Produce Hauler Combats Higher Fuel Costs
Aug 1, 2001 12:00 PM, By Foss Farrar
Success in the produce business requires flexibility. Companies contend with many variables, including harvest seasonality, weather, and customer demand.
Produce haulers deal with even more uncertainty — road conditions, delay at shipper facilities, equipment malfunction, and claims for improper handling or inadequate temperature control.
One of the biggest problems distributors now face is higher fuel prices, says Tony Greene, transportation director for Hollar & Greene Produce Company in Boone, North Carolina. Prices have increased significantly. Fuel is one of the biggest fleet costs, and recent increases have been devastating to some trucking companies.
“We are in transportation because we are a produce company, not because we choose to be in trucking. It's too risky and not that profitable,” Greene says. “On average, our 50 tractors run 1.25 million miles per quarter, or five million miles a year. We purchase about a million gallons of fuel a year.”
Greene says that fuel costs increased about 50% from 1999 to 2000. To hold down costs, Hollar & Greene recently signed a one-year contract with a local utility co-op to purchase fuel at a fixed price. “In April, we locked in at $1.30 a gallon, including 25 cents per gallon North Carolina state tax,” he says. “Since then, we've seen the market price increase 15 to 20 cents. Thus, we've already realized big savings. Last year, our average fuel price was $1.50 a gallon, nationwide.”
Improving fuel economy is another way Hollar & Greene cuts costs. The company runs an all-Kenworth fleet of mostly older tractors. Average equipment age is seven years. In 1998, the company purchased six new Kenworth T-600s from Carolina Truck Centers Inc, the Kenworth dealer in Hickory, North Carolina.
“We achieved a saving of up to one mile-per-gallon after the most recent equipment purchase,” Greene says. “The 1998 T-600s run with Caterpillar 3406E engines. We concluded that fuel economy improved mainly because of the new 550-horsepower engines. Of course, drivers can make a difference in fuel consumption, and we are fortunate to have experienced drivers. Our average driver has been with us for 10 years.”
Compared to older engines with mechanical fuel control, the high-horsepower 3406Es provide more power without burning more fuel, he adds. They are so reliable that Hollar & Greene has retrofitted all but one of its older Kenworth T600 and W900 tractors with 3406Es. These older tractors had mechanically controlled engines from Caterpillar, including the 3406C rated at 425 hp. Hollar & Greene purchases engines from Carolina Tractor & Equipment Inc, the Caterpillar dealer in Hickory. “Our highest average fuel economy is 6.5 mpg,” he says. “The fleet average is 5.5 mpg. I'd like to see that improve.”
Mix of Trailers
Hollar & Greene runs 60 refrigerated trailers, 53-footers from a mix of suppliers — Utility, Wabash National, Great Dane, and Dorsey. They are equipped with refrigeration units from both Thermo King and Carrier Transicold. Newer units include the Carrier Transicold Phoenix Ultra XL Stealth, as well as the Thermo King SB-III Whisper Edition. All of these units have noise abatement packages.
“In recent years, the resale market has been soft, and we have been buying late-model used trailers,” Greene says. “Used equipment costs about half as much as new. We must hold down our costs because rates for staple produce such as cabbage and tomatoes has changed very little relative to operating costs since 1963 when we started, due to deregulation, competition, and supply and demand. Therefore, Hollar & Greene and other produce distributors must find ways to run a cheaper mile, mainly through technology.”
Hollar & Greene is a grower-shipper-broker-carrier that started out as a broker and shipper in the 1960s, Greene says. The company began in the 1940s when Lige Hollar, a World War II veteran, returned to Boone after the war and started a produce route with one straight truck. His first customers were in North and South Carolina.
In 1962, Lige Hollar agreed to allow his son-in-law, Dale Greene, to start another route with a spare truck. The two worked independently that year. Lige picked up produce in Florida from January through May so that he could supply his customers year round. From June through the end of the year, he relied on suppliers in Georgia, the Carolinas, Virginia, and other states farther up the coast, as the harvest moved north. In that same year, Dale also went to Florida and helped build the Carolina customer base. In 1963, Lige Hollar and Dale Greene merged and founded Hollar & Greene.
