MTL Inc Builds Solid Reputation For Innovation, Profitability
Oct 1, 1997 12:00 PM, Charles E Wilson
BECOMING the third largest North American tank truck carrier was no accident for MTL Inc, the parent company of Montgomery Tank Lines Inc. It was the result of hard work and a management philosophy that is both innovative and entrepreneurial.
Plant City, Florida-based MTL Inc moved into the number three position in the most recent Modern Bulk Transporter Gross Revenue Report with 1996 revenue of $235.6 million. The company operates approximately 1,800 tractors and 3,800 tank trailers spread among 74 terminals that are strategically positioned across North America.
"We are following a proven strategy that has made MTL one of the fastest growing tank truck carriers in the industry," says Elton "Buzz" Babbitt, MTL chairman of the board. "In addition, we believe we are one of the most profitable. We doubled revenues in the period since 1989, and we expect to do so again by the year 2000.
"We've been successful because we help our customers solve problems. We also have a strong companywide commitment to safety and quality. Finally, our operating system is a key factor. It gives us the power of a large corporation with the flexibility of an entrepreneur."
Charles J O'Brien Jr, MTL president and chief executive officer, adds that the corporation has been consistently profitable for quite some time. "That's a real accomplishment in an industry like this that is rate-driven and capital-intensive," he says. "We've had 13 consecutive quarters of earnings growth, and our operating ratio has been in the 91%-92% range since 1987."
MTL is positioned to grow internally at 8% to 10% a year without acquisitions, according to Richard J Brandewie, senior vice-president and chief financial officer. When the company's affiliates and private fleets are factored in, the overall growth rate could be closer to 15%. The affiliates are distinctive to MTL and are like franchise fleets operating under the MTL umbrella.
"Being the largest tank truck carrier is not our specific goal, but we plan to reach $500 million in annual gross revenues by 2000," Brandewie says. "We're financially well-positioned for growth with less than one part debt to equity. We would have no difficulty spending up to $100 million within the next year to acquire another carrier or carriers. We have invested an average of $25 million per year over the past five years, primarily in trailers."
All of these factors have drawn praise from Wall Street even though the MTL stock has not attracted as much attention and does not have as high a multiple as some other public trucking companies. A recent Wall Street Journal article said that MTL's stock seems poised to shift into higher gear.
15% Growth First Quarter The article pointed out that MTL's net income increased 15% during the first quarter of 1997. An earnings estimate for 1997 of $2.20 per share may prove to be conservative as the company broadens its horizons to include more petroleum hauling, among other things.
Further, the carrier's unusual operating structure provides some insulation against salesfluctuations. Many of the expenses typically shouldered by trucking companies aren't part of MTL's income statement because of its affiliate program. That's one reason the carrier logged an impressive operating cost per mile of $1.58 in 1996.
The road to becoming the third largest North American tank truck carrier began 32 years ago when Babbitt bought a Colorado trucking company, renamed it Montgomery Tank Lines, and relocated it to Chicago, Illinois. In its first year, the carrier generated $200,000 in sales. Annual revenues had climbed to $7 million by the end of the 1970s.
>From the very start, Babbitt and the other managers showed a willingness to try new ideas. At the same time, they have never been reluctant to shut down projects that didn't achieve expected results or evolved in a way that didn't fit the rest of the company.
"We believe much of our success comes from being able to give our customers innovative solutions to their bulk transportation problems," Babbitt says. "Some of them require sophisticated technology. Others just need help with transportation logistics issues, such as rail transfer."
"The affiliate program has been one of our biggest successes. "It has given a lot of smaller carriers a chance to be successful in today's big-carrier environment and has provided us with greater flexibility to serve our customers. On the down side, we expanded into tank containers a number of years ago. Unfortunately, we couldn't make them work in our operation, and few of our customers wanted them for domestic shipments."
In 1978, Montgomery signed up its first affiliate carrier-Cletex Inc, then based in Cleburne, Texas. The concept grew out of MTL's need to find a cost-effective way to expand quickly into the Gulf Coast amidst concerns about a truckers' strike that was occurring in the region at the time.
The affiliate arrangement is similar to franchising. In return for a slice of the affiliate's revenue, Montgomery provides certain support services-safety training, joint sales and marketing programs, computer help, insurance, and discounts on fuel and equipment through bulk purchasing.
Currently, Montgomery has 30 affiliates. They generate approximately 60% of Montgomery's linehaul revenue and are able keep 85% of that total to cover expenses and provide income for growth.
"The affiliate program is great because it gives smaller carriers a chance to provide superior service and capabilities," Babbitt says. "The technical demands of this industry are straining the resources of many smaller tank truck operators. It is one of the factors pushing consolidation. We provide an alternative."
National Expansion MTL growth accelerated following trucking industry deregulation in 1980, and it wasn't long before the company was operating in all 48 continental states. By 1985, MTL revenues had reached $32.5 million, and the carrier was ranked 17th in Modern Bulk Transporter's Gross Revenue Report.
Revenue growth got a big boost in 1989 when MTL merged with Quality-O'Boyle Inc, creating a company with revenues in excess of $90 million. O'Brien was president and principal shareholder of Quality-O'Boyle, and he joined MTL as chief operating officer.
The carrier took another major step in 1994 when it became a publicly owned company. "We are one of just a few tank truck carriers that is publicly owned," Babbitt says. "This is one of the best things we have done. We struggled financially until we went public. This has given us the money we need to grow. It's a much easier way to raise cash for acquisitions. Besides, there seems to be some stature in being publicly held. It helps on the customer side and fuels the affiliate program."
Today, MTL Inc is the holding company for three operating subsidiaries-Montgomery Tank Lines Inc, Quality Carriers Inc, and Levy Transport Ltee. Levy, a Canadian tank fleet based in Quebec City, Quebec, was acquired in June 1996.
