Cryogenic hauler GenOx Transportation Inc operates in one of the smallest niches within the tank truck industry. However, that doesn't mean the management team has small dreams and goals.
In fact, quite the opposite is true. Launched 10 years ago, the Houston, Texas-based carrier has grown at an impressive rate. Company growth barely paused during the most recent recession, and GenOx is ramping up for an aggressive push into an emerging segment of the cryogenic transport market.
“We definitely believe that LNG (liquefied natural gas) will be the next significant growth opportunity for the cryogenic transport sector,” says Kevin Mathews, GenOx Transportation's president. “Demand is growing for LNG as a transportation fuel, and we are well positioned to play a leadership role as a transporter. We have an LNG transport permit from the Texas Railroad commission, our drivers are certified for LNG, and we have purchased five new LNG trailers.
“We're going to grow with LNG just like we have with other industrial gases. We're going to apply the same principles we've used over the past decade, such as investing in equipment, so we are positioned to provide customers with the service they are entitled to receive.”
One of the strengths of GenOx is their focus on long-term relationships. Mathews explains: “My father taught me a key value to success is in building and maintaining long-term relationships. Our relationship with our customer is as important to us as it is with our banker, our insurance agent, our attorney, our safety and IT consultants, our trailer and tractor manufacturers and our vendors. They understand our vision and provide us with the tools which allow us to focus on our core business.”
GenOx definitely grew at a rapid pace over the past few years. Growth reached a record level in 2008 before the recession hit. “We resumed growth in late 2009, and hit record levels again in 2010 and 2011,” Mathews says. “All indications are that we should do well this year.”
The GenOx management team anticipated the end of the recession in 2009 for the industry sectors the carrier serves. “We started increasing our driver force and trailers early on,” Mathews says. “That meant we were able to meet increased customer demands, and that gave us a jump on the market. GenOx has continued to invest more than $5 million a year on new equipment since 2008.”
Mathews grew up in the industrial gases transport industry, which has helped him understand the challenges and opportunities in the business. His father, Russell Mathews, was Airco's general manager of distribution for North America during the 1970s and started Cryogenic Transportation, which he owned from 1982 through 1996.
After earning an economics degree, Mathews worked for Matlack Systems Inc. and Archer Daniels Midland Company during a seven year period. Along with his father, he identified a specific need in the industrial gas transportation industry and started GenOx in 2002 with 12 tractors and 10 cryogenic trailers.
The primary focus for GenOx is on industrial gases, including nitrogen, oxygen, argon, carbon dioxide, and helium. The carrier hauls these gases in compressed and liquefied form.
“These gases play a critical role in the US economy, and the companies that produce them touch on every major industry, including steel, food processing, medical, computer, construction, automotive, and energy production,” Mathews says. “Demand for these gases gives an indication of economic activity. For instance, argon demand is a key indicator of the health of the steel and electronics industries.
GenOx targeted call-and-demand business initially and gradually added contract business. Call-and-demand business generally requires quick response, and projects last a day to two weeks in the winter. Summer call-and-demand projects often run longer.
The nature of the business takes the GenOx fleet throughout the United States and into parts of Canada. Tractors average 140,000 miles a year, and total fleet mileage was 11.8 million miles in 2011.
The fleet operates out of the headquarters terminal in LaPorte, Texas, and terminals in Augusta, Georgia, and Toledo, Ohio. The carrier also has satellite locations in Jackson, Mississippi; Oklahoma City, Oklahoma; Salt Lake City, Utah.
To ensure that customers receive the best possible service, GenOx brings in only experienced tank truck drivers. “We want a minimum of three years of over-the-road truck driving experience,” says Ken Utz, GenOx vice-president of safety management. “Tanker experience is mandatory — as is a hazmat endorsement — and cryogenic handling experience is important. Driver candidates also must have a valid TWIC (transportation worker identification credendial) card.”
Mathews adds that the carrier doesn't select just anyone to fill a seat in a tractor. “We have a waiting list of people who want to drive for us, and we take our time with the selection process,” he says. “We want a mature driver who isn't trying to race through life. We enable them to make a good living while working safely. We know our strategy works because we have a very low accident rate and our driver turnover is just 10%.
The minimum driver selection age for the carrier is 25 years old, but the average is closer to 45. Many of the drivers selected are recommended by current GenOx drivers, and already have cryogenic transport experience.
All driver candidates undergo a rigorous background check, and Utz stresses that the GenOx selection process exceeds the Federal Motor Carrier Safety Administration's driver qualification requirements. “We don't leave anything to chance when reviewing a candidate,” Utz says.
