Leasing provides fleet flexibility for Ozinga Transportation Systems
Apr 1, 2003 12:00 PM, By Charles E Wilson
AFTER winning a bid last year to become a chemical company's primary tank truck carrier, Ozinga Transportation Systems Inc faced a short startup deadline. Leasing became a crucial factor enabling the trucking company to successfully meet the challenge.
By the time the contract took effect in September 2002, the Chicago, Illinois-based tank truck carrier had leased 12 chemical tankers, most of which are based at the customer's main US chemical plant in New Castle, Delaware. Today, 35 tank trailers are under lease specifically for this contract. Owner-operators supply 20 tractors.
The contract involving the leased tank trailers is with Uniqema, a division of the ICI Group of Companies. Uniqema is a leader in production of oleochemicals, oleochemical derivatives, polymers, and surfactants.
“We needed the flexibility offered by leasing with this contract,” says Richard Jousma, Ozinga Transportation Systems president. “We needed the equipment quickly, and the contract has a set term that is much shorter than the six to 10 years it takes to depreciate a tank trailer. We didn't want to be stuck with an under utilized asset in the event the contract didn't renew.
“Leasing was an easy choice for us, because we've leased various types of tanks and other equipment for many years. We find that leasing works very well with specialized applications where the business changes quickly. In many cases, these are projects of limited duration.
“We can grow and shrink our tank fleet quickly as the projects come and go. In addition, more chemical hauling business in general is being done on yearly bids, a situation that favors leasing. Our bottom line looks a lot better with leasing. The more we run leased equipment, the more we like it.”
Besides a quick start up for fleet operations, the Uniqema contract called for Ozinga Transportation Systems to provide an on-site logistics manager at the chemical company's New Castle plant. The logistics manager has responsibility for tank truck shipments out of three Uniqema plants — New Castle; Paterson, New Jersey; and Chicago, Illinois.
“Back in 1996, we started our Continuous Move program as a way to maximize distribution efficiency,” says Michael J Carney, Uniqema's senior distribution operations specialist for the Americas. “We realized that we needed to build a strong partnership with a bulk carrier to achieve our objectives. Once the program was operational, we began to see the need for a fleet management person who would be imbedded with our operation.”
A key objective of the Continuous Move program is to ensure that maximum use is made of the carrier partner's tank trailers. “We want them loaded as much as possible, both with outbound and inbound Uniqema loads,” Carney says. “We provide computer access to our shipment schedule, and Ozinga Transportation Systems has the responsibility for making sure that the loads get moved.”
Ozinga Transportation Systems is responsible for a growing percentage of Uniqema's bulk highway shipments. The East Coast fleet operation takes about 40% of the shipments, and the remainder are covered by other Ozinga Transportation units and some additional carriers.
The logistics process is in the hands of Larry Thomas, who was hired specifically for the Uniqema contract. Thomas came to the project with more than 25 years of experience in the tank truck industry as a driver, dispatcher, and terminal manager.
“This is a great arrangement,” he says. “We're able to see the whole distribution picture with the customer, which means we can do much more to boost the efficiency of the process. We usually know about shipments 30 days in advance, and we're achieving loaded rates of approximately 95% in our trucks.”
Thomas also views the tank trailer lease arrangement as an unqualified success. “We had no trouble finding the equipment we needed, and we got it right away,” he says. “When we need replacement trailers, we're able to get them within 48 hours. It's amazing how well it has worked out.”
Transport Resources Inc (TRI), Matawan, New Jersey, was selected to supply the Ozinga Transportation Systems East Coast operation with leased tank trailers. All of the units chosen by the tank truck carrier meet DOT407 code and have a 7,000-gallon capacity. The stainless steel tanks are insulated and have in-transit heat. None are more than five years old.
“TRI has given us great service,” Jousma says. “Ralph Nappi and his team have exceeded our expectations. It's a very professional operation.”
Deciding to lease tank trailers for its new East Coast operation was a logical move for Ozinga Transportation Systems. Leasing has been a part of the tank truck carrier's management strategy for many years, especially when the carrier needs equipment such as storage trailers or vacuum roll-off boxes.
“Ozinga Transportation Systems is a diverse organization that has specialized equipment needs,” Jousma says. “In addition to chemicals transportation, we're involved in hazardous, non-hazardous waste hauling, construction materials, transportation, and freight brokerage.”
The trucking operation's parent is Ozinga Brothers, which operates close to 25 cement ready-mix plants in Illinois and Indiana. It is a family-owned and operated business.
Transportation operations are broken into four units. Chemical hauling and environmental waste transport units were established in 1986. A construction aggregate hauling unit was started a year later. First Choice Logistics is a bulk freight brokerage that was established in 1998.