"We knew immediately that Levy would make a good fit," O'Brien says. "Levy is growing at a good rate, is extremely well-managed, and offers us a solid position from which to grow our business in Canada.
"We see a lot of potential for our Canadian operations, and we're also increasing our activities in Mexico through our partner, Transportes Especializados Antonio de la Torre e Hijos. We are truly a North American tank truck carrier."
Seventy-Four Terminals The three wholly owned subsidiaries have a combined workforce of 2,450, including 945 company/affiliate-employed drivers and 800 owner-operators. The workforce is distributed among 74 terminals in the United States and Canada. Forty-four of the terminals are operated by affiliates. Torre e Hijos also has four terminals of its own in Mexico.
Twenty-four terminals have tank wash racks, but MTL also has approved tank cleaning at approximately 200 third-party wash racks. All approved facilities have submitted the National Tank Truck Carriers wash rack audit form to MTL's safety department. MTL managers have now begun making site visits, which should be completed in about 18 months. They are looking closely at the way the wash racks are operated.
The terminal network gives MTL the ability to serve its customers virtually anywhere in North America. The 10 largest of these customers are Procter & Gamble, Union Carbide, PPG Industries, Ashland Chemical, Hoechst Celanese, Reichhold Chemical, Solvay Interox, Witco Corporation, DuPont, and BetzDearborn.
Resins, latex, and detergents account for about half of the cargoes handled by MTL. Other chemicals include solvents and peroxide. Edibles make up 10% of the business. Dry bulk and petroleum are at five percent and growing.
"Since the Levy acquisition, we've begun to put more emphasis on petroleum hauling," says Marvin E "Buddy" Sexton Jr, president of Montgomery Tank Lines. "Within Montgomery itself, we now have one affiliate focusing exclusively on petroleum.
"On the dry bulk side, we have one of the largest trailer fleets dedicated to plastics, and we have a nationwide rail-to-truck transloading capability. Our plastics trailers have 2,000-cubic-foot capacities."
Tailored Services With its size and diversity, MTL can provide customers with tailor-made tank truck transportation services. "We are first and foremost a tank truck company," O'Brien says. "We couldn't succeed if we forgot that. Like any other tank truck carrier, we have to be able to do the basic job, and that hasn't changed over the years.
"We have the critical mass necessary to negotiate core-carrier contracts with large shippers. At the same time, the affiliate program enables us to provide very personalized service at the plant level."
MTL also is an active partner in the Chemical Manufacturers Association's Responsible Care program and has received ISO 9002 certification at the Plant City headquarters location. "We are committed to continuous quality improvement in all aspects of our business," O'Brien says. "We never stop looking for ways to enhance the level of service we give to our customers."
Agreement comes from DuPont, which sponsored MTL as a Responsible Care partner. "We know we can count on MTL to bring a strategic perspective to the table," says Tom Sloan, DuPont bulk transportation coordinator. MTL always seems to go above and beyond what is expected. They follow through on every promise. Even when things go wrong, we know we can count on MTL to take corrective action and make things right."
Hoechst Celanese MTL's commitment to establishing lasting customer partnerships also impressed the Hoechst Celanese Specialty Chemicals Group. The tank truck carrier was selected in 1993 as the primary service provider when Hoechst Celanese Specialty Chemicals Group initiated its Dedicated Logistics Operations (DLO) program. Under the DLO program, Hoechst Celanese basically outsourced to MTL the management of the bulk transportation function at its Leeds, South Carolina, plant.
Achievements through the partnership include tighter delivery windows. Previously, the Hoechst Celanese Specialty Chemicals Group could guarantee a delivery within a couple of hours, according to Jim Dickinson, manager of supply and distribution for the group. The MTL partnership brought the ability to determine delivery times to within 30 minutes.
Hoechst Celanese also is benefiting from MTL's tank engineering expertise. Working together, the partners have created a customized tank trailer that allows Hoechst Celanese to increase individual payloads by 10%.
Working with Union Carbide's UCAR Emulsion Systems Division (UES), MTL increased productivity by using lightweight equipment that enabled payload increases of more than 15%. Previously, UES latex payloads were around 42,000 pounds. MTL purchased lightweight tractors and aluminum tank trailers that boosted payloads to 54,000 pounds.
Engineering Expertise MTL now has 20 of these lightweight aluminum latex tankers in service. Special features include a Teflon coating that prevents the latex from adhering to the tank walls. This reduces heels and makes cleaning much easier.
MTL probably has one of the most specialized fleets of hydrogen peroxide trailers in the industry, and the equipment keeps getting more specialized. The newest units have a metering system that provides greater precision when partial loads are delivered to consignees.
Several factors contribute to the tank truck carrier's engineering expertise. First and foremost, MTL has a very close relationship with Bulk Manufacturing Company, its principal supplier of stainless steel chemical trailers. The Bulk Manufacturing plant is located next door to the MTL corporate headquarters in Plant City.
Bulk Manufacturing design engineers and MTL managers work closely on projects to develop specialized equipment to meet customer needs. It's a partnership that has proven very successful over the years and has given MTL a definite competitive edge in the marketplace.
Additionally, MTL employs one of the most knowledgeable corrosion specialists in the industry. Chuck Boudin determines which tanks can be used to transport various products. He starts the process of evaluating the corrosion properties of a new product by filling out a Bulk Commodity Selection Report.
"As part of our ISO 9002 process, a report is filled out anytime the terminal manager and sales manager lack experience with a product," he says. "One of our biggest challenges is gathering information on the chemical product. Shippers have a responsibility to provide the data, but they don't always have the information we need."
In the quest for the details, Boudin turns to a variety of references, including Reg Scan and Cor*Sur computer software. Reg Scan is an up-to-date listing of the Department of Transportation regulations contained in 49 CFR. Cor*Sur is a database of the corrosion properties of various chemicals and is available from the National Association of Corrosion Engineers.
