“Trucking is a real science, and it almost never works out the way you plan it,” says Terry Barnett, president of Glenbrook Excavating and Concrete Inc. in Prairie View, IL. “You just hope that the good averages out the bad.”Sometimes you get a break. “You can read your soil borings, find out that you can reuse your excavated sand – and they pay you for it,” says Barnett. “That’s a home run. You need some home runs to cancel out the strikeouts.” His company runs six tractor-trailer rigs, all five-axle dump trucks. Five tractors are Peterbilt units and one is a Mack.Because of the challenges – including that of keeping a truck fleet busy – many contractors choose to subcontract their trucking, often to one or more owner-operators. But some contractors, including Loiseau Construction Inc. in Flandreau, SD, own truck fleets and prefer to do much of their own trucking.“We run 12 tractor-trailer rigs with side-dump trailers,” says Jim Loiseau, president of the firm. The company does grading and base work, but no paving, and hauls most construction materials, including recycled asphalt, dirt, riprap, gravel, and broken concrete.Loiseau uses three-axle Circle R trailers with 25-ton capacity. Typically he buys over-the-road Peterbilt tractors with 600,000-800,000 mi., removes the sleeper cab, shortens the frame, and adds an axle in front of the drive axles. An engine overhaul might be needed. “We typically want Peterbilts with 425-horsepower, a 13-speed transmission, and a 3.90-to-1 gear ratio in the differential,” states Loiseau. “For the type of work we do, that ratio saves on clutches and drivelines.“Typically we take projects that require truck work,” he says. “Trucks can work on days when it’s too wet for scrapers. And our trucks give us the opportunity to do more of the work that we bid. Doing our own trucking makes us more competitive and gives us more control over our work.“If I hire a trucking firm, I have to pay for his profit, plus a 4% sales tax, to haul for me,” Loiseau points out. “If I do my own trucking, I don’t have to pay the sales tax and I don’t have another company’s inefficiencies to pay for. And I can make my own profit on the trucking.”Loiseau hires nonunion drivers, and he says it’s no problem to keep them busy. If a driver has no trucking for the day, he can easily switch to running a roller or other machine. “I don’t have to make phone calls to get truckers, and I’m not waiting for somebody because he can’t come and do the job,” he says.Asset Allocation
Clarkson Construction Company, a large contractor based in Kansas City, MO, subcontracts all trucking except the hauling of concrete for paving projects. Clarkson keeps 35 tandem-axle dump trucks that are maintained exclusively for paving concrete. Hauling other materials, such as riprap, would bang up the beds and cause them to leak concrete, notes Ed DeMoss, Clarkson’s risk manager.“We sub out the hauling of raw materials,” says DeMoss. “It’s difficult for a contractor to compete with a materials supplier because most of those suppliers have trucking firms that specialize in hauling, say, sand or rock.”Clarkson does, however, own a fleet of about 20 Euclid articulated dump trucks. Each “artic” can haul 35-40 yd.3 of material. “We own large trucks and we own scrapers because we do large projects,” says DeMoss. He ticks off a list of major earthmoving projects Clarkson is doing: the first two phases of a $200 millionplus interchange project in Kansas City, MO; the $18 million State Highway 150 reconstruction, also in Kansas City; and a $200 million site-work project in Kansas City, KS.“The artics move material efficiently on common excavation projects where the cuts and fills are on the same site,” reports DeMoss. Clarkson owns half of Superior Bowen, a firm with seven asphalt plants, but Superior Bowen subcontracts its asphalt hauling, in part because subcontracting can help Clarkson meet minority business requirements. Even more important, adds DeMoss, “the profit is not in the hauling for our asphalt operations. The profit is in making the asphalt mix and laying the material. Plus, you don’t have the liability of running the trucks on the roads; that’s part of the risk management.“If you have 50 or 60 trucks hauling for you, it’s difficult to make sure the owner-operators carry insurance and that their truck meets Department of Transportation requirements and that their driver is qualified,” he continues. “It’s more important to us to transfer the risk of all those things to the trucking contractor.”
