SWAIN Oil Transport is a company on the move. The small San Diego, California-based petroleum hauler recently announced plans to expand operations into Arizona and Nevada.
Set to occur over the next couple of years, the expansion should provide the tank truck carrier with the opportunity to increase its fleet from seven transports to about 40 over the next decade, according to company officials. The move into the new markets will enable Swain Oil Transport to grow with key customers.
“Our first move will be to add operations in Phoenix, Arizona, during 2006,” says Scott Swain, president of Swain Oil Transport. “We'll probably wait until 2007 to set up shop in Las Vegas, Nevada. We plan to start with one or two transports in each location and grow from there.
“We making these moves in coordination with some of our key customers, including Costco and Sam's Clubs. These customers, along with other independent petroleum marketers, have been our focus and the key to our success. We've built strong relationships with them by providing personalized, flexible service.”
Around the clock
The petroleum hauler is ready to go 24 hours a day, seven days a week to meet customer needs. During 2005, the fleet hauled 332 million gallons of refined fuels, primarily in the greater San Diego area. Operations extend as far north as Los Angeles.
Swain Oil Transport has been serving independent petroleum marketers since 1994, when the operation was started with a single transport. “My father was a Mobil Oil jobber in the San Diego area, and I worked with him until 1992,” Swain says. “I wanted to stay in the oil industry, and I bought one of his truck-and-trailer units. That's how we got started.”
By 2001, the company was still very small with just three units. Along with many other small petroleum haulers across the United States, Swain Oil Transport faced its greatest challenge following the terrorist attacks in New York City and Washington DC on September 11.
“Our operating costs — especially insurance — absolutely soared after 9/11,” Swain says. “It was a moment of truth for us. We couldn't survive without getting bigger, and we had to do it quickly. We needed at least six trucks in our fleet to make the economics work out. That initial growth paid off, and now we're ready to start a second round.”
Technology benefit
Technology will help smooth the way for the expansion and will make Swain Oil Transport more competitive with larger petroleum haulers. “For a small company, we have a lot of technology in place,” Swain says. “We believe it's what we have to do to run an efficient and profitable operation. The technology also enables us to keep up with the big guys.”
Capabilities in place include software from Advent Business Systems, an on-line virtual office management product, and voice over Internet protocol (VoIP) phones. “It's an arrangement that makes it possible for us to run this company from any location,” Swain says. “With the Advent product, we should be fully paperless within six months. The only real holdup right now is at the petroleum terminal level. Our customers will be able to go on-line to review paperwork for any of their shipments.”
Technology is helping to improve fleet management and communication. Swain Oil Transport is installing satellite-based tracking units from Satellite Security Systems in all seven trucks in the fleet.
“We were very impressed when we saw the Satellite Security Systems product,” Swain says. “It uses web-based vehicle tracking, and one of the security benefits is that we can provide law enforcement officials with direct access to the system in the event of an emergency. Finally, it is cost-competitive.”
The system offers geofencing capability and is available with a remote truck shutdown option. It can track a vehicle to within 30 feet of its actual location, and tracking is updated every 15 minutes. Finally, the system serves as the driver's timecard tracking his work hours.
Busy fleet
With the expansion, the tank truck carrier will be busier than ever hauling a range of products that include gasoline, diesel, and ethanol. Due to California Air Resources Board mandate, most of the diesel marketed in the past year and a half in Southern California was refined as ultra low sulfur product.
“Hauling ULSD hasn't been any real problem for us,” says Doug Kenner, Swain Oil Transport operations manager. “That's because we haul it directly from the refinery to our customers. We don't have any special loading instructions with the exception of a drain-dry requirement. The refineries we operate out of have slop tanks for us to drain into.
“The only place we face any real difficulty is at the delivery point. Our drivers must make sure that they don't put product into the wrong customer storage tank. That can be costly. We have the same concern with gasoline/ethanol blends that are also mandated in Southern California.”
Opportunity for mis-drops certainly is there, because the current fleet of seven units averages 50 loads a day. The company's 18 drivers keep the vehicles moving. Drivers on the day shift handle five to six loads, while the night drivers average four loads per shift.
They do that under some of the most challenging traffic conditions in the United States. “It generally takes a driver about 5½ hours to make the roundtrip between San Diego and Long Beach (about 220 miles total),” Kenner says. “However, congestion sometimes slows traffic to the point that it can take two hours just to go 19 miles.”
Skilled professionals
It takes skilled truck drivers to handle the challenges, and Swain and Kenner believe Swain Oil Transport employs some of the best in the business. “We have great people working for this company, and we have very low turnover,” Kenner says. “We have mature professionals, most of whom are 35 to 40 years old.”
Turnover is a serious concern because it's tough to find truck drivers in San Diego. “Keeping the company small has helped with retention because we're able to provide a more personalized work environment,” Swain says.
He adds that the company will be impacted by the industry-wide driver shortage as it expands into Arizona and Nevada. To address that concern, the company developed a web-based search strategy to improve the process of finding new drivers, and it established ties with several truck driving schools.
Kenner says a number of factors will help attract new drivers as the company expands. First, Swain Oil Transport pays a competitive wage and provides its drivers with 50 to 60 hours of work each week. Second, the carrier runs a modern fleet that is very well maintained.
Leased tractors
While Peterbilt daycab conventionals were the fleet standard for trucks and tractors, Swain Oil Transport has opted to try some Freightliners with its next acquisitions. Regardless of make or model, the trucks are leased.
“Leasing works well for us making it possible to use our investment capital more effectively,” Swain says. “All of the Petes were supplied through PacLease or Paccar Financial. We're getting the Freightliners through TransLease Inc, a Colorado operation that does a lot of work with petroleum fleets.
“We try to set a lease term that lasts about as long as the warranty. Trucks already in service are on a five-year lease, but we are switching to a three-year term for future acquisitions.”
Trucks and tractors are specified with Caterpillar engines. The carrier is running both C12 and C13 engines rated for 370 to 425 horsepower, and all of the vehicles are fueled with 15-part-per-million ULSD. “We've had no problems with the fuel, Kenner says. “Our trucks are getting six to seven miles per gallon.”
Vehicles also are specified with 10-speed transmissions and a single-drive axle with a tag axle. In addition to Holland Kompensator fifthwheels, the newest units have Alcoa aluminum wheels and Bridgestone widebase single tires.
All of the petroleum trailers in the fleet were supplied by Heil Trailer International. “Heil builds a great product, and they stand behind it,” Kenner says. “We get a long life out of the trailers, and we don't replace them until the repair costs begin to escalate.”
The newest 9400-gallon semi-trailers have double-taper tanks with four compartments and double bulkheads between each compartment. “We can completely empty a trailer in about 22 minutes,” Kenner says.
Both Civacon and Scully overfill systems are used in the fleet. Other tank hardware includes Civacon internal valves and API adapters and Betts product outlets. Running gear includes Alcoa aluminum wheels, Michelin X-One single tires, and Hendrickson's Intraax air suspension with the Tiremax tire inflation system.
Fleet maintenance is handled through a commercial shop, Pacific Crest Services in San Diego. While tank tests and inspections are performed by Pacific Crest Services, code tank repairs are sent to Weld-It Company in Los Angeles.
Mechanics from Pacific Crest Services inspect all of the vehicles in the Swain Oil Transport fleet every day. They service the fleet tractors on a 10,000-mile schedule and trailers every 90 days.
The goal of the maintenance program is simple — make sure each vehicle in the fleet is ready to go 24/7, because Swain Oil Transport is a company on the move.