Boudin uses Reg Scan to determine what type of tank can be used to transport a given product. Next, he checks the Cor*Sur database to find out the corrosion rates for various alloys. "We won't approve any product for shipment in stainless steel tanks with more than 20 mils of corrosion per year," he says.
Computer System Corrosion information already on file will be incorporated into the new computerized dispatch system that is part of MTL2000. The multipurpose intranet system will be 90% functional by the end of October. The hardware is already in place at all company and affiliate locations.
"We believe MTL2000 will be a tremendous step forward in information handling for this company," says Siamak Azmoudeh, vice-president of management information systems. "On the dispatch side, the system will enhance the load matching process for all of our terminals. Our customers also will have access to load status information. MTLnet, the company's communications media, is a massive intranet communication network."
MTL decided on an intranet because it has an open architecture and was the fastest way to implement such a large computer network. The system includes Microsoft-based software running in a Windows NT environment. Application software at each location runs independently, but records are shared throughout the network through data replication.
The client-server-based system is very flexible, which will make it relatively easy to adopt the SAP transportation module when it is completed. "Many of our customers are installing the SAP system, so we had to keep that in mind when developing MTL2000," Azmoudeh says.
MTL2000 will give the affiliates a state-of-the-art tool that will enable them to manage equipment more precisely than at any time in the past, according to Azmoudeh. They will have instant access to a variety of corporate records, including equipment profiles and driver records. "We believe it will help reduce paperwork over time," he says.
Customers also are asking for paperwork reduction. They want better methods for transmitting bills of lading, and they want enhanced performance reporting. Many customers are asking for more detailed shipment tracking information.
Driver Communication Considerable shipment data already is available because certain tractors in the fleet have satellite communication capabilities. The OmniTRACS system provides regular updates on vehicle location, and drivers can provide cargo status reports.
The drivers are experienced, well-trained professionals. A majority are owner-operators or are employed by the affiliates. Only a quarter of the units are actually MTL company trucks.
"Through this arrangement, we can invest more of our capital resources in tank trailers," Sexton says. "We believe that's a better use of our money. In addition, owner-operators are driven to succeed. If they are treated right, they do well. We cater to them."
Turnover is relatively low at 30% to 36%, but MTL is working on ways to reduce that to no more than 20%. The biggest problem right now is that MTL's business is growing faster than it can hire new drivers.
"We're having to turn to less-experienced drivers," says Richard Carr, MTL vice-president of safety. "We're getting a lot of applicants with less than two years of over-the-road truck driving experience, so we're restarting a training program that is designed for recent graduates of truck driving schools.
"One way to reduce the driver shortage might be to include truck driving as part of the federal welfare reform program. The government would provide the school training. We have relatively good results with drivers fresh out of school."
MTL's minimum requirements are for drivers who are at least 23 years old and have two years or more over-the-road truck driving experience. Only one preventable accident is allowed in the previous three years. The requirements apply to MTL and affiliate drivers.
Driver Training All drivers go through the MTL training program. The initial classroom orientation is four days, and it is followed by on-the-job training. And that's just the beginning.
Every driver goes through extensive classroom and field retraining every three years," Carr says. "We consider training to be an investment that benefits both MTL and every one of our customers."
Classroom training is conducted at full-time facilities in Concord, North Carolina; Summit, Illinois; Houston, Texas; Los Angeles, California; and Elkridge, Maryland. Plans are underway to open a sixth classroom in Montreal, Quebec, Canada. Each facility is staffed by a full-time trainer and has audio/video capabilities, working equipment mock-ups, and a tractor-trailer training unit.
During the initial training, drivers study hazardous materials safety and regulations, familiarize themselves with MTL equipment, and complete defensive driving training. Hours of service and driver logs also receive a lot of attention.
"Hours of service and driver logs are the most difficult topics for many of the drivers," Carr says. "We need new regulations that the average driver can understand. The current rules are too complex, and they don't take the facts of life into account. We need rules that enable a driver to keep the same work/sleep cycle."
In addition to annual incumbent training, drivers participate in quarterly safety meetings at the terminals. Seven full-time safety managers assist with the quarterly safety meetings. The safety managers also help organize training programs for local fire departments and emergency responders.
Community outreach is a key element in MTL's participation as a Responsible Care partner. It is yet another factor in the company's drive to be one of the leading tank truck carriers in North America.
MTL INC operates one of the largest fleets of stainless steel tank trailers in the world, according to Elton (Buzz) Babbitt, chairman of the board.
More than two-thirds of the company's nearly 4,000 tank trailers are stainless steel chemical units. Equipment ranges from general chemical transports to highly specialized units for peroxides, high-temperature products, and other chemicals that are difficult to handle.
With its in-house engineering capabilities, MTL can meet virtually any product-handling need. "Our peroxide customers have been asking for a more efficient and accurate means of making less-than-trailerload deliveries," Babbitt says. "So, we worked with our primary trailer builder to design a unit with metered delivery capabilities."
Other customers have asked for equipment that can handle high temperatures. For instance, DuPont ships a couple of high-value products that must remain at temperatures above 280 degrees F while in transit. MTL provides customized, heated tanks.
"Normally, a heated tank will cost around $75,000," says Michael Grimm, MTL executive vice-president. "We added about $20,000 in equipment enhancements to each of these tanks, including additional insulation and advanced temperature control monitors."
The number of lined and coated trailers in the MTL fleet is growing. "We have 40 different lining and coating variations in our fleet," says Chuck Boudin, MTL corrosion specialist. "We have approximately 100 rubber lined, 130 coated, and 50 FRP (fiberglass-reinforced plastic) lined trailers."
Coatings (primarily Plasite and Heresite baked phenolics, vinyl esters, and modified epoxies) offer a way to extend the life of tanks that have experienced moderate corrosion. "We can use coatings to protect both steel and aluminum tanks," Boudin says. "The coatings can help maintain product purity. They cost $3,000 to $8,000 and last an average of five years."
