HUGH Hinton Jr, president of Sterling Transport Inc, sees plenty of reason for optimism in 2005. He believes construction activity will grow by approximately 20%, and his company is well positioned to benefit from that growth.
Construction activity across the Southeast has been a key source of new business for the Lakeview, North Carolina, tank truck carrier. In fact, management projects at least 15% growth in construction hauling over the next year. Additionally, the company should have plenty of work transporting propane this winter.
“The economy in our region continues to strengthen, and it's bringing more construction activity,” Hinton says. “It's been great for us. The propane side of the business also is expanding. Both construction and propane hauling have become year-round operations.”
To keep up with customer demand, Sterling Transport has steadily enlarged its fleet. The carrier runs 100 tractors, 80 propane trailers, 50 cement bulkers, and 25 asphalt tankers. Most of the vehicles are based at the headquarters terminal in Lakeview and a satellite facility in Chesapeake, Virginia.
Fast growth
That's a lot of growth from where the fleet started just 10 years ago. Sterling Transport grew out of a propane retailer operation that had been in business since 1939. Propane transport capability was added in 1994 to enhance the retail operation.
“This was a family business, and it was very successful,” Hinton says. “Adding the transport service strengthened our own operation, and it generated additional revenue because we also began hauling propane for other retailers in this area.
“From the outset, we treated the transport fleet as a separate company. We did that so our customers knew they received the same high-quality service. We tried to show no favoritism to our own propane retailing company.”
Then in 1997, after 58 years in the propane retailing business, the Hintons got an offer that was too good to turn down. “It was a good offer at the right time, and we sold the retailing operation,” Hinton says. “However, the buyer didn't want the transport side of the business.”
So Hinton kept the tractor-trailer fleet and set up Sterling Transport. He realized, though, that the company would have to haul more than propane. The cargo was too seasonal.
“We needed other commodities to keep our trucks and drivers busy,” Hinton says. “We decided that one of our best options to keep the fleet running throughout the year was to diversify into construction products, such as cement.”
Fleet diversification
Sterling Transport took a major step in diversification in 2000 with the purchase of MAKO Transportation in Apex, North Carolina. The acquisition brought asphalt and cement business.
“The construction business has expanded more than we ever imagined,” Hinton says. “It's really a year-round operation today. The cement and asphalt we haul is going into road construction. We're also transporting cement for airport improvements. And we're hauling some sand.
“The past year was even busier due to the cement shortages that resulted from higher worldwide demand. Even though we primarily stay in the Southeast, we had some shipments exceeding 500 miles. We went to Pennsylvania to pick up some loads of cement last year, and we expect to do more of that in 2005.”
On the propane side, Sterling Transport also has achieved solid growth. Propane operations got a big boost in May 2004, when Sterling Transport purchased the propane division of Wendell Transport Corp, Clayton, North Carolina.
“We gained 25 propane transports with that acquisition, some of them in the 11,600-gallon range,” Hinton says. “We sold off some of our older, smaller propane trailers. They were purchased by overseas buyers.”
Hinton says acquisitions will continue to be part of Sterling Transport's growth strategy, and the company is targeting fleets with 30 or less trucks. “We want steady, sustained growth,” Hinton says. “We realize we could expand faster, but we want a managed process.”
Internal growth
In addition to acquisitions, the company also aggressively pursues internal expansion and diversification opportunities. One example of internal diversification is International Carrier, a truck brokerage company that specializes in placing shipments of produce and frozen foods.
Internal growth of the tank truck operation is reflected in recent equipment purchases. In 2004, Sterling Transport bought seven cement trailers, eight asphalt tanks, and three propane transports. The company plans to add another 10 cement trailers this year to keep up with customer demand.
New cement trailers are purchased through Southeastern Pneumatic Inc, Ellaville, Georgia. “We have a strong relationship with Southeastern Pneumatic, and we started working with them when we made our first move into cement hauling,” Hinton says. “We've always believed that the dealer who sells the equipment is more important than the manufacturer.”
The cement bulkers from Southeastern Pneumatic are aluminum Heil SuperJets with a 1,000-cubic-foot capacity. Trailers are specified with air lines on top to make it easier for drivers to clear away cement dust after loading. Hardware includes Heil domelids, Sure Seal butterfly valves, and Solimar aerators.
“We prefer Solimar aerators because there is less chance of product back flow,” Hinton says.
Asphalt tanks
Most of the asphalt tankers in the fleet were manufactured by E D Etnyre & Sons. Typical capacity is 5,000 gallons, and the newest units were fabricated with aluminum barrels.
Sterling Transport runs a variety of propane transports, but most were built by Mississippi Tank Company. The newest MC331 units have an 11,600-gallon capacity. Four of the trailers have metered delivery systems, and all 80 propane trailers are outfitted with the Smart Hose passive shutdown system. Other hardware includes Fisher and RegO valves and Blackmer pumps.
Company tractors predominate in the fleet, most of them leased through Ryder System Inc. The carrier has standardized on Freightliner tractors, and 95% of them have sleepers. The newest tractors were ordered with the MBE 4000 engine rated at 455 horsepower and Eaton-Fuller 10-speed transmission.
“We need sleeper units, because we do have some longer trips where drivers are away overnight,” Hinton says. “This is especially true during the winter with propane hauling.”
PTO-driven Gardner Denver blowers are mounted on the tractors used in cement operations. Newer tractors that pull propane trailers were fitted with hydraulic drive systems to run the trailer-mounted pumps. The carrier is using both Drum Hydrapak and Stac Manufacturing's Therma Flow systems.
“We send the tractors to Southeastern Pneumatics for the blower and hydraulic installations,” Hinton says. “We've had to spec hydraulic drive systems for propane operations because there is less room for a prop shaft on the new tractors. Hydraulics is becoming the only option.”
To keep the equipment in top shape, Sterling Transport uses a variety of resources. Southeastern Pneumatics handles maintenance of the cement trailer fleet, and MC331 service work is contracted out to code tank repair shops. Tractor service is handled by Freightliner dealers.
“We also contract with commercial providers for tire repairs,” Hinton says. “We do some minor service work (such as brake replacement and adjustment) at our Lakeview location. We also have a service truck that makes road calls within a 200-mile radius of the Lakeview office. We believe it's better to contract out vehicle maintenance work, because it lets us concentrate on what we do best.”
That focus on serving customers has been a winning strategy, and it has helped ensure steady growth.