Subcontracting trucking has another benefit: You don’t have to keep your own trucks busy all the time. The key to making money in trucking is transporting high volumes of material safely, maintains Richard Jackson, president of N.W. White & Co., a large trucking company based in Columbia, SC. All but eight trucks in the firm’s 120-unit fleet come from Mack. The others are Kenworth, International, Autocar, and one Peterbilt. “We sort of standardized on Mack,” states Jackson.“A dump truck is a volume machine,” he notes. “You can’t make it with a dump truck running 15 days a month.”“Like a Policeman”
A number of contractors, such as Hoffman Construction Company in Black River Falls, WI, own relatively few trucks, but hire more than they own. That way the company doesn’t have to keep a large fleet busy to earn a return on a high sum of assets. Hoffman owns 14 quad-axle dump trucks: 12 Mack units and two Freightliners.“We try to make sure we have one or two of our trucks on the job and the rest of them are subbed out,” says Brad Eberhardt, engineer-estimator with Hoffman. “The amount of trucking work is so variable during the year. We own 14 and keep them busy, and when we have more work we hire trucks. We hire a lot of the same trucks from year to year. It’s easier to work with them because we have a relationship with them.”In suburban Chicago, IL, Glenbrook does the same thing. “We run six or seven crews a day, and we may have up to 40 trucks running,” says Barnett. “We put one of our trucks into each crew. That way we depend on one of our drivers to be a clock checker, like a policeman. If our driver can do a run in an hour and a rented trucker takes three hours to do it, we only pay him for one hour.”Barnett figures his trucking costs for a dump truck to be at $60.35 per hour. That breaks down as follows: $34.35 per hour for a Teamsters driver, with benefits; $80 for fuel per 10-hour day, or $8 per hour; $13 per hour for depreciation on the $130,000 rig; and $5 per hour for maintenance, tires and insurance.At $60 per hour, a 40-truck project will incur a $24,000 trucking bill in just one day. “If you’ve got 40 trucks on the job, you need somebody to manage the trucks,” says Barnett. “You’re spending a lot of money quickly.”In South Dakota, Loiseau charges between 12 and 16 cents per mile for hauling construction materials. The lower rate, 12 cents, applies to longer hauls of 40-60 mi. over good roads with low traffic. “When we haul riprap, we get up to the 16 cents a mile because the material is so abrasive on the boxes,” he relates.Loiseau is able to make a profit on his trucking. “I think our costs are $45 to $50 an hour for dump trucks,” he says. For those trucks he charges $60-$65 per hour. “We’re making about $15 per hour on those trucks while we’re paying for the used tractors and new trailers. Those trucks typically get about 50,000 miles a year.” If he bids a job on a cost-per-ton-mile basis, Loiseau works out the numbers so that he’s getting paid $60-$65 per hour.Here’s how his costs itemize: A nonunion driver costs $20 an hour, which includes $14.50 an hour in wages, plus overhead in workers’ compensation and unemployment insurance. Fuel, at $1.50 per gallon (at the time of this writing), costs $12 per hour. And Loiseau figures $13 an hour for licenses, tires, repairs, and equipment replacement costs (depreciation).Sharp Pencil
Odie Jacks manages more than 1,200 owner-operator trucks that are signed up with Owl Creek Contracting, the firm that does most trucking for Kokosing Construction Company, a large contractor based in Fredericktown, OH. Jacks and a small staff maintain a file on each owner-operator to make sure that all trucks have legal state authority to haul materials and that each one has workers’ compensation, a certificate of insurance, and the like. Owl Creek hires trucks to haul everything from dirt to concrete and asphalt to sand and gravel.Owl Creek owns only three trucks. “Management doesn’t want to be in the trucking business in terms of owning trucks,” maintains Jacks. “It’s easier to hire owner-operators to do the trucking for them.”Jacks pays trucking firms both by the hour and by the ton-mile. For short hauls, on which Kokosing has more control over the time spent loading and dumping, Owl Creek pays by the hour. That’s the case with asphalt, because Kokosing owns the asphalt plant and the haul is short and predictable. The same asphalt trucks tend to haul asphalt for various Kokosing projects, so their owners can be trusted to haul by the hour.“We have the same crew that follows everybody around, so they get to work like a fine-tuned clock,” Jacks describes the asphalt operation. “When Kokosing pays by the hour, we have more control over everything. And we’re very safety-oriented.” He says paying by the hour lessens the risk that drivers will hurry and take unnecessary chances in order to make more money hauling by the ton.In addition, payments by the hour are still competitively bid. “You have the same people, the same trucks,” states Jacks. “They don’t want Kokosing to have to pay more because then they have to bid higher, and that cuts their chances of getting more work.”Stone, by contrast, is often hauled by the ton. “The less control we have, the more [likely] that it’s a tonnage job,” notes Jacks. “Because then the guy has to hustle to make money. The time to load and unload will vary. A lot depends on how busy the loader operator is. He may have other people to load, or he may be angry with your driver and make him wait. If everything goes smoothly and nothing gets held up, the truck paid by the ton will make his hourly rate but not much more.”For example, offers Jacks, suppose a truck’s hourly rate is $55.50 and he can haul one load per hour. If he’s hauling 20.5 tons per load, that’s $2.70/ton. But a lot depends on making that one load per hour. That might include a 12-minute haul one way, for 24 minutes round-trip, plus 36 minutes to load and unload. If anything happens to upset that time, the driver won’t make his 10 loads per day and he won’t make his hourly rate.On earthmoving projects, “You balance the number of trucks you have with the maximum rate the excavator can produce,” says Hoffman estimator Eberhardt. “You don’t want trucks waiting and you don’t want your excavator to sit idle. Estimating the right cycle time – and then achieving it – is the biggest key.”Eberhardt says the number-two challenge is the material you’re digging. You have to estimate correctly the time it takes to work with any given material. “There’s rock, clay, and sand,” he points out. “All those factors enter into the rate of production.” In general, he adds, it’s easier to haul sand than clay. But some sand is so fine that you can’t put a truck on it, so you have blend it with other material and make a little haul road at the excavation site.The third key is the distance of the haul. “For borrow, you want to find the closest source of quality material that you can,” he advises.Having good trucks is very important, stresses Eberhardt. “Just this winter, we purchased 10 new Mack dump trucks and traded in 10 older Macks. They were getting to be 10 to 15 years old, and S buying new trucks was cheaper than fixing the old ones.”