Coatings with high release properties are being used in tanks that haul highly viscous products. The coatings speed unloading times significantly and clean more easily.
Standard Tanks The primary supplier of both standard and customized MTL stainless steel tank trailers is Bulk Manufacturing Company in Plant City, Florida.
Virtually all of the tank trailers built by Bulk Manufacturing go into MTL's trailer fleet, which provides equipment to affiliates and customers. Bulk Manufacturing builds approximately 300 DOT407 and DOT412 tank trailers a year.
Standard units are either straight-round or double-conical DOT407 chemical transports. Straight-round tanks range in capacity from 3,500 gallons to 8,500 gallons. Double-conical units have 5,000- to 8,300-gallon capacities. Average size for both is 7,000 gallons.
The newest straight-round tanks have a 13,500-lb tare weight and can accommodate a maximum lading density of 13 pounds per gallon. They are able to carry a maximum payload of 54,000 pounds.
The tanks are built for a 25-year useful life and barrels are fabricated from 10-gauge 316L stainless steel. Heads are eight-gauge stainless steel. Three reinforcing rings are above the fifthwheel plate to provide increased support, and three rings also are specified in the suspension area. Longitudinal stiffeners are welded in place on the top of the tank.
A full-length, 15-inch-wide dimpled steam pan provides in-transit heat. Insulation consists of six inches of R-19 fiberglass compressed to five inches around the barrel. Insulation on the heads is 12 inches deep.
Girard pressure- and vacuum-relief vents are mounted in the 20-inch Betts manhole cover. The vents are specified with Kalrez gaskets. Tanks are piped for rear unloading through Betts QRB Hydrolet valves.
Bulk Manufacturing makes the curbside ladder, which has handrails for operator safety. Surrounding the manway area is an aluminum grip-strut work platform that has a rail for use with a fall-protection lanyard.
Revolver Plate The tanks are built standard with the Revolver upper-coupler plate. The polymer surface on the plate provides a significant friction reduction over the typical greased metal surface. Recent driver feedback indicates less binding.
Wiring and lighting are from Truck-Lite. Retro-reflective conspicuity tape runs the length of the trailer and outlines the rear head.
Hendrickson's Intraax air suspension is being specified on all new MTL tank trailers for driver comfort and reduced wear and tear. Other running gear components include Rockwell axles with automatic slack adjusters and Midland-Grau antilock braking. Michelin 11R22.5 XT-1 radial tires are mounted on aluminum disc wheels.
Bulk Manufacturing recently began installing the PSI tire inflation system on new MTL trailers. PSI claims the system improves safety and shows the potential to reduce tire wear and catastrophic failure. Company records indicate increased tire life.
Affiliates and owner-operators provide most of the 1,730 tractors in the MTL fleet. However, MTL does run approximately 330 tractors with companydrivers. "A company tractor is the only option in some cases," Buzz Babbitt says.
Tractor Choices MTL prefers Freightliner and Mack conventionals. The carrier runs both sleeper tractors and those with day cabs. Driver comfort enhancements include air-ride seats, air-conditioning, and a tilting and telescoping steering wheel.
Engines are rated at 355/410 horsepower and are set for a 65-mile-per-hour cruise speed. The drivetrain includes a 10-speed Rockwell RM10-145A transmission and Rockwell RT-40-145A drive tandem. Synthetic lubricants are specified for the transmission and differential. Other components include a Bendix 31-cfm air compressor, Jacobs engine brake, Rockwell WABCO air dryer, and Arctic Fox fuel heater.
The drive-axle air suspension is rated at 40,000 pounds. Among other running gear components are Centrifuse outboard-mounted brake drums, Rockwell WABCO antilock braking, Rockwell automatic slack adjusters, Alcoa aluminum disc wheels, and Bridgestone 11R22.5 radial tires.
MTL INC is looking for a few more good affiliates. Growth-oriented, entrepreneurial tank truck carriers are encouraged to apply.
MTL corporate executives want to expand the program because they see it as one of the fastest routes to growth for the third largest North American tank truck carrier. MTL's objective is to achieve gross revenues of $500 million by 2000, and it is halfway there.
Affiliates are being counted on to deliver a big chunk of that new revenue. They currently generate 60% of MTL's linehaul revenue total (approximately $146 million of MTL's $236 million revenue in 1996), and they run 602 tractors and 592 tank trailers. They also operate 44 of MTL's 74 terminals.
"We're looking for candidates that can give us access to new geographical areas, new business, and new customers," says Elton (Buzz) Babbitt, MTL chairman of the board. "We're estimating that new affiliates added in the next couple of years will help generate at least $15 million in additional revenue annually."
Babbitt stresses that the program is mutually beneficial. MTL is less exposed to the cyclical shifts of the tank truck industry because many of the expenses typically shouldered by trucking companies aren't part of the MTL income statement. Much of the fixed-burden is shifted to the affiliates. That's why MTL was able to achieve an operating cost per mile of $1.58 last year.
"Our affiliates operate most of the terminals in the MTL system, and they supply a large percentage of the power units," Babbitt says. "As a result, MTL is able to focus more investment resources on tank trailers. We have one of the most modern and specialized tank trailer fleets in the industry.
"Affiliates also give MTL the ability to provide very personalized service at the plant level. They give our company a human face."
Affiliate Benefits Affiliates benefit by being part of an organization with extensive support services and resources. Most importantly, MTL's size makes it a formidable competitor in attracting new business.
"Our program gives smaller tank truck carriers a chance to remain competitive in a market that increasingly is favoring large carriers," says Charles J O'Brien Jr, MTL president and chief executive officer. "Major shippers want fewer and fewer carriers. The core-carrier concept is here to stay.
"In addition, the technical demands of the business are straining the resources of many smaller tank truck operators. It is one of the major factors pushing consolidation.
