Wilhelm puts finishing touches on a 40-year tank truck career
Apr 1, 2008 12:00 PM
A Part-Time college job turned into a fulltime career that spanned more than four decades for Lanny Wilhelm. He capped off that lengthy tank truck career by serving as chairman of the National Tank Truck Carriers Inc (NTTC) over the past year.
Wilhelm says it has been a very fulfilling career that is closing on a high note. “Being selected as NTTC chairman in 2007 was a great way to celebrate my 40th anniversary in this business,” he says. “It also was 40 years ago that I attended what became the NTTC Leadership Development Seminar, which is now conducted at Purdue University. My youngest son, Jason, works at Liquid Transport Corp, and he attended the Leadership Development Seminar in 2007.”
Wilhelm started working for Hennes Freight Lines while attending Cincinnati University. Hennes was a multi-faceted carrier. It had tank operations and hauled a lot of dry bulk — cement, lime, and such. The company also transported heavy machinery and constructed electric generating plants along the river.
It didn't take long for Wilhelm to develop a strong interest in trucking and tank trucks in particular. “I liked the excitement of the job,” he says. “I was fascinated with the way products were moved around the United States.”
While a college student, Wilhelm was assigned to the tank truck side. He worked on weekends and during summer breaks as a dispatcher, driver log manager, and parts delivery driver. He was offered a fulltime job during his senior year.
Upon graduation in 1967, Wilhelm entered the Hennes management training program in Zanesville, Ohio. He stayed with that company until 1979 — when the tank truck operation was closed — and advanced to vice-president of operations. Over the years, he worked in the dispatch, safety, and sales departments.
Hennes shut down tank truck operations in 1979 to focus on other parts of the business. Wilhelm went to work for Ford Brothers in Ironton, Ohio, serving as vice-president of operations.
From there, he moved to Liquid Transport Corp in 1982 to become general manager. He built a new management team and upgraded equipment and systems. In 1990, Wilhelm was promoted to president and was named a partner.
NTTC has been an important part of Wilhelm's professional life throughout his tank truck career. Over the years, he served the organization in various capacities including Region III director, Region III vice-chairman, and treasurer.
Back home in Indiana, Wilhelm was elected chairman of the Indiana Motor Truck Association in 1993. He was named Ernst & Young Entrepreneur of the Year in 2000.
During a recent interview with Bulk Transporter, Wilhelm talked about how the industry has changed and some of the challenges that lie ahead. He reviewed the current condition of the tank truck industry.
BT: How would you characterize the state of the tank truck industry today?
Wilhelm: I believe tank truck carriers are holding their own compared to the rest of the trucking industry. I think we are doing better than general truckload carriers considering the state of the economy.
BT: Will we see a recession in 2008?
Wilhelm: There is a lot of talk about a recession, and some people believe we are in one now. I think the industry is seeing some negative growth, but I wouldn't say it has entered a recession yet. We're very close, but we may be near the bottom of the downturn.
I do believe that economic growth will be flat for our industry this year. The carrier base seems to be maintaining their revenues at about the same levels they achieved in the past couple of years. We all are working much harder to load the trucks. However, we're still able to move all of our trucks, and we've been able to keep most of our drivers.
Two years ago, it was a different story. All of us had an overload of freight. We were at maximum capacity, and it was difficult to attract enough drivers.
BT: Does the tank truck industry have trucks parked right now?
Wilhelm: If you look across the industry, many tank fleets do have some equipment sitting. We're not adding new equipment like we did a couple of years ago. However, we're still employing about the same number of drivers as we did a couple of years ago, and we are keeping them busy.
BT: What is the driver situation today?
Wilhelm: It's easier to attract drivers today. Part of the reason seems to be that a lot of truckload drivers are now available.
BT: Will the tank truck industry be able to retain those drivers once the economy turns around?
Wilhelm: We certainly hope so. At Liquid Transport we're looking for new business that would help with driver retention, and we're asking our drivers for more flexibility with regard to the types of cargoes they are willing to handle.
BT: What is NTTC doing to help ensure that tank truck carriers have enough drivers?
