WHAT'S YOUR NICHE?
Green Bay-area truckers stay ahead of tough times with niche services
Just ahead of the recession, Ashwaubenon-based Valley Transfer & Storage, LLC made the leap from providing general freight services to working primarily with transporting pulp for the region's paper industry.
It meant a potentially risky capital outlay in 2008 for new equipment and special permits to service those customers, but it's a move owner Jeff Trudell said has paid off through the past few years of a rocky economy.
"At the time it was a pretty risky investment, but it paid off and we've expanded our customer base since we made that decision," he said. "It's helped us out by focusing on specialty product."
Trudell said Valley Transfer continues to look at the potential to expand and will tailor its trucking to the needs of its customers.
While general freight still makes up the bulk of the nation's trucking industry, niche operations have found their spot in the industry, said Bob Costello, chief economist with the American Trucking Associations.
"All types of (tanker) freight are up significantly year over year," he said Thursday. "There are some areas doing quite well."
While niche markets can offer a bonus to carriers, freight can be limited and there can be more demands on the carrier.
"But if you get a niche, you're good at it and you get a customer base, they rely on you more" Costello said.
Freight moves 'sideways'
Trudell said the move to serving a specific segment of the market was a mix of businesses sense and survival.
"We got out of over-the-road at the right time," he said. "It did not look great on where it was going at the time or where prices were going at the time… We thought about buying new equipment and doing what we could to make it go, but made the decision to get out."
Valley Transfer operates 10 tractor units and has more than 70 trailers. It also started a warehousing division to serve its customers, most of which are in the Green Bay area, but service extends as far away as Duluth, Minn.
"I think the smaller carriers, 1,000 trucks or less, are going to have to focus on their specialty freight and get those niche markets to really survive long term," Trudell said. "We're really trying to grow that and focusing on service to the customer … and specialty product hauling."
Many of Valley Transfer's orders are "just in time" to mills and the destination can change several times while en route
The American Trucking Associations said Tuesday its seasonally adjusted for-hire truck tonnage dropped 0.2 percent in August from July. But the number is still up 5.2 percent compared to the same time in 2010, according to the report.
Costello said freight has been going "sideways" for much of the year.
While freight volumes have stabilized and showed some improvement in recent months, the recession took a heavy toll on the trucking sector nationwide with thousands of operations closing up shop.
The number of trucking company failures are down, with about 537 fleets exiting the business through the first half of the year. That's down from more than 1,000 over the same period in 2010, Costello said.
"If you made it this far, you're probably going to make it," he said, noting there still likely will be more failures ahead.
U.S. Census Bureau data from 2009 indicates Brown County had 182 establishments offering truck transportation services, the majority of those, 98, had four or fewer employees.
A decade earlier, in 1999, the number of businesses with truck transportation services was 202, with about 127 of them made up of operations with four of fewer people.
"Because of more regulations, high fuel prices and much higher equipment prices — while there are still a lot of players in this industry — I fully anticipate those numbers to go down and not up, even into the future," Costello said. "Getting into the industry … is getting more difficult."
Most sectors of trucking in the report showed a decline in the number of businesses in Brown County as sorted by North American Industry Classification System, including segments like long-distance general freight hauling and specialized freight trucking. Specialized trucking includes companies that haul freight using equipment such as flatbeds or refrigerated trailers.
"General freight trucking, local" is one of the areas that showed growth between the 1999 and 2009 report, increasing from 24 businesses in 1999 to 31 in 2009, according to the Census Bureau report for Brown County.
Broad base
Finding a broad base of customers is key for companies still in the business.
Paper Transport Inc. in Ashwaubenon sees a big portion of its work come from contract hauling serving a specific customer. PTI hauls paper products as well as general goods like beverages and food products.
"On the general freight side of things, the key is to have a very solid sales, marketing and customer service department … having a broad base helps build stability in that arena," said Joe Shefchik, director of business development at PTI. "We're always looking to expand what we are doing from a number of customers' standpoint so we have that business spread out."