"We want to make it clear that affiliates operate under the MTL umbrella, but they are still independent businesses. MTL is very decentralized, and we are careful not to destroy the best aspects of the affiliates."
The tank truck carrier added its first affiliate in 1978, but the program didn't really take off until about 1989. MTL currently has 30 affiliate partners. They range in size from a high of around $11 million down to less than $1 million in annual gross revenues.
While a number of independent companies have joined the program over the years, MTL also has created new affiliates by helping veteran MTL managers start their own trucking businesses. In some cases, MTL terminals have been sold or leased to these managers.
Affiliate Gross Affiliates receive 85% of the gross revenues they generate, with the remaining 15% going to MTL to cover the cost of the various corporate support services that are provided. Out of the 85% percent, affiliates pay their own bills, including payroll, equipment maintenance, other related overhead items.
Partners assume complete responsibility for worker compensation insurance coverage. Liabilities arising from accidents, spills, and contaminations are funded by affiliates up to $10,000 per incident. Amounts above that are handled by MTL. MTL's third-party claims administrator processes accident claims for the affiliates.
MTL support services include access to competitive financing for tractors and tank trailers. MTL also has a tank trailer leasing unit. MTL partners greatly benefit from MTL's purchasing efficiencies for vehicles, tires, fuel, and insurance.
Receivables functions are handled at the MTL corporate office in Plant City, Florida. MTL provides and supports a state-of-the-art computer system that includes dispatch coordination capabilities. Actual dispatching is handled by each terminal.
Affiliates have access to safety and environmental engineers deployed by the WCM Group in Houston, Texas. These engineers perform both scheduled and impromptu safety and environmental terminal audits. In addition, affiliates can consult with MTL's regional operations and maintenance managers.
Marketing efforts are coordinated by Michael Grimm, Montgomery Tank Lines executive vice-president. Affiliate partners participate in all rate negotiations that affect their operations; however, MTL holds the final authority and actually publishes the rates. Since the affiliate must be satisfied that it can make a profit, supply drivers, and ensure adequate driver compensation, MTL tries to adopt a rate that the affiliate prefers.
Affiliates are encouraged to coordinate operations with each other, and many build very solid working relationships. Cooperation is encouraged through an 8% commission that is paid to an affiliate for generating loads for either another affiliate or an MTL company-owned terminal.
Affiliates generally praise the overall structure of the system, saying it's the best of all worlds. Two affiliate veterans with extensive experience in the program offered their views.
Buddy Wood Buddy Wood and his company, Cletex Inc, were the first to join the affiliate program back in 1978. Today, Houston-based Cletex is one of MTL's largest single terminal affiliates, with over $11 million in sales. The affiliate runs 50 tractors and owns roughly 160 stainless steel tank trailers. Of the 75 employees, approximately 50 are drivers.
"Affiliation with MTL enables us to look like a big company from the outside," Wood says. "Internally, we're still a small company without a big corporate bureaucracy, which means we can react quickly to customer requests. The affiliation has given us fantastic opportunities over the years."
General Manager Thad Felton says: "MTL put us on the map. They've been like a big brother to us, helping out when cashflow was tight. We couldn't have been as successful without them."
Cletex serves as the main US link in the MTL effort to expand traffic in and out of Mexico. Cletex has formed a very close relationship with Transportes Especializados Antonio de la Torre e Hijos SA de CV in Tulpetlac, Mexico, MTL's affiliate south of the border.
"Mexico has become our niche," Felton says. "We now have 75 to 100 tank trailers in Mexico at any given time. Mexico-bound cargoes include chemical feedstocks and lube oils. About 60% of the trailers return loaded to the United States.
"We have so much Mexico activity now that we could just about focus exclusively on that side of the business. The only downside is that trailers are tied up for 10 days to two weeks while they are in Mexico, but that is a very minor issue."
Growing Operation Fueled by the Mexico activity, Cletex is growing. The company plans to be running 60 power units by the end of the year. All of the new tractors will be Freightliner conventionals with Detroit Diesel Series 60 engines rated for 425 horsepower.
Eighty percent of the Cletex tractors have Qualcomm satellite tracking units, which make it possible to place a tractor within about 100 feet anywhere on its route. More shippers and receivers are requesting that kind of monitoring capability, according to Felton.
Brenner Tank is the primary supplier of DOT407 tank trailers to the Cletex fleet. "We have been a Brenner customer for many years," Felton says. "We're able to get tanks when we need them. Brenner has been there for us through good times and bad. We do the same for them. There's nothing like a good working relationship."
The typical 7,000-gallon chemical trailer in the fleet is set up for rear unloading. With more customers requesting vapor recovery for chemical shipments, the carrier recently began adding a Fort Vale removable vapor recovery fitting to the hardware carried by the drivers.
Cletex operations are directed out of a recently expanded terminal facility that also provides office space for MTL regional managers. The maintenance shop, which is ASME-certified for code tank repairs, was increased to 110,000 square feet. The terminal also has a rail siding for transloading of chemicals.
Outstanding Affiliate Cletex is not the only MTL affiliate in the Houston area. Others include Montgomery Houston Tank Lines Inc, Pasadena; and Service Lines Inc, Freeport. Montgomery Houston Tank Lines was honored as the Outstanding Affiliate last year and M Tank Lines received the President's Safety Award.
Charlie Emhuff, president of Montgomery Houston Tank Lines, started with MTL in 1974 as a dispatcher. He saw the affiliate program evolve and joined the ranks himself in 1991. He rents the terminal facility from MTL.
"It was easy to become an affiliate because I grew up with the system," he says. "It's a good win-win arrangement. The affiliate program has given a number of us Montgomery managers a chance to become independent businessmen. We have incentives to grow, and we are in control of our own destiny.
