Foodgrade Market Health Encourages Prime Inc To Initiate New Bulk Division
Sep 1, 2001 12:00 PM, By Mary Davis
ROBERT LOW, president of Prime Inc, Springfield, Missouri, has been taking the pulse of the foodgrade market since 1973 when he purchased his first refrigerated trailer. Recognizing the health of the bulk liquid market, he decided in 2000 to add 55 foodgrade tank trailers to Prime's fleet of 2,750 reefers and 550 flatbeds. Today, the foodgrade tank trailers number 100.
“It looked like there was room for a well-managed, high-quality carrier out there,” he says. “We want this expansion of our liquid bulk division to be thoughtful. We really believe there is an opportunity for us.”
After a year in operation, the new division contributed $9.5 million to the company's annual revenue of $500 million.
“Revenue from the bulk division is a little stronger than we predicted,” says Kirk Erickson, bulk division manager. “But, we felt from the beginning that we were fully capable of meeting the demands of virtually any foodgrade transportation challenge.”
At first, the bulk division concentrated on juice transportation as a service to shippers in Florida. It wasn't long, though, before trucks were moving coast-to-coast, hauling various foodgrade products, including liquid sweeteners and alcoholic beverages. “Our traffic lanes are oriented to the long haul,” says Erickson.
The bulk division participates in what has been a successful tractor lease program for Prime's owner-operators. Sponsored by the company for its refrigerated and flatbed divisions since 1986, the program provides independent contractors with tractors from Success Leasing Inc, a division of Prime.
“The lease program has been very successful for us,” says Low. “People typically work harder and smarter for themselves than they do for someone else. I think it benefits shippers, too, because they get quality value added from us.”
To ensure that contractors will operate efficiently, Prime offers courses in business management tailored to owner-operators. Classes are conducted at a conference center in Springfield.
“We teach them to run their own business,” says Low. “Positive, enterprising, and highly-motivated individuals routinely succeed once they join our team.”
After the business courses were instituted, the company reported a 10%-12% increase in owner-operator earnings and a 50% increase in driver retention.
Driver training also includes company orientation and policies, Department of Transportation regulations, defensive driving, and hazardous materials handling. The company is implementing a defensive driving program, the Smith System.
As a supplement to driver training, about 3,000 video tapes are distributed to truck stops that contain safety information for Prime drivers to review. Information is compiled from interviews with shippers and includes a variety of trucking issues and safety tips.
“We also offer a maintenance program with the lease, if they want it,” says Low. “Additionally, we have a tractor down-time benefit that helps owner-operators in the event of a breakdown, or we will provide them with a loaner tractor while theirs is being repaired.”
When the bulk division was established, the company had few problems finding drivers. “We were looking for drivers with qualified tank experience,” says Erickson.
Low brings first-hand experience to the driver training and recognition programs, having begun his career as a driver. He began a small transportation business in college when he bought a dump truck to deliver products to a construction site. When winter ended the construction project, he sold the truck and bought a tractor, which he intermittently drove and leased to a shipper.
The military interrupted his budding career, but after returning from service in the Marines, Low started the refrigerated transportation service. “It was very successful,” he says. “But we grew much too quickly.”
By 1979, the company was saddled with $25 million in debt for its $40 million in revenue. After declaring Chapter 11 bankruptcy in 1981, Low started on the road back to solvency. “I learned about the problems of having too much debt,” he says.
Low obtained some investors and began to rebuild the company, including establishing the leasing program for owner-operators. Today, the company has expanded throughout the United States, and into Canada and Mexico. Since 1986, the company has experienced an average revenue growth in excess of 20% per year.
Operations are directed from new corporate headquarters that are designed to enhance company operations, as well as cater to the unique needs of all associates.
Low runs the company with an open-door policy, evidenced upon entering the reception area. He is visible through an open door leading into his office beyond two receptionists. A newsletter on the counter details the company's financial condition, including operating ratios and revenue by reefer, flatbed, and tank trailer divisions.
Offices on the first and second floor house administration and logistics personnel. Sales and dispatch areas perpetually buzz with activity.
The operation utilizes computerized technology to enhance all its divisions.
“Modern technology is no longer optional in the trucking industry today,” says Erickson. “It is key to improving efficiency, productivity, and communications. It is invaluable for maintaining our 98.7% on-time pickup and delivery record.”
In addition to its own operation, Prime offers logistic services to other businesses. For some customers, Prime provides use of computer systems to assist customers in the distribution process. Other customers require on-site support and consultation throughout the shipping process.