Wilhelm: Last year, NTTC employed a public relations firm to develop advertising materials promoting the tank truck industry as a good place for truck drivers. We're really targeting the van sector. Drivers like the fact that when they work for a tank fleet, they don't have to sit around in warehouses and help with loading and unloading. More drivers from the van side are taking a hard look at tank trucks.
Admittedly, we're getting some of the van drivers because tank fleets have remained busy as the dry freight side slowed. We think we can keep these drivers once we get them on board.
BT: How is the tank truck industry being impacted by the higher diesel prices?
Wilhelm: The higher fuel prices certainly are taking a big bite out of the profit margins. Most of us are passing along fuel surcharges to offset the increase. However, we do have some shippers that are not paying a full surcharge.
Looking down the road, I think many shippers will begin to question the fuel surcharges. I believe they will begin asking us to look for ways to offset the cost to them.
BT: What is the future for owner-operators?
Wilhelm: Federal agencies are pushing hard right now to make fleets view owner-operators as company drivers. We certainly see this with the Internal Revenue Service. I think they are going to take a closer look at contractors in general in the future.
BT: Isn't that an anti-small-business attitude on the part of the federal government?
Wilhelm: It certainly could be viewed that way. Ultimately, I think we'll still be able to use owner-operators, but there is going to be a battle over this. There are so many owner-operators working with tank truck fleets that it would be a major challenge to convert all of them to company drivers. It would be cost prohibitive. We'd also see a huge impact on the US economy.
BT: Looking at the candidates who are most likely to be on the Republican and Democrat Presidential ballots, how do you think they will impact trucking?
Wilhelm: Generally speaking, both Democrats and Republicans have worked with trucking. However, we do believe there will be a lot of changes if the Democrat slate gets in. Certainly, there will be changes in appointed officials at the Cabinet level and regulatory bodies. We're also likely to see higher operating costs due to legislative and regulatory activity.
BT: What will be the impact on trucking if the person elected President is obligated to organized labor?
Wilhelm: The candidates competing for the Democrat nomination are under a lot of pressure to support organized labor. The unions want the card-check system to be mandated federally because they would have an easier time organizing businesses, such as trucking companies. We think that is one of the first things a Democrat president would do after taking office.
That is a big issue that could have a huge negative impact on trucking. Most of trucking has been non-union for quite a few years now. We've seen a lot of growth as a result.
BT: How would the trucking industry be affected?
Wilhelm: Productivity would be hurt. We really don't know how much unionizing would cost the industry. A lot of numbers have been thrown around, but it certainly will impact the bottom line of trucking.
BT: What is likely to happen with hours of service?
Wilhelm: The fight over the hours of service rule is not over. Sometime this year, DOT (Department of Transportation) will come out with a rulemaking basically stating that the new hours-of-service rules should be implemented. We hope that happens, because we believe the new rules are good for trucking.
We're able to pick up an extra hour of productivity with drivers. The 34-hour restart has been positive for trucking. The sleeper berth aspect of the rule has been a bit of a problem.
BT: Where does the industry stand now on the indemnification and hold-harmless contract clauses?
Wilhelm: It remains a big issue for trucking. The issue really got started with the tank truck industry, and the carriers in this industry took the lead in pursing a legislative fix at the state level. Fleets are working hard with state legislators to get laws passed that prohibit shippers from forcing carriers to sign these hold-harmless agreements.
NTTC has been very involved in working with a number of our trucking executives and with state trucking association presidents. About six states already have prohibited these agreements, and a number of other states have pending legislation. Indiana is one of the states that have banned hold-harmless agreements, and Liquid Transport Corp executives worked closely with state legislators on that effort. The Indiana legislation has become a model for other states.
Shippers aren't totally giving up, though. They are shifting their approach a bit. Many are now asking carriers to name them as an additional insured. That also poses problems for the carrier. Carriers need to understand the contracts presented by shippers. Don't just sign a contract thinking these agreements won't be a problem.
