- change ups
Equity Transportation moves to bigger Holland warehouse
Equity Transportation Co.’s expansion into warehousing and load consolidation one year ago has worked so well, it has now moved into a larger warehouse only yards away from its first warehouse in Holland.
The Walker-based trucking company, which has 250 drivers and operates throughout the continental United States, moved in October into a 650,000-square-foot building at 1451 M-40 in Holland. Equity is leasing 400,000 square feet in the building, which was built by the Robert Grooters Development Co. but now is owned by Kojaian Management, a Bloomfield Hills company that owns approximately 4 million square feet of industrial space in the Greater Grand Rapids and Holland/Zeeland areas.
Equity had been leasing a smaller 65,000-square-foot warehouse facility from RGDC since November 2009, but “we outgrew that this summer,” said Jason Harris, director of operations for Equity at its Holland warehouse, adding that Equity “just moved across the parking lot” to the much larger Kojaian facility.
“When the economy was down, we had to kind of reinvent the wheel. It’s been a couple of tough years in the transportation industry,” said Chad Bishop, vice president of operations at Equity.
As the recession set in and worsened, there were too many trucks nationwide and not enough loads, which forced trucking companies to drop their rates by 18 to 20 percent during the last couple of years — “really, below operating cost so we had to do something to get our revenue up,” said Bishop.
So Equity added a new service for its customers: load consolidation, which requires docks where the partial loads are combined in one. Existing docks generally come with warehouse space, in which Equity saw yet another source of revenue.
Now, said Bishop, “we can do anything,” from inventory control in the warehouse to “milk-run” deliveries of parts to local industrial companies that operate on just-in-time manufacturing schedules. About 10 people work at the warehouse.
Bishop said Equity knew many of its customers were shipping in semi-trailers that were only half-full, but paying the full-trailer rate. So Equity began offering to consolidate partial loads with other partial loads going in the same direction, for lower rates.
Shippers are often reluctant to do that because they don’t want competitors finding out what they are shipping and where it’s being delivered, but Equity installs partitions between the loads, “so you wouldn’t know who is riding with who,” said Bishop.
“Everybody is trying to save money” said Bishop, adding that it was “a great time” to offer load consolidation. “We were able to save companies 20 percent on their freight bill, and we were able to increase our rates, too,” said Bishop.
Just one customer alone has saved $150,000 in shipping since Equity began offering load consolidation a year ago, he added.
It also has other advantages. “Our load consolidation program is a green program. Everyone’s trying to go green,” said Harris, and Bishop noted that consolidated loads actually means those shippers can claim they have a smaller carbon footprint and also split the fuel surcharge with the other shipper on that load.
Harris said that as the economy was “going down the tubes,” Equity saw the opportunity to save customers money. Now there are sometimes as many as three or four different loads on one truck, ranging from office furniture to farm equipment, and household goods to food and beverages.
When Equity first started its load consolidation and warehousing, it was consolidating three to five loads per week, and customers were using from 15,000 to 20,000 square feet of warehouse space. Now, said Bishop, the company sometimes consolidates more than 30 loads a week, and 100,000 square feet of the warehouse is in use.
Equity, which is now based off Fruit Ridge Avenue just north of I-96 in Walker, was founded in 1978. By 1993, its fleet consisted of 30 trucks, all owner-operated, and the company was struggling. That year, Alan Bishop, Chad’s father, bought into Equity and helped make it a viable business again. Alan Bishop became sole owner of Equity around 2005 upon the death of its founder, Ed Stoga, according to Chad Bishop.
Today, Equity owns its own fleet — 250 semi-tractors and about 750 trailers — and has a total payroll of about 370.
The past two years were especially grim for the American trucking industry. Bishop said that from what he has read, the closing of many trucking companies and downsizing by others led to as many as 200,000 semi-tractors being removed from service in the United States — “which definitely helped us,” he added.
Bishop said Equity “really grew like crazy” up through 2008; then the recession hit. Equity’s business with the office furniture industry dropped the most, he said, but the company also hauls a lot of food and beverages, raw materials and general merchandise.
“We survived because we really crunched down. We got lean,” he said, describing it as “a scary couple of years.”
An employee asked Bishop when the trucking industry was going to get back to its previous level of work before the recession. “I said this is the way it’s going to be and this is the way we’re going to operate. Because I don’t think it’s ever going to get back to the way it was.”
Bishop said that, in his opinion, no trucking company is going to put more equipment on the road right now: “They’re too scared.”
Trucking is a volatile industry, with frequent ups and downs, but Transport Topics in late November reported that American Trucking Associations Chief Economist Bob Costello said “there is a little bit of life in this economic recovery.” He was responding to news that the October volume of freight hauled by U.S. trucking companies was at a three-month high and 6 percent above October 2009.
Bishop said Noel Perry, an economist with Transportation Research Consulting Group, is one of the most highly regarded experts on the trucking business, and Perry is predicting that overall, 2011 and 2012 will be “very good years” for the industry, according to Logistics Management magazine.
But there will be challenges.
“I think we are through the worst of the recession,” as far as its impact on trucking, said Bishop. “But the next hill we’re going to have to climb is a driver shortage. We are just doing everything for our drivers and trying to hang on to them.”
Equity has openings for drivers now: “We could probably hire 20, at this point in time,” said Bishop.
Indeed, Perry told the recent annual meeting of the North American Transportation Employee Relations Association that “we’re going to have a big shortage in drivers” as the economy improves in 2011 and the number of shipments increases.
One of the factors reducing the number of employable drivers is CSA 2010, which takes effect within weeks. Comprehensive Safety Analysis 2010 is a Federal Motor Carrier Safety Administration initiative to improve large truck and bus safety and ultimately reduce accidents involving commercial motor vehicles. It will include the sharing of data on each driver’s record. Too many problems could lead a trucking company’s insurance company to bar a particular driver from employment.
Bishop said the trucking industry fears CSA 2010 will reduce the number of employable drivers by about 10 percent.
Another pothole ahead: Costs in the trucking industry “have continually gone up,” said Bishop. One example is the change in fuel required by the Environmental Protection Agency to reduce certain exhaust emissions. The change results in fewer miles per gallon and a vehicle maintenance schedule that is double the frequency of what it used to be.