The company uses a Qualcomm OmniTRACS satellite system to track its own shipments. Messages are transferred from Prime's fleet management to Qualcomm's network management center, then sent to the vehicle via the communications satellite. The vehicle uses the communications satellite to send messages to the Qualcomm network management center, where the message, as well as the vehicle's location, is then forwarded to Prime fleet management.
“This system enables us to see where loads are at all times and ensures that each load is delivered on schedule,” Erickson says. “If a truck breaks down, we can run a radius sweep and locate another piece of equipment.”
Prime uses electronic data interchange (EDI) capabilities, e-mail, FastFax reporting, and tracing and tendering via the Internet.
The maintenance department uses a program from Innovative Software Inc to track repairs. About one-half of maintenance is performed in-house. The other half is outsourced to various shops.
An agreement with Semo Tank/Baker trailer sales brings instructors to Prime to train mechanics to work on tank trailers and pumps. Another program is coordinated with Bandag tire dealers who conduct standard service tire checks, inspecting for correct tire pressure, tread condition, and properly aligned wheels.
The company estimates it has achieved a 17% reduction in tire costs and 10% reduction in trailer maintenance as a result of the two programs.
Twelve company bays are set aside for trailers and the same number for tractors for preventive maintenance. Another area contains an eight-bay shop where returning or departing vehicles are fueled and checked over. The building also contains administrative offices for handling log compliance, insurance, and permits.
Maintenance foremen write out repair or service orders that mechanics follow. Information is entered into the software system. Preventive maintenance may be handled in Springfield, or other arrangements may be made for vehicles that are on the road. Tractor engine oil and filter changes are scheduled every 22,500 miles. Tractors receive transmission and rear end lubrication every 350,000 miles. Engines receive an overhaul at 120,000 miles.
Equipment includes foodgrade tank trailers purchased through SEMO Tank/Baker. For juices, sweeteners, and other related edibles, Prime chooses Walker sanitary stainless steel 6,800-gallon tank trailers equipped with L C Thomsen outlet valves and Drum FP2000 foodgrade pumps. An Olson three-inch spring-loaded vent with dustcover is installed in the Walker manway.
To protect hoses and prevent theft, aluminum hose tubes are accessible only through the rear-mounted cabinet.
Running gear includes Reyco Granning suspensions; Dana axles and hubs; Eaton antilock brake system; Holland Binkley gear; and Grote lighting and wiring.
For transporting alcoholic beverages, Prime specifies DOT407 stainless steel, insulated, and single-compartment Walker tank trailers with 6,800-gallon capacity. They are equipped with Hendrickson Intraax air-ride suspensions and axles, MeritorWABCO antilock brake systems, and Walther Engineering's Dura-Lite hubs. Jost and Binkley supply landing gear. Betts provides a full-opening manway with gasket and sealing provisions.
Components include Betts emergency valves and Girard pressure- and vacuum-relief vents.
For its foodgrade division, Prime has chosen the Freightliner Century Class conventionals supplied by Springfield Freightliner. Tractors are equipped with 500-horsepower Detroit Diesel Series 60 engines, and ZF Meritor 10-speed transmissions.
Axles are from Meritor, the rear axle with a 3.58 ratio. The front axle is set back to improve maneuverability. MeritorWABCO supplies the antilock braking system. The tractors are equipped with Freightliner AirLiner suspensions. Other components include ConMet hubs, Alcoa aluminum wheels, and Truck-Lite lamps. A Drum Hydrapak hydraulic drive system is mounted on the tractors.
Prime's emphasis on quality vehicles is equal to company efforts to recruit and retain quality employees. One way this is accomplished is by providing many services that attend to personal needs. The new corporate facilities were designed with employees in mind. It contains short-term sleeping rooms and private quiet rooms for drivers. Other amenities include shower suites, laundry, barber, and beauty shop.
A food court, deli, and restaurant offer a wide selection of meals. Also on site are a gymnasium, sauna, tanning bed, convenience store, mail center, and banking facility.
Smoking and non-smoking lounges with televisions, pool tables, and a variety of seating arrangements are available. A movie theater and game room provide additional entertainment. For personal reflection, a chapel is in the complex. A medical clinic and accountant's office, leased to local providers, offer more personal services for employees.
Prime provides a day care center for employee children. Staff oversee education and care for infants, toddlers, pre-school, and school-age children, ages from six weeks to 12 years.
With a most significant infrastructure in place, Prime is well positioned to expand its bulk foodgrade division.
“Prime has been built on the simple philosophy that providing the best staff with the best equipment, the best support system, and the best training ultimately leads to the best customer service,” says Low.
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