Insurance companies are totally opposed to carriers signing off on these additional insured arrangements. A fleet can be named in an insurance claim simply because its truck was on site when some sort of incident occurred. It doesn't even matter if your vehicle had anything to do with the problem.
BT: How is the tank truck industry being impacted by security requirements from government agencies and shippers?
Wilhelm: The impact has been big. Security requirements adopted since 2001 certainly have increased our operating costs. Access to shipper facilities is more difficult, and it often takes longer for drivers to pick up loads.
The TWIC (Transportation Worker Identification Card) in particular has been a real challenge for the tank truck industry. It will cover any port on a waterway, and that includes rivers. The TWIC is expensive, and drivers must go to a port location to get the card. That's not always easy for fleets that are far away from the ports.
We need a better national security plan for drivers. We need a single document that covers security, the hazmat endorsement, and so on. That would be a real plus for us. Adding to the current confusion are shippers who also have their own security cards.
BT: With the continued graying of tank truck industry management, what sort of merger and acquisition activity are we likely to see in the next few years?
Wilhelm: We haven't seen a lot of this in the past several years, because carriers have been busy and they were making good profits. As the economy worsens now, we're starting to see more interest in selling.
I believe the larger tank truck carriers will continue to buy smaller fleets. There will always be a place for smaller niche carriers, but the small fleets will face greater competitive pressures in coming years. They simply can't compete with the big fleets if they don't have a special focus.
BT: Are the large fleets able to achieve the return on investment that they need to remain competitive?
Wilhelm: I question whether they are working as efficiently as they should. However, I still believe that large carriers are best positioned to provide shippers with the services that they want. The large carriers have the best opportunity to improve profitability while meeting shipper service requirements.
BT: Liquid Transport Corp was acquired by Dana Transport in 2006. What was that experience like for you?
Wilhelm: It was an emotional decision for us, but we realized that the timing was right. We believe the sale was good for our company and our employees. LTC has grown. We operate more than 1500 power units and more than 6,000 trailers. We've benefited by joining an organization with more than 30 tank cleaning racks across the United States.
BT: What has been your company's experience so far with the 2007 engines and ultra low sulfur diesel?
Wilhelm: We're running some new trucks. We haven't experienced any big negative issues with the new equipment, but they don't get fuel economy as good as we had anticipated. We believe the manufacturers will continue to work out any bugs.
Truck prices certainly have increased, and we haven't been able to pass along those additional costs to our customers. We're eating the higher costs right now, but somewhere down the road we'll need some rate increases. The same goes for the higher prices we're experiencing with tank trailers.
BT: The American Trucking Associations continues to discuss the possibility of raising truck weights. What is the tank truck industry view on that?
Wilhelm: NTTC has opposed any size and weight increase, but we also realize that many of our members are looking for ways to increase productivity and profitability. We're working with a number of our vendors to see if it is possible to add payload to existing tank trailers.
We believe the size-and-weight issue will boil down to state-by-state initiatives when it's all said and done. At NTTC, we'll look at higher weights from that perspective. We think that states considering higher weights are most likely to follow ATA's 97,000-lb recommendation.
BT: What is happening in the area of tank truck rollover prevention?
Wilhelm: Last year, NTTC co-sponsored three rollover summit meetings. We had a great turnout for those meetings. We're working with the Department of Transportation and Federal Motor Carrier Safety Administration to identify new alternatives and technology to prevent rollovers. Many of our members now order new vehicles with roll stability systems. We're also addressing the issue through driver training. We want to make sure drivers understand rollovers and how to prevent them.
It's important to remember, though, that the rollover incidence among tank truck carriers still is relatively small in comparison to the total number of shipments we handle each year.
BT: What is the likelihood that we will see a regulatory initiative targeting tanker rollovers?
Wilhelm: It could happen. We're not fighting it. I don't think we would stand in the way of a regulation mandating roll stability technology on new vehicles. We might have an issue with a retrofit requirement.
BT: LTC was once very involved with tank containers, but what happened to that market in the United States?
Wilhelm: We entered the tank container market about 20 years ago and saw very rapid growth. At the time, we were hearing that tank containers were going to take the place of tank trucks for a lot of the longhaul domestic shipments of chemicals.