On the chemical side, the carrier focuses on business from chemical distributors and manufacturers. “Distributors are a big piece of our business,” Jousma says. “We look for chemical shippers that can provide volume and can help us maximize fleet utilization. We want shippers that will work with us.”
Waste hauling targets remedial projects, and Ozinga Transportation Systems hauls a significant volume of materials such as solvent-based paint residues and storage tank bottoms to cement kilns, fuel blenders, and disposal facilities. Eighty percent of the waste is non-hazardous. Liquid waste trailers are in dedicated service.
The carrier has shown skill in taking on specialized work. “One of our more unusual projects was temporary removal and storage of molten salt at 400°F from a natural gas processing unit,” says Jeffrey Duda, Ozinga hazardous waste division manager. “In another project, we drained ethylene glycol from a hospital cooling system that was shut down for 12 hours for inspection and repair.”
To service the natural gas processing unit, Ozinga Transportation Systems rented an asphalt trailer that had a burner. The company also rents storage tank trailers for projects such as the one involving the hospital cooling system.
“Sometimes we rent equipment that can't be kept busy day to day,” Jousma says. “Utilization is the key factor in determining whether we will rent, lease, or buy a piece of equipment. We'll also continue buying specialized equipment, such as multicompartment trailers.
“The name of the game today is return on investment. With the excess capacity in this industry, low rates, and rising costs of insurance and fuel, we have to make sure that we get the best return on every dollar we spend.”
Counting the leased equipment dedicated to the Uniqema account, Ozinga Transportation Systems' fleet includes 92 tractors, 160 tank trailers, five vacuum trailers, nine roll-off chassis, and about 90 roll-off boxes. About 40 dump trucks are used in the aggregate hauling operation.
Company tractors are supplied by Mack and International, and most have 70-inch sleepers. Drivetrains include 427-horsepower Mack engines in the Mack tractors and 410-hp Cat C12 engines in the Internationals. Typical tractor-mounted product handling equipment consists of a Drum compressor and carbon steel Roper pump.
PeopleNet's communication and tracking system is a recent addition to the tractors. Plans are to handle driver logs and fuel tax reporting with PeopleNet. The system works through the Internet and offers lower operating costs. Previously, Ozinga Transportation Systems relied on cell phones to maintain direct contact with drivers.
The standard chemical tank trailer in the fleet meets MC307 or DOT407 codes. The newest units have come from Brenner Tank LLC and Tremcar Inc. Straight-barrel tanks have capacities of 6,500 to 7,000 gallons. For multicompartment equipment, Ozinga Transportation Systems prefers three or four compartments. Regardless of configuration, the tanks are expected to deliver a 20- to 25-year life.
Brenner is the preferred supplier of stainless steel vacuum trailers. The newest 6,000-gallon trailers have a three-inch Betts discharge outlet, rather than the six-inch outlet specified in the past. The trailers also have Drum vacuum pumps.
Most chemical hauling activities were within 1,500 miles of Chicago prior to the Uniqema contract. Waste hauling has been concentrated in a 600-mile radius of Chicago, and the aggregate hauling unit serves the Ozinga Brothers ready mix plants in Illinois and Indiana. Most operations are east of the Mississippi River.
Commercial wash racks serve as mini terminals for the chemical and waste-hauling units. Even the main office shares space with a commercial wash rack — Sani Wash in Markham, Illinois.
“In most locations, we just want a place to park our equipment,” Jousma says.
The newest terminal is in Toledo, Ohio. Other Ozinga Transportation Systems mini terminals are in Detroit, Michigan; Cleveland, Ohio; Pittsburgh, Pennsylvania; New Castle, Delaware; and Greenville, South Carolina.
Responsibility for making the far-flung operation work smoothly falls on a compact management team. They rely heavily on the professionalism of the drivers in the field. Selection and training of those drivers is a methodical process.
“For our chemical and waste operations, we start by looking for people with at least two years of over-the-road truck driving experience and a good record,” says Sam Booker, Ozinga director of safety and regulatory compliance. “We focus on tanker drivers who are self-motivated and have a safety orientation.
“Experienced drivers mean lower turnover for us. They know what to expect in tanks. We believe we've been able to attract a higher caliber of driver with our program, which emphasizes competitive pay and getting them home weekends and once or twice during the week.”
Newly hired drivers receive a day-and-a-half orientation at the main office followed by three days of riding and driving in the Chicago area with a driver trainer. Quarterly retraining is tied to safety bonuses, and hazardous materials get a lot of emphasis.
“We make it clear that every person matters in this company,” Jousma says. “They are part of a niche specialist company with tightly focused operations. Our drivers are the key to providing the high level of service that our customers expect.
“All of our resources are focused on serving our customers in the most cost-efficient manner available. It's why we run leased equipment. It's why we have minimal office facilities. The growth we're experiencing today is proof that we're following the right strategy.”
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