Efficiency is in the driver’s seat at Produce Supply Express
Distribution company maintains revenue in face of operations challengesAugust 16th, 2018
As the trucking industry struggles with a shortage of drivers, increasing fuel and maintenance costs, and the looming threat of higher equipment costs as a result of tariffs, Produce Supply Express Inc. Vice President Lom Hutchins says the Spokane-based distributing company is aiming to increase efficiency.
“We run a little bit smaller this year, about 5 or 6 percent, but we’re meeting the same revenue as last year,” Hutchins says. “We’ve had to get a little more efficient with fewer drivers, that’s for sure.”
Hutchins says the company, which is based at 4411 S. Grove Road, has been employing semiretired drivers up to three days a week to fill the gaps left by the industrywide shortage of drivers.
“Since we’re Spokane based and this is our only terminal, we can do things like that,” Hutchins says. “They can help support the long-haul drivers that are driving to California and Arizona and Colorado.”
The company currently employs 51 people, of which 43 are drivers. Hutchins says the company’s annual revenue has been holding steady at between $10 million and $12 million for the past few years.
Produce Supply Express, like other trucking companies, is trying to attract new drivers while retaining existing personnel. Hutchins says drivers for the company received a raise at the end of 2017, and they can expect more raises in the future.
“My drivers are averaging north of $53,000 (annually) and it’s going to be even more,” Hutchins says. “It’s good money for a high school education.”
While the shortage of drivers is the worst Hutchins says he’s seen in his 17 years of managing the business, he says he’s heard