AT THE beginning of each year, Bill George presents the management team at Eagle Transport Corp with a framed list of key issues to be addressed companywide during the year. Usually, the list contains five items ranked in descending order of importance.
This year's list has just one item: Electronic onboard recorders (EOBRs). The Rocky Mount, North Carolina-based petroleum hauler has launched a $3-million effort to outfit every tractor in its fleet with one of the most advanced EOBR systems in the industry. The project started in the last quarter of 2006 and will be completed within 18-24 months.
“This is a major project for us, and we are totally focused on the successful rollout of this system,” says George, president of Eagle Transport. “This EOBR system will transform the way our company does business, and it should give us a significant competitive edge in our market. In essence, we are adding our drivers to the corporate computer network that links our headquarters, terminals, and customers.
“Our goal is to get 100% utilization out of this EOBR system. We're going to eliminate the 10 million pieces of paper that are generated each year within our operation. Much of the paper comes from the process of managing annual shipments of 450,000 loads of fuel. Only the bill of lading will remain when the system is fully operational.
“We're counting on the EOBR system to increase both revenue and profits. We believe we'll be able to attract customers who want the higher level of service that we'll be able to offer. At the same time, the system will help us cut operating costs through improved efficiency and elimination of paperwork errors.
“Log book errors also should be a thing of the past. The EOBR system has the capability to comply with federal requirements for electronic driver logs. In addition, we believe it is flexible enough to meet whatever hazmat security requirements are proposed by TSA (Transportation Security Administration) in the future.”
System rollout
Eagle Transport is rolling out the EOBR system to all 380 tractors in its fleet. Installation started during the fourth quarter of 2006 and was scheduled for completion by April 2007. A private contractor was handling the equipment installation, which was being conducted terminal by terminal, starting with locations in Florida.
The EOBR system chosen by Eagle Transport was developed by Microlise America, Coral Springs, Florida, and Eagle's EOBR project team consisting of the information technology support group and operations management. The system uses satellite and cell phone-based technology for communication and vehicle tracking. Hardware includes a handheld Symbol terminal that drivers use to process shipment-related data.
The system provides dynamic dispatch capabilities that enable Eagle Transport to adjust delivery schedules based on customer needs. It can update vehicle location as frequently as every two minutes.
Customer facilities and other key locations (shipping terminals) will be geofenced. The system will track a rolling-100 transit time to each delivery location, calculating average time in transit from petroleum terminal to c-store. “This will give us very precise data on driver and vehicle productivity,” George says.
On the handheld terminal, drivers receive maps of customer locations, customer site information, and detailed delivery instructions. In addition, they use the handheld computers for calculations related to product levels in storage tanks at customer locations. A final part of the rollout will add an audio mapping function (satellite navigation) that gives the driver directions while en route to the customer location.
The Microlise system has been configured to ensure that drivers load the correct gallons for the account and that the shipment of gasoline or diesel is delivered to the correct customer location. The system validates product quality, and verifies that the shipment will fit in the customer's storage tank without violating ullage requirements. It reconciles stick readings with tank capacity and gallons delivered.
Much of the transportation and delivery information is being made available to Eagle Transport customers. They can access the information through a secure web site link or via email. Data includes pending loads, en route loads, and delivered loads. All of this data is incorporated into Eagle Transport's inventory management system.
Installing this new EOBR system certainly is one of the most dramatic steps taken by Eagle Transport, but it's not unique. Over the years since the carrier was incorporated in 1969, the management team has shown a willingness to take bold initiatives. Along with George, the team is led by Chairman Don Stallings.
Stallings started the business, and that included driving one of the company's first two petroleum transports. However, he also was an All-American football player at the University of North Carolina and played professional football as a defensive end for the Washington Redskins.
Company culture
The company culture built by the leadership combines strong customer and employee relations with an aggressive growth strategy. It's been a winning combination, and management is confident that the new EOBR system will help take the company to the next level.
