Manufacturing recovery fuels GRMI Logistics growth
Three years ago it had only three trucks and two office employees.
GRMI Logistics, a family-owned and operated industrial shipping service that went into business in June 2011, is moving its base of operations to Cascade Township due to growth over the last two years that increased profits by more than 600 percent.
When the company was launched by Nerman Jelovac and his son-in-law, Amir Babic, it had only three owner-operated trucks and two office employees. Today, it has 62 trucks under contract and 11 office employees. The organization specializes in expedited freight movement and arranges shipments in all 48 contiguous states and Canada.
According to GRMI’s fleet shift and sales manager David Allred, a couple of factors that sparked that growth are its partnership with Sylectus logistics software two years ago, and the recovery of manufacturing in Michigan, particularly the auto industry and its suppliers.
On a manufacturing production line, and especially in the automotive industry, any delay that stops the line is a potential small-scale economic disaster that gets worse with each passing hour. Lack of parts due to a delay in delivery by the off-site supplier is a prime cause of line shutdown.
“It’s a big deal,” said Allred, so about 90 percent of the owner-operated trucks with which they contract are two-person team drivers. That greatly reduces the impact of the federal “hours of service” law that limits how many hours at a stretch a driver can work. With two drivers, the rig keeps rolling while the off-duty driver sleeps or relaxes.
Contracting with owner-operators has a number of benefits for a small firm like GRMI Logistics. For one thing, the owner of the semi-tractor is responsible for its upkeep. A driver who is an owner of the rig he or she is driving has more incentive to make sure maintenance and repair on the truck is done in a timely manner because downtime is income lost.
Many trucking companies, including some in West Michigan, went bankrupt when the manufacturing economy slowed to a crawl during the recession. But Allred said now “there is a lot of opportunity out there — a lot of demand for these trucks.”
Contracting with owner-operators also eliminates the problem many trucking companies are facing: finding qualified, experienced over-the-road truck drivers. As the marginal trucking companies went under during the recession, many drivers were thrown out of work — and those who stuck with it suffered wage cuts. Those near retirement often took it, and others changed jobs. Fewer young people went into the truck-driving trade.
According to a report in the Minneapolis Star-Tribune in late October, trucking companies as well as manufacturers and retailers with their own truck fleets are resorting to a variety of incentives — including higher wages — to recruit new drivers. Walmart, which has one of the nation’s largest truck fleets, has been buying radio spots to lure qualified truckers, offering a $76,000 salary plus bonuses. The national average is about $50,000.
Ads for truck drivers are among the most frequent found in newspaper classifieds, and who hasn’t seen a message on the back of semi-trucks stating, “Now Hiring Qualified Drivers”?
Another factor driving the trucking industry is the oil boom in the Northern Plains states, which has overloaded the American railroads with cargos of oil and gas, thus increasing the pressure on the trucking industry.
The American Trucking Association has stated there are about 750,000 drivers for hire, not counting the owner-operators, but at least 30,000 more are needed. The association estimates the industry will need to hire tens of thousands of new drivers every year to keep up with retirements, turnover and growth in the industry over the coming decade.
Another big change at GRMI was its decision two years ago to begin using Sylectus, an Internet-based transportation dispatch software for assigning and tracking customers’ loads and also helping in the day-to-day management of a truck fleet.
Every transportation company has what is called a load board, which in the old days was just that — a board where management kept tabs on its trucks and loads in progress. Normally, the software in use now has been focused on monitoring the loads on the road, but Allred said “with Sylectus, you get everything. Their system does it all.” That can include payroll and other management requirements.
GRMI works with a lot of 3PLs — third-party logistics companies. 3PLs were first identified in the 1970s, when shipment of goods and materials began to include a mix of transportation by both truck and railroad, called intermodal transportation. Before then, contracts for truck transportation had only involved two parties: the shipper and the carrier. 3PL services means a third party is involved: a business that usually provides bundled or integrated services, involving transportation, warehousing, inventory management and sometimes packaging.
Allred said 3PLs have streamlined the process of determining which company gets the loads and ensuring the customer is never in the dark about the status of the load. He said GRMI tries to work with 3PLs or customers who are able to integrate with the Sylectus software. Whenever information pertaining to a load is updated, the updates automatically go to all companies involved.
Every transportation company has a safety score compiled by the Department of Transportation, and both 3PLs and customers “want to check to make sure you are a safe company,” said Allred. That is reflected by driver log books and scrutiny by officials of the hours driven in a day. A safety score can fluctuate by the day, he said, but the software takes note of that.
Allred, 26, is a Grand Rapids native and was virtually born into the trucking industry. His parents were a husband-and-wife driving team, one of the first such teams in Michigan. When he was born, his father starting his own trucking company to spend less time away from home, and David Allred was involved in the business beginning in his high school years.
“This is a forever-changing industry,” he said. “The way things are done today is different from yesterday, and extremely different from 10 or more years ago. I can only imagine what it will be like five years from now, with the way technology is going.”
And when it comes to trucking, he said, “Demand is always there because products always need to be moved.”