk Transport, have the best of two worlds back home in southern Indiana. Number one, they operate a successful business and, number two, they run it from the comfort of their farm in the rolling hills of the Hoosier State.

It's not surprising that the Koesters-Jim and Elise and their son, Eric - have a family-owned business, considering that Jim is a fourth-generation Indiana dairyman. A daughter, Kimberly, is a college student. Jim's parents and siblings continue to farm 2,500 acres of owned and leased land in Wadesville where they all live. The owned property has been in the family since the mid-1840s, so naturally tradition runs deep.

However, historical precedence hasn't taken the place of modern management. Koester Transport operates two terminals, one at the homestead and another 180 miles away in Springfield, Kentucky. Eleven tractor-trailer rigs are based in Indiana, and four triaxle tank trucks are in Kentucky. The tractors are either owned or on a lease/purchase arrangement.

Two of the Indiana units are parked in Holland, Indiana, at drivers' homes, two at an Evansville, Indiana, processor, and the rest at the Wadesville location. About two-thirds of the company's annual revenue is derived from the Indiana operation and the remainder from Kentucky, says Jim Koester. The company hauls about 140-150 million pounds of milkannually. The peak season extends from mid-December through May.

Koester Transport vehicles pick up milk at about 80 farms in each state and deliver it to nearby processors. In addition, the company provides transportation for milk and cream from the processor to processing plants as far away as Wisconsin and Pennsylvania. In Indiana, Koester hauls for Ideal American Dairy in nearby Evansville and Holland Dairy in Holland. The Kentucky trucks are dedicated to a Kroger Inc processing plant in Winchester, Kentucky, and are used to pick up milk from farms in a 50-mile radius of the plant.

"We are in a special position," says Jim. "We handle product from the farmer to the manufacturer. We understand a lot of their problems. I try to stay involved so I can know the industry."

Jim began his involvement as a child on his parents' farm and continued until he and Elise were married in 1974. The transition from milking cows to hauling milk seemed a natural progression for the couple. They started the company by purchasing farm routes and two 2,100-gallon tank trucks from an operator who was ready to retire. Jim continued to work on the family farm when he wasn't picking up and delivering milk. As the business gained momentum, the Koesters bought another truck and route, and began hiring drivers. In 1994 Jim and Elise acquired their first transport.

"We wanted to have the equipment so that we could answer to the needs of the market," she recalls.

A fresh opportunity arose in 1997 when the Kentucky routes and vehicles became available. However, the couple knew they would need an additional person to help manage the expanding company, so they discussed the project with Eric, who still had a year of college to complete. He was encouraged by his parents to complete his education first and then join the company. He graduated from Purdue University in 1998 with a major in agriculture economics. Eager to practice what he had learned in college and observed of the business at home, he joined his parents. Today, Jim directs operations while Eric assists his dad, and handles accounting and payroll. Elise takes care of orders that come in via fax and phone and other administrative duties. Jim still gives a hand on the family farm, which produces alfalfa, corn, wheat, and soybeans.

As the milk transportation business has expanded, the work has become more demanding, but purchase of the Kentucky operation came with what turned out to be a fortuitous circumstance. The former owner had just hired a manager who, the Koesters learned, was the nephew of a member of the National Federation of Milk Haulers. Active members of the association, the Koesters knew the uncle and say they feel lucky to have his nephew, Chuck Hagan, on board.

The family touch spills over to company drivers - 10 based in Indiana and five in Kentucky. Jim says that retention is not a serious problem. The Koesters know all their drivers and interact with them on a regular basis.

"We strive to retain employees by providing health insurance, uniforms, and have set up a retirement plan," Elise said. Two have been with the company more than 10 years. A few may run over-the-road occasionally, but for the most part, they travel the same local farm routes on a seven-day-on, three-day-off schedule.

Indiana's rural roads, hilly countryside, and narrow drives at farms can be a challenge for the drivers. "We don't want them turning through the farmers' yards," says Jim. The terrain is another reason Koester prefers tank trucks rather than the harder to maneuver tank trailers and tractors.

The majority of the farms served are typical of the 70 to 200 cow herds found in the area. Most breeds are Holstein with a few Jersey and Guernsey still being used. The farms continue to be family-owned. Milk production usually requires pick up every two days, occasionally daily.

About 25 of the farms are run by members of the Amish sect, which means drivers may be negotiating around children, horses, buggies, wagons, and various horse-drawn farm equipment.

The Amish farms have no electricity, so product must be pumped by a gasoline-driven pump mounted on the trailer. Despite the inconveniences, the runs can be rewarding, says Jim, noting that the drivers are treated to home-cooked baked goods made by the farmers' wives.

Drivers must have a commercial driver license (CDL) with tank endorsement. They must have a state board of health license permit that is required by both Kentucky and Indiana. They are trained to take milk samples before loading and are evaluated by state inspectors on a quarterly basis.

The Koesters emphasize cleanliness for drivers and equipment. "We expect the trucks to be kept sanitary," says Jim. "We want our drivers to look professional. We supply the uniforms that convey this message to our customers."

In conjunction with the emphasis on vehicle cleanliness is preventive maintenance. Eric and Jim perform minor repairs on brakes and tires. Other minor repairs are sent to a local facility, Freeman Repairs in Wadesville. Major work on all the vehicles is conducted by Bluegrass Tank and Equipment Co in Elizabethtown, Kentucky. Service is scheduled every 10,000 miles.

Tanks are washed at the dairy plant. After the milk is unloaded, tank interiors are washed by plant personnel using the clean-in-place (CIP) system mounted in each cargo tank. The newest insulated stainless steel tank trailers in the fleet come from Walker Stainless Equipment Co and have either 6,500- or 6,200-gallon capacities. Thomsen foodgrade discharge valves and fittings, Run-O-Vent vents, and Walker manlids and dust covers are part of the tank specifications.

Typically, the rear two-door cabinet contains a foodgrade stainless steel ITT-Jabsco pump. Some of the trailers used at the farms without electricity have a Honda gasoline engine to drive the pump.

Hendrickson Intraax air suspensions have been specified on the newest trailers in the fleet. Landing gear are supplied by Jost International.

The triaxle tank trucks generally have Walker 5,500-gallon insulated stainless steel tanks with Jabsco pumps, Run-O-Vent vents, and Thomsen foodgrade valves. Kenworth, Freightliner, International, and Ford are among the truck makes used.

Koester has Freightliner, Kenworth, and International tractors in the fleet. The Freightliners are powered by Cummins 390-horsepower engines and have Fuller 10-speed transmissions. Kenworths are equipped with Cummins 360-hp engines and Fuller 10-speed transmissions. Internationals have Detroit Diesel, Caterpillar, and Cummins engines. Transmissions are from Fuller.

Fleet equipment kept in good running order is a significant part of the Koesters' determination to maintain an efficient operation in a specialized foodgrade market. As for the future, they will be keeping an open mind toward other related opportunities as well as possibilities for diversification. Whatever fate brings, especially if the past is any indication, it seems likely a family philosophy will be used when making decisions. That means that even with growth and expansion, the Koesters will retain the down-home spirit of Indiana and the work ethic handed down through generations of farming.

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