"At the same time, the corporate support services take a big load off me. Corporate managers take care of major compliance requirements, including determining the right tanks to carry various chemicals. MTL has an excellent network for finding backhaul loads and such."
Montgomery Houston Tank Lines currently operates 54 tractors and about 90 tank trailers. Unlike Cletex, Emhuff prefers to limit owned equipment. Owner-operators provide all but one of the tractors in the fleet. All but 10 tank trailers are supplied by MTL.
Emhuff points out that the MTL tank trailer program is very attractive for an affiliate. In addition, he can adjust his trailer fleet quickly as market conditions change. Lately, the carrier has needed more equipment.
"We've been very busy all summer, and our revenues are up considerably over last year," he says. "One reason the Houston market has been good for tank trucking is that rail congestion throughout the area has brought big delays for chemical shipments moving by rail."
Located in the Bayport Industrial Park, the Montgomery Houston Tank Lines terminal has a one-bay maintenance shop for minor trailer repairs. Chemical cleaning is done in a two-bay wash rack next to the shop.
MARCO Antonio de la Torre wants his company to be the first MTL affiliate in Mexico. He's well on his way to achieving that goal.
De la Torre is director general of Transportes Especializados Antonio de la Torre e Hijos SA de CV, which has headquarters in Tulpetlac, Mexico. The tank truck carrier has been MTL Inc's interline partner in Mexico since May 1995.
"We're thrilled to be part of the MTL family," de la Torre says. "We feel that by working together, we can be successful on both sides of the border. We want to be like any other MTL affiliate. We know that the US-Mexico border will no longer be a barrier at some point.
"We were interested in finding a US partner since the late 1980s, but we didn't want to work with just any carrier. When we met the Montgomery people, we knew we had finally found the right fit."
MTL officials are just as enthusiastic about the partnership with De la Torre e Hijos. "This company grew in much the same way MTL did, through an unswerving dedication to customer service and a strong entrepreneurial spirit," says Charles J O'Brien Jr, MTL president and chief executive officer. "We're dedicated to providing our Mexican partner with whatever he needs to succeed."
Veteran Carrier De la Torre e Hijos is a 50-year-old family-owned tank truck carrier that began as a one-truck operation. The company has grown steadily, and the fleet now consists of 260 tractors and 400 trailers, most of them tanks. A growing number of the tanks in the fleet meet US DOT code and are supplied by MTL de Mexico SA de CV, MTL's new tank leasing operation in Mexico.
Tanks moving to and from the United States are carrying a wide variety of cargoes, including fatty acids, alcohol, glycerin, lubricating oils, solvents, and latex. "We have more and more cargo going both ways," says Alejandra de la Torre Verduzco, De la Torre e Hijos traffic manager.
While increasing amounts of traffic are moving in and out of the United States, De la Torre e Hijos still has a lot of customers within Mexico. The fleet operates throughout the country, with trips averaging 1,000 kilometers (600 miles).
De la Torre e Hijos is benefitting from a business climate in Mexico that has improved tremendously in the past year. Confidence in the government has risen, the peso is holding its value, and investment dollars are flowing in from Europe, Asia, and the United States.
Shipments to and from the United States are coordinated with Cletex Inc, an MTL affiliate in Houston, Texas. Managers at the two companies have formed very solid working relationships that are getting stronger and stronger.
The partners are taking steps to reduce the turnaround time for tanks moving between the two countries. Significant progress has been made.
Mexico Facilities De la Torre e Hijos directs the Mexican side of the operation from either of two terminals: the headquarters facility in Tulpetlac, a Mexico City suburb, or the Guadalajara, Jalisco, terminal. The carrier also has small satellite locations in Matamoros and Nuevo Laredo, Tamaulipas, and Monterrey, Nuevo Leon.
The two primary terminals are in the process of installing some of the most sophisticated tank cleaning systems in Mexico. The containerized units are high-pressure, low-volume systems that use Spraying Systems Inc spinners. The wash systems were assembled by Bulk Manufacturing Company in Plant City, Florida.
The first containerized unit is up and running at the Guadalajara terminal and is dedicated to foodgrade cleaning. Two more units are being assembled by Bulk Manufacturing. One will go to Guadalajara and will be used for chemical cleaning, while the other is slated for the Tulpetlac facility.
Even without the new wash units, De la Torre e Hijos had limited tank cleaning capabilities. Trailers were cleaned at the Tulpetlac terminal with steam supplied by a 50-horsepower boiler.
Computer Network The De la Torre e Hijos terminals are linked to the MTL computer network. They will run the MTL 2000 dispatching and management system just like any US-based MTL affiliate. The carrier has hired dispatchers and other terminal personnel who can speak both Spanish and English.
In many respects, De la Torre e Hijos faces many of the same concerns as its US-based counterparts. The Mexican carrier finds it difficult to locate adequate numbers of highly qualified, professional truck drivers.
"It's getting difficult to find good drivers who meet our requirements," Alejandra de la Torre says. "We have implemented MTL's driver-selection standards, and we are following the MTL safety program. We are trying to operate like a Montgomery affiliate in every way."
Drivers wear uniforms and carry all of the necessary equipment to perform their jobs safely. Protective clothing and equipment include rain slicker, goggles, leather gloves, and hardhat.
Driver appearance is important, as is fleet image. Tractors are washed at least once a week. Each driver is responsible for waxing his assigned tractor and keeping the cab interior clean.
Kenworth Tractors Drivers are assigned to some of the latest tractors available in Mexico. The carrier has standardized on Kenmex T800 tractors with Cummins M11 engines, 13-speed Fuller RTLO-14713 transmissions, and Rockwell drive axles. The carrier runs 350- and 400-horsepower engines.
The leased tank trailers that are used for international shipments are built by Bulk Manufacturing to DOT407 code. On average, the tanks have a 7,000-gallon capacity and are designed for a maximum lading density of 13 pounds per gallon.
