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Hollingsworth Winds Up Great Year
FLINT — Even with higher diesel prices, costlier insurance premiums, a shortage of experienced drivers, and the fact that thousands of transportation companies across the country have gone out of business, the Hollingsworth Group had a banner 2004.
With a local office in Alto and company headquarters in Flint, the Hollingsworth Group saw its West Michigan brokerage revenue soar to $4.5 million last year — up 45 percent from the firm’s 2003 total of $3.1 million.
Hollingsworth is a logistics company with warehousing and supply chain management services, but primarily is a freight hauler with two divisions that blanket the Midwest and deliver to Ontario.
Chieftain Contract Services has more than 300 tractor-trailers in its fleet that carries an assortment of goods ranging from auto parts to bottled water. The other division, Help Expedite, uses 110 vans, trucks and tractor-trailers to move “hot” freight — those “on-time” parts that clients needed yesterday.
“Our company retained good drivers and kept our fleet intact, where we could actually say yes to clients. The amount of freight was going up, and the determination of whether we did well or didn’t do well was being able to say yes to the customer,” said Christopher Shepard, president of the Hollingsworth Group, on why the firm had a successful year.
Higher costs for diesel and gas and higher insurance premiums being offered by fewer insurers were both problems haulers faced last year, but neither was the biggest problem.
Shepard said the biggest was finding and then holding on to experienced commercial drivers. One reason for that is drivers’ pay didn’t keep up with the cost of living during the economic boom of the 1990s, so many took jobs in construction or manufacturing.
“They weren’t growing in their salaries and what happened was there were fewer people getting into trucking because it didn’t look as attractive as other jobs,” said Shepard.
If there are fewer qualified drivers, then, according to Murphy’s Law, the sheer amount of freight that needs to be driven will rise. Shepard said that is exactly what has happened over the past few years.
With the high volume of imports that have arrived in the United States from China, some Midwest companies went to the coasts to haul those goods because port contracts pay more. Shepard said that exodus left a hole in the regional market, but also created an opportunity for firms, like Hollingsworth, to pick up more business.
But when there is more freight to haul — again, according to Murphy’s Law — the cost of diesel will go up. And it did. Trucking firms added a fuel surcharge to clients’ bills when the pump price rose beyond a manageable point. Contracted customers, though, often won’t pay it or will only pay a portion of it, leaving a hauler with higher expenses and lower margins.
“Right now, it’s hovering between a 9 and 11 percent surcharge. I’ve got some customers that still won’t pay a surcharge at all. I’ve got others that are paying 4 and 5 percent, which just doesn’t get it,” said Shepard.
Increased security has affected the business, too. New regulations have made it tougher for Hollingsworth to transport hazardous materials and make regular trips into Canada, where border delays can last for hours. So Shepard said his company has cut back both on the hazmat hauls and Canadian trips as other trade has become available.
“Markets drive directions of companies in most every case and with the over-abundance of freight and a lack of capacity, we chose not to bid that business,” said Shepard.
Even with all those roadblocks and even though 60,000 U.S. trucking firms have gone out of business over the last three years, the Hollingsworth Group did very well in 2004. The bottom line the firm achieved last year becomes even more remarkable knowing that last year was only its third year of operation in the region.
Although Hollingsworth was founded in 1924 — making it one of the oldest transportation firms in the country and possibly the only own owned by Native Americans — the Alto office only opened in 2001.
Dave VanHalsema directs the operation there, which employs 25.
Michigan, Ohio, Indiana, Illinois, Wisconsin, Kentucky, Tennessee and Ontario make up the routes both Hollingsworth divisions travel. Detroit, Nashville and Warren are where the firm has its terminals, and Detroit and Duran are where Hollingsworth has more than two million square feet of warehouse space.
“We’ve also bid and won some of the projects with the automotive companies to help them with their logistics management,” said Shepard.
The firm’s newest division, though, distributes quality paper for point-of-sale products. Four-year-old Chieftain Papers is a middleman between mills and their hauling customers. The firm, for instance, may very well have sold the paper that a new car owner’s manual is printed on.
As for 2005, Shepard said all the transportation indicators he has seen, including those on Wall Street, forecasts that the industry should do well this year, and he projects that his firm will grow a bit more over the next 11 months.
“My company right now, with our strategic plan, is looking to solidify and stabilize what we had in ’04, maybe build on it a little bit. But I’m not looking for enormous growth,” he said.
Shepard isn’t looking for enormous growth because that takes investing lots of capital, finding more hard-to-find drivers, and buying expensive new equipment.
Those are three things he isn’t planning to do, at least not this year, because Hollingsworth is in the business for the long haul.
“I’m looking to do modest growth,” he said, “even though the economy is booming, it seems to me, and there is plenty of freight to be hauled.”