The company now moves more than five million packages a year, most of it 50-lb packages of cabbage. The balance includes bulk and bagged potatoes, watermelons, greens, and beans. “We try to take advantage of seasonal markets,” Greene says. “For example, at Christmas we are busy delivering Christmas trees.”
Hollar & Greene serves about 400 customers, mostly east of the Mississippi. None of them represent more than 5% of the company's total business. The top ten customers total less than 25%, Greene says. “We deliver truckloads to supermarket distribution centers and to wholesalers in produce markets,” he says. “We also serve some multi-drop accounts.”
The headquarters in Boone includes 12,000 square feet of offices, a 6,000-sq-ft refrigerated warehouse, and a 20,000-sq-ft shop. The company also operates branches in Bunnell, between Jacksonville and Daytona Beach, Florida, and in Mount Airy, North Carolina, on the Virginia border.
Hollar & Greene picks up produce from Florida to New York, as well as the Rio Grande Valley of Texas. Work starts in Florida in January, where Hollar & Greene has 20 suppliers, then moves north with the harvests. In May to June, for example, the harvest takes up around Moultree, Georgia, where Hollar & Greene picks up from 10 suppliers. In the Carolinas, the company has about 20 suppliers along with others near Hillsville, Virginia. The company also distributes for growers in northwestern Pennsylvania and northwestern New York.
“When Florida runs short or has a freeze, we start loading trucks in Texas,” Greene says. “We have a good relationship with Texas growers. For example, we may tell them we need 30 to 40 cabbage loads in a particular week, and they'll tell us to come on.”
Outbound loads of refrigerated and dry freight are picked up throughout the East Coast, from Maine to the Carolinas, Greene adds. “We load general merchandise, food products, and groceries,” he says. “Some of this is from Fortune 500 companies. For example, we might pick up in Pittsburgh and deliver to that shipper's Jacksonville distribution center.”
A key factor in Hollar & Greene's ability to get business from such high-profile accounts is its high on-time delivery record, Greene says. With only 50 trucks, the company consistently provides prompt service to Florida for product from anywhere in the Northeast. From the upper Midwest, third-morning delivery is easy.
“Many drivers like these long hauls,” he says. “For instance, they pick up somewhere along the Great Lakes on Thursday for Monday delivery.”
Hollar & Greene realizes that keeping drivers happy helps ensure a high retention rate. The company is careful to hire only safe, experienced drivers. “We are slow to hire and slow to fire,” Greene says. “Senior drivers get most weekends off, and new drivers get 75% of weekends off.”
The average round trip is over 1,000 miles and takes up to three days, he adds. Average weekly mileage is 2,500 miles. Drivers typically make one to two deliveries per load.
“We have a good safety record with no fatalities at any time in the company's history,” Greene says.
Hollar & Greene stays busy all year, but struggles with getting loads from Florida from June to December. “This is a difficult time of year for us,” Greene says. “The growing season is over, and Florida basically becomes an import state. We have a lot of Florida outbound dead-head.”
However, the company doesn't want to stop serving Florida receivers during the off-season, he adds, because year-round service is the reason Hollar & Greene built up its fleet in the first place. Hollar & Greene has established a niche in Florida. Few other trucking companies are willing to deliver produce there for fear of losing money during the summer and fall.
Another significant factor in driver retention is providing good equipment, kept meticulously cleaned and serviced after each run. Typically, Hollar & Greene drivers keep the same tractor for five to 10 years. They can take pride in the equipment because they know that the company's shop will keep it shiny and in good working order. Older tractors are repainted and refurbished after five years in service.
Hollar & Greene mechanics perform most equipment maintenance and repair, ranging from routine PM to engine rebuilds. Carolina Truck Centers handles tractor warranty work, and Carolina Tractor and Equipment repairs those engines still under warranty. Warranties run for 500,000 miles or five years.
Tractors are equipped with Audiovox Tri-Mode hands-free digital cellular phones for driver-dispatch communication. “Drivers use voice-activated dialing,” Greene says. “In addition, we give them the option of having voice mail. Drivers can take the cell phones out of their cradles when leaving the cab.”
© 2013 Penton Media Inc.