Barrels use 10-gauge 316L stainless steel and the heads are eight gauge. The straight-barrel trailers are fitted for steam heat and have a Betts domelid with Girard pressure-relief vent and a Betts discharge outlet. The tanks are insulated with fiberglass.
The original tank trailers used in Mexico domestic service were built by Fruehauf de Mexico. Nacional de Carrocerias SA (Nacasa) has been the primary supplier for the past 15 years. About half of the Mexico-built trailers are of carbon steel, and a number of these are rubber-lined for acids. Stainless steel tanks, both insulated and uninsulated, make up the remainder of the trailer fleet.
About half of the Mexico trailers have three axles, allowing a 48.5-tonne (106,700-lb) gross combination weight. The tanks have pressure capabilities that are comparable to MC307 units in the United States.
Tank equipment includes a three-inch rear discharge outlet with a manually operated stainless steel gate valve, 18-inch manhole, and spring-loaded pressure-relief vents. Nacasa trailers have Sudisa axles, while the Fruehauf trailers come with Pro-Par running gear. All of the trailers are specified with spring suspensions.
Maintenance Program De la Torre e Hijos shops in Tulpetlac and Guadalajara keep the fleet in top running order. While preventive maintenance is the cornerstone of the maintenance program, company mechanics can handle virtually any project, from tractor rebuilds to tank repairs.
However, De la Torre e Hijos mechanics work on only the tanks that are dedicated to operations within Mexico. The shops do not have ASME certification for making repairs to DOT code tanks.
As part of the preventive maintenance program, tractor engine oil and filter are changed every 12,000 kilometers (7,500 miles). Mechanics make a detailed checkof each tractor every six months. Tank trailers also receive a complete PM inspection every six months.
Components needing overhaul usually are rebuilt. The maintenance department operates a well-equipped machine shop complete with lathe, drill press, and brake-lining machine. Looms are used to rebuild electrical wiring systems. A variety of diagnostic equipment is on hand to assist in engine overhauls.
WHEN Rene Bussieres started a local trucking company 10 years ago, he never imagined that a couple of petroleum transports would grow into a combined fleet of 532 tractors and trailers. In 1996, the Canadian carrier reported annual revenues of C$45.5 million.
Levy Transport Ltd is located in Saint-Romuald, one of several suburbs that surround the city of Quebec on the banks of the St Lawrence river. In a province that recognizes French as the primary language, English is part of the work environment at corporate headquarters. Operations are multiprovincial and binational-the carrier serves Canadian and US customers.
Levy recently experienced its biggest change when the company was acquired by MTL Inc, the parent company of Montgomery Tank Lines and Quality Carriers.
"We knew a good fit when we saw it," says Charlie O'Brien, MTL president and chief executive officer. "Levy is a very well-managed petroleum operation that offers us a solid position from which to expand our operating presence in Canada. Most importantly, they share the same dedication to customer service that we've always insisted on at MTL. You can't just magically create that commitment."
>From Levy's perspective, the deal made equally good sense. Eastern Canada is a highly competitive market, but there are significant growth opportunities for a well-run Canadian company. The merger also gives Levy the corporate support it needs to expand its business within Canada.
"Our Canadian presence combined with MTL's facilities and equipment in the US creates a perfect chance to grow our respective businesses on both sides of the border," says Rosaire Belanger, Levy general manager. "We now have access to additional terminals and equipment, as well as the recognized expertise of a major corporation.
"Levy and MTL have similar business philosophies of establishing transport partnerships with their customers. By establishing a close working relationship, we can better understand the needs of our customers. Providing superior customer service with dedicated equipment is part of the success equation at Levy."
When the deal was completed, Levy became a wholly owned subsidiary of MTL. The two organizations began working on ways to develop growth opportunities. One MTL goal is to more than double the combined Canadian revenue by the year 2000.
Today, Levy has a mix of petroleum, chemical, glass, and dry freight business. Currently, the chemical division accounts for about 30% of MTL's total Canadian revenues. As general chemical carriers, Montgomery and Levy can handle virtually any liquid product moved over the highway. Products range from acids, ammonia, and caustic to specialty chemicals used to manufacture glue for carpets and tiles.
Since the acquisition, both companies have implemented strategies designed to grow their respective specialty niches. Under the direction of Buddy Sexton, Montgomery is charged with expanding MTL's chemical markets throughout Canada.
Bussieres and the Levy team will focus on its petroleum niche primarily in Eastern Canada and explore opportunities for chemical hauling in Quebec and Eastern Canada. Belanger also sees growth opportunities for Montgomery and Levy throughout Western Canada and US border states.
In the past two years, the carrier purchased 42 new tank trailers to haul various chemical products. Most of the four-axle trailers have single-compartment tank vessels with a 38,000-kg (82,000-lb) payload capacity.
Tandem-axle trailers are used to haul product across the border into Northeastern states such as New York, New Jersey, Ohio, and Illinois.Some chemical products are delivered as far away as the Carolinas.
Single- and multi-compartment DOT407 tank trailers built by Tremcar Inc are among the newest units in MTL's combined Canadian chemical service. Capacity for a single-compartment trailer is 5,500 imperial gallons (6,600 US gallons). It is constructed of type 316 stainless steel with 10-gauge reinforcing rings. The shell is 10-gauge and the shell head is eight-gauge.
Tank hardware includes Girard DOT407 pressure-relief vents and Betts internal valves and domelids with Hypalon gaskets. Running gear is a Neway AR92-15 air-ride suspension. Ingersoll axles are rated for 25,000 pounds each with a 77.5-inch track. Rockwell S-cam brakes are equipped with Midland-Grau automatic slack adjusters.
The chassis rolls on 10-stud aluminum hubs, Alcoa aluminum wheels, and 11R22.5 Michelin XZE-1 tires. Lights and wiring are from Truck-Lite. The Jost landing gear is rated for 60,000 lb.