Drivers must show that they have successfully completed training on the transport and handling of liquefied gases, in addition to Department of Transportation-mandated training, before they are allowed to begin hauling for GenOx. In addition to an extensive safety and orientation program, they also must complete the Great West Casualty Insurance Company “Value Driven Driving Program” and watch the rollover training video produced by DOT and National Tank Truck Carriers.
“We constantly reinforce the safety message with the drivers, and we make it clear that our operation fully complies with federal requirements,” Mathews says. “We believe safety compliance is a byproduct of good business practice.
“We want our customers and the public to know that we run a safe operation. That is one reason we recently requested an FMCSA safety review, which resulted in a “Satisfactory” rating. In addition, we recently worked with the Texas Department of Public Safety to train State Troopers on MC338 tanks used to transport LNG. We're always open to working with federal and state inspectors to ensure that we are all on the same page with regard to safe transportation of cryogenic liquids.”
Drivers at GenOx are independent contractors, some of whom lease their tractors through the carrier's in-house program. Drivers are under no obligation to buy tractors from GenOx, but they benefit from the fleet pricing.
The carrier is purchasing 30 new tractors this year, all of them Freightliner Cascadias with 72-inch sleepers. Specifications include a 450-horsepower Detroit DD13 engine, Eaton Fuller 10-speed transmission, and Meritor drive axles. Safety-related technology includes Meritor WABCO's roll stability hardware and OnGuard collision-avoidance system and Bendix disc brakes.
“We learned about the benefits of the collision avoidance and roll stability systems and disc brakes at annual safety symposiums held by some of our shippers,” Mathews says. “These two-day meetings are held in spring and fall and are attended by gas processors' in-house fleets and also the for-hire carriers that work with the gas processors. We share equipment recommendations and safety strategies. We get the latest recommendations on cryogenic product handling from around the world.”
Non-code cryogenic tanks make up most of the trailer fleet, and new units are built by Alloy Custom Products, Lafayette, Indiana. Forty-five new trailers have been ordered this year. GenOx buys trailers with aluminum or stainless steel cargo tanks, depending on application.
“In most cases, our trailers are dedicated to specific products, and we want the maximum capacity for each product,” Mathews says. “We want to be able to give our customers the maximum payload, which means they get more bang for their transportation dollar.”
For example, nitrogen trailers are specified with aluminum inner vessels that have a 7,700-gallon capacity. Trailers are insulated with a high-efficiency fiberglass, rather than the perlite that once was an industry standard. Trailer-mounted product pumps are powered by a Kubota diesel engine mounted in a cabinet behind the landing gear. Product pump and hoses and valves are accessed through the aluminum cabinet at the rear of the trailer.
Running gear for the 102-inch-wide trailers includes Hendrickson Intraax air suspensions with Hendrickson's Tiremaax tire inflation system, Meritor WABCO roll stability, Bendix air disc brakes, and Bridgestone widebase tires.
“Eventually, we'll shift our entire fleet to air disc brakes,” Mathews says. “Disc brakes pads last longer than conventional S-cam brake linings, and they have a lower cost of maintenance, but we are really making the switch for safety due to the shorter stopping distance for disc brakes.”
Five of the 45 new tank trailers on order are for LNG. These will be constructed to MC338 specifications and have a 13,000-gallon capacity and a 70 psi maximum allowable working pressure. Trailer tare weight will be 25,000 pounds.
“These LNG trailers are just the beginning for us,” Mathews says. “We believe demand for LNG as a vehicle fuel will grow, especially with high-utilization fleets. Engine technology is improving, and more natural gas liquefaction plants are being built or expanded. This is definitely a growth market, and we want to be part of it.”
An aggressive maintenance program keeps equipment in top shape. The three GenOx terminals have small maintenance shops, which handle routine preventive maintenance and minor repairs. The carrier also uses various commercial trailer shops in areas where the fleet is operating. “We find maintenance shops that understand cryogenic equipment,” Mathews says.
Tractors and trailers are inspected at least monthly using an inspection procedure that exceeds the requirements of a Federal annual inspection. In addition, twice a year, GenOx initiates a detailed inspection of every vehicle using the DOT annual inspection procedures, regardless of where the equipment is located.
“We apply anticipatory management for our business model, which includes both maintenance and safety,” Mathews says. “We take a proactive approach in order to avoid potential problems, which we are addressing by installing roll stability systems, OnGuard collision-avoidance systems, and Bendix disc brakes. We are constantly searching for new safety technologies in order to ensure our driving force is equipped with the tools they need to safely and efficiently serve our customers. Our goal is to make sure that every pickup and delivery is incident-free.”