The tank container business remains viable, and we are still doing a lot with them. However, we don't see tank containers replacing tank trucks in US domestic operations. Most of the tank containers we handle today are transporting international shipments.
BT: What are your thoughts on the movement by some state governments to turn existing freeways into toll roads and to sell toll roads to private corporations?
Wilhelm: I don't think selling toll roads is a good idea. Indiana is one of the states that sold a toll road to private owners. This could have a huge negative impact on transportation. We don't know what the overall cost structure will be. The new owners can do pretty much what they want, and their main objective is to make a profit. We believe states need to maintain ownership over their toll roads and other highways.
BT: What should we do to upgrade the nation's highway system to alleviate the growing traffic congestion that is affecting truck fleet productivity?
Wilhelm: Highway congestion is a big problem not just for trucking, but also for the general public. Today, you end up sitting in huge traffic jams in just about every major US city.
I think our politicians missed the mark years ago by failing to develop an effective tax system to keep up with the nation's growth. As a result, we didn't keep up on new highway construction, and we failed to adequately maintain what we already had in place. Our existing interstate highways are in absolute shambles. The biggest challenge for our political leaders is to find an effective way to raise the money needed to fix the highway system.
Highway congestion is one reason we lose drivers today. They get so disgusted sitting in traffic, and they decide they don't need that aggravation anymore. They go off to do something else less stressful. We have no control whatsoever over that issue.
BT: What sort of problems do you see with the highway construction that is underway today?
Wilhelm: Many truck-related rear-end collisions occur in construction zones. States need to do a better job of providing warnings to alert truck drivers that they are entering a construction zone. Truck drivers don't get ample warning currently. It's not enough just to have some warning signs a half mile or so from the construction zone. It would be a better idea to add rumble strips and some flashing lights a couple of miles before the construction zone.
BT: With all of the industry challenges, is there still room for new tank truck carrier entrants?
Wilhelm: It's very difficult for someone to start a tank fleet from scratch today. Costs are becoming prohibitive. However, there will always be niche opportunities in some markets.
BT: How do we attract more young people to the tank truck carrier management ranks?
Wilhelm: Trucking in general needs to do a better job of promoting the industry as a career choice. The management ranks are graying, and Baby Boomers are beginning to retire. We have to attract more young people right out of college. We have to show them what a great career this can be.
BT: How would you rate your year as NTTC chairman?
Wilhelm: It was a really great experience for me. I was honored to serve as chairman of NTTC after so many years as a member. It was a chance to work more closely with John Conley and the association staff. National Tank Truck Carriers is a wonderful organization that represents our industry very well.
BT: Why should tank truck carriers join the association?
Wilhelm: There are many reasons for a carrier to be a member. Certainly, NTTC stays on top of the industry issues coming out of Washington DC.
BT: Why do fleet executives need to be active in NTTC?
Wilhelm: The association staff needs member input. Members also are instrumental in alerting the NTTC staff to government actions at the state level that could impact the industry.
BT: What did the NTTC Middle Management Course mean to you?
Wilhelm: Before I went there, I really knew nothing about National Tank Truck Carriers. It provided my initial insight into how a trade association can be a real asset to trucking companies. It also gave me awareness that you can network with a lot of people throughout the industry. It really opened my eyes and gave me a much greater awareness of the trucking industry.
BT: What does the future hold for you?
Wilhelm: Trucking has been an absolutely wonderful career for my family and me. I enjoyed all of the years in this industry, and I'll still have some involvement with trucking in coming years.
In June, however, I'm stepping away from day-to-day operations at Liquid Transport. I will continue with the company for a couple more years in an advisory role. I'll always be part of trucking, and I'll stay involved in NTTC affairs.
At the same time, I'm moving on to some new opportunities. I'm involved in building some strip shopping centers and an office building. I want to indulge my passion for beautiful automobiles, and I plan to continue building my car collection. Finally, I want to spend more time with my wife, Tamara, and my children and grandchildren.
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