Drivers can reach the top of the tank using an 18-inch-wide stainless steel ladder with knurled channel rungs, side handrails, and platform-type top step. The 20-inch-wide walkway stretches the full length of the spilldam.
Some trailers are equipped with in-transit heat. All piping is stainless steel with 3/4-inch stainless steel ball valves. All chemical and petroleum trailers are specified with air suspensions to protect the chassis and tank vessel from damage caused by rough roads.
A portion of the Canadian chemical fleet is dedicated for specific chemical companies such as Borden Chemical and ICI. For example, an eight-axle B-train is in dedicated service for hauling formaldehyde solution to a customer in Montreal. Canadian B-trains are allowed a length of 23 to 25 meters (75 to 82 feet) depending on the tractor used. They can haul 48,000 liters (12,680 US gallons).
Other customers require specialized equipment for the delivery of some chemical products. Levy drivers use company tractors to pull chemical trailers owned by Degussa Corporation. The DOT412 trailers are used to haul hydrogen peroxide to numerous Canadian paper mills.
MTL's combined chemical operations use 230 tractors and trailers that are dispersed among five terminals in Quebec and two terminals in Ontario. Equipment is assigned to specific terminals for dedicated service.
Besides diversity of services, chemical shippers want carriers that have well-established quality programs. Levy has been an advocate of quality improvement processes for many years and the commitment has been strengthened since the carrier was acquired by MTL.
The quality effort has come a long way since Levy initiated MTL's Safety, Quality, Environmental (SQE) plan that encompasses hiring practices, employee training, safety and health committee, drug and alcohol policy, and emergency response team. Levy also follows Montgomery's ISO 9002 operating procedures at each terminal in the MTL network.
"Levy already has a reputation for building strong partnerships with its customers," Belanger says. "Adherence to the ISO 9002 operating procedures is useful as another tool to keep our processes consistent. It enables our employees to serve customers more efficiently."
Despite Montgomery's chemical orientation, petroleum operations continue to dominate at Levy. With 225 tractors and trailers, the petroleum division accounts for a major portion of Levy revenues.
Canadian oil companies serviced by dedicated tank trailer equipment include Petro-Canada, Shell-Canada, Sonic, and Imperial Oil. Levy drivers load their transports at terminals in Quebec and Montreal.
The Levy petroleum division has begun providing some logistics-type services for customers. In some instances Levy dispatchers are being assigned to work fulltime with specific customers.
Dispatch facilities in Saint-Romuald include separate offices for former employees of Petro-Canada and Shell-Canada who joined Levy Transport after the oil companies moved operations out of Quebec City. The dispatchers monitor product inventory levels with computer software provided by the oil companies.
Dispatch operations have been largely computerized for several years. Software has been upgraded and modified to match the needs of customers. Levy will be incorporated into MTL's MTL2000 computerized dispatch system.
"We show our customers that we have the depth and expertise to give them the highest level of service," Belanger says. "We will do whatever is necessary to adjust our operation to meet their requirements. For example, for some customers, we paint their company name and logo on our equipment."
Drivers check with dispatch to verify a trailer's previous cargo, and they review delivery instructions with the dispatchers. Cleaning details are discussed with drivers assigned to chemical shipments. Tank cleaning is handled by commercial wash facilities.
Levy delivers petroleum products to about 200 Petro-Canada facilities in the province of Quebec. Annual deliveries average 300 million liters (79 million gallons).
Beyond the routine deliveries to service stations and convenience stores, the petroleum division has developed niche opportunities. Ship refueling is one example. The carrier fuels vessels at the ports of Montreal and Quebec. Depending on the size of the ship, the fueling process can take as long as 24 to 30 hours.
To maximize equipment utilization, two and sometimes three drivers are assigned to each petroleum transport. Deliveries are made 24 hours, six days a week.
More than 90% of the power units owned by Levy are built by Freightliner. The carrier usually keeps tractors about five years and then trades them for new models.
"Freightliner sells its equipment at a reasonable price and offers a good warranty," Belanger says. "We usually prefer to keep tractors until the warranty runs out so that any major mechanical work is handled by the manufacturer."
The newest tractors in the combined Canadian chemical service are Freightliner FLD 120 conventionals with sleepers. They are equipped with Detroit Diesel Series 60 engines rated for 430 horsepower and 13-speed Fuller RTLO-16713A transmissions. Rockwell equipment includes 15.5-inch ceramic clutches, WABCO antilock braking systems, automatic slack adjusters, and tandem-drive axles with a 4:63 ratio.
Each tractor is equipped with a Leece-Neville alternator, Jacobs compression brake, Bendix AD-9 air dryer, Holland Air Slide fifthwheel, Con Met aluminum hubs, Alcoa aluminum wheels, and Michelin 11R22.5 tires.
Tractors also have driver-controlled differential and interaxle locks. Drivers are able to select optimum traction when encountering slippery road conditions or steep terrain.
All tractors are equipped with cellular phones and speakers for no-hands operation by drivers.
Drivers are an important component in the Levy effort to achieve a high level of service quality. The carrier starts by hiring the best drivers it can find. The driver corps includes a mix of owner-operators and company drivers.
Levy follows Montgomery driver hiring guidelines, which include 15 minimum eligibility requirements. Applicants must be at least 23 years old with a minimum of two years of verifiable over-the-road experience as a driver of a commercial motor vehicle within the past 10 years.
Specific citations or convictions during a stated time period automatically disqualify an applicant. For example, drivers may not have any speeding violation in excess of 14 miles per hour over the posted limit during the 36-month period prior to the order date of the motor vehicle record.
Approved applicants must complete classes at the Montgomery training school in Montreal within 30 days of being hired. Safety is emphasized during the initial training and throughout the time a driver is employed by Levy.
Driver training is part of the overall commitment by Levy and Montgomery to ensure that customers on both sides of the border receive the best possible service.
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