“There is no question that new technology is a key to our growth,” Stallings says. “We don't think any customer has had to wait for us to catch up on the technology side. However, we never forget that it is people who have made this company successful. We work hard to find and retain good managers and drivers. The best proof is that we have a lot of 15-20 year people on our team.”
That team has helped bring steady growth for the petroleum hauler. By the mid-1970s, Eagle Transport had become the largest propane carrier in North Carolina and operations had expanded into Virginia. More expansion followed in the 1980s with moves into Georgia and Florida that doubled the size of the operation in just 18 months.
In 1994, Eagle Transport changed direction somewhat and sold the propane side of the business to Wendell Transport, another North Carolina fuel hauler. Ten years later, Eagle Transport bought Wendell's gasoline hauling operation.
Growth in recent years has been particularly impressive. “We went from a $50-million-a-year carrier in 2001 to nearly $100 million a year in annual revenues in 2006,” George says. “That was a major milestone.”
Supply chain challenges
The financial success has come in a business that is increasingly difficult. “The petroleum supply chain faces serious challenges,” George says. “It's taking more equipment to haul the same amount of fuel. We're experiencing more pipeline and terminal shutdowns. The industry has to distribute something in the range of 40 different gasoline blends. The number of US refiners in the United States has declined over the past 20 years. Our petroleum supply chain has become fragile, and that's a dangerous situation for this country.”
George adds that he doesn't see much in the way of improvement in the near term. The situation isn't likely to get any better, but there is an upside: disarray brings opportunity for the astute petroleum hauler.
Today, the carrier has targeted those opportunities and is growing both through acquisition and internal opportunities. The geographic expansion has continued westward toward the Mississippi River and north into Pennsylvania, West Virginia, and eastern Kentucky. The carrier now has 700 drivers spread among 24 company-owned terminals in nine states.
Freestanding, company-owned terminals are an important part of the Eagle Transport operating strategy. Management believes the terminals help the carrier stand out with customers. In addition, the terminals help attract and retain drivers.
The carrier is building one to two new or replacement terminals each year. Each facility is designed for a 50-year life. The largest facilities in the Eagle Transport system consist of a building in excess of 15,000 square feet on up to 10 acres. Each terminal includes a maintenance shop, fuel island, office space, drivers' room with lockers, and a training room.
Driver team
At many terminals, there are more drivers than tractors. The company ratio is 1.86 drivers per tractor, and some terminals have a full double shift on every tractor. Each rig is expected to run 14 shifts a week.
“We have to do that to remain profitable,” says Herb Evans, executive vice-president of Eagle Transport. “We charge about three cents for transporting a gallon of gasoline that retails for $3. By maximizing fleet productivity, we're still able to achieve an average annual revenue per tractor of $235,000.”
The training room may be one of the busiest areas at each terminal. Driver productivity is just one of the topics covered in regular training sessions. The new EOBR system also is getting plenty of attention.
“We've been very impressed at how quickly our drivers have picked up the key operating features of the Microlise system,” George says. “They have been very accepting of the system because most of them see it as a time-saver. We believe the EOBR will save them 30 to 40 minutes a day, which could mean up to four additional loads a week per driver.”
Safety meetings are held in the training rooms. Monthly meetings last about 30 minutes, with hour-long safety meetings scheduled once each quarter. Meeting are organized by a safety team that includes two regional managers and four field safety coordinators, all of whom receive safety guidance from Bob Heinish, Eagle Transport vice-president of safety. Each meeting covers a central, corporate-wide topic as well as local issues.
Risk management
Meetings are just a part of a comprehensive program designed to maximize safety awareness and performance for every driver at Eagle Transport. The carrier uses a virtual risk management (VFRNM) program co-developed with Zurich Environmental Insurance to evaluate and rank driver performance.
The three-page report measures accidents, incidents, roadside inspections and violations, and motorist complaints. Each driver is given a score based on those factors. The higher the score, the higher the risk.
The safety team intervenes aggressively with any driver who reaches a threshold score of 60 points. Following an interview with the driver, safety managers set up a 90-day training program to address risky behavior. That is coupled with ride alongs by a field safety coordinator and the terminal manager.
A cadre of driver trainers also assists in the remedial instruction, as well as new-hire training. The carrier currently has a team of about 74 certified driver trainers, all of whom have successfully completed a program that shows them how to teach effectively. Feedback from these trainers is a crucial part of the driver selection program at Eagle Transport, and they have a key voice in which driver trainees are retained.
The driver trainers wear a distinctive uniform, because the carrier wants people to know that these are the best of the best. Trainers spend up to 25% of their time on driver training and receive additional pay for that. They are selected by terminal managers and field safety coordinators and must successfully complete an evaluation that examines personality, willingness to learn, and behavior.
Looking beyond training, Eagle Transport promotes safe performance with a variety of incentives. Quarterly and annual awards are available for safe performance, and some drivers qualify for up to $2,000 a year in bonuses. Forty-eight Eagle Transport drivers (who drove approximately 10 years without a preventable accident) have been honored with membership in the President's Million Mile Club.
Modern fleet
Equipment may be one of the biggest incentives. Eagle Transport drivers know that they will operate tractors and trailers that are outfitted with some of the latest productivity and safety technologies. The new EOBR system is a prime example.
Eagle Transport runs only Kenworth T800 daycab conventionals, and they are on a relatively fixed replacement schedule. The carrier typically buys about 80 to 100 new tractors each year, and these are for both replacement and growth, according to Richard Overman, Eagle Transport vice-president of maintenance.
For the past three years, Eagle Transport has been a participant in one of the CBC buying groups and has received several thousand dollars a year in rebates. “It's been a great program for us,” Overman says. “We get the maximum rebate every year.”
Last year was an exception to the standard buying schedule. Overman says the carrier pre-bought 150 new tractors in 2006 with delivery scheduled for 2007. “We don't plan to buy any new tractors this year,” he says. “We'll wait to see how the new engines perform with ultra low sulfur diesel and how reliable they are.”
Tractors now on order were specified with 450-horsepower Cummins ISX engines and Eaton AutoShift transmissions. In fact, the engine is the only part of the drivetrain that doesn't come from Eaton Corp.
Overman gives the 10-speed AutoShift transmission high marks. “We're getting four-tenths of a mile per gallon better fuel economy with the AutoShift,” he says. “We've also seen lower maintenance costs because we don't have to replace clutches. Slip-seating is easier, and driver fatigue is reduced.”
Some of the newest tractors are being tested with the Eaton roll stability system. Other components include Jacobs engine brakes, Eaton tandem-drive axles, Bridgestone radial tires, and Alcoa aluminum disc wheels.
About one fourth of the tractors in the fleet have Roper pumps, and the carrier recently spec'd three tractors with the pump control manifold system from Safety Pumping Systems. “We want to evaluate the ability of the Safety Pumping System units to prevent retained product,” Overman says.
Tank trailers
Each tractor typically is mated to a petroleum trailer in the Eagle Transport operation. All of the trailers are from Heil Trailer International. The newest units are low-profile tanks with five compartments and 9200-gallon capacity.
The carrier has standardized component specifications as much as possible on the tanks. Hardware includes Betts domelids and air-operated internal valves, Dixon-Bayco API adapters with sight glasses, and Scully overfill protection. Dixon-Bayco also supplies the delivery fittings, while product hoses are from Goodall and Kanaflex.
The carrier specifies trailer axles with a 77.5-inch track. Running gear includes Hendrickson's Intraax air suspension, and the carrier is testing some trailers with the Haldex roll stability system. For added safety, Eagle Transport puts a third brake light with a strobe on trailers based in states where it is allowed.
Constant refinement in the vehicle specifications has given Eagle Transport a very reliable and very modern fleet. The specifications help ensure low-maintenance service for the life cycle of every tractor and trailer in the fleet. Eagle Transport runs tractors five years and trailers for 15 years.
Most importantly, the fleet specifications were refined steadily over the years to help ensure that Eagle Transport can deliver the best possible service to its customers. The already high level of customer service will almost certainly be enhanced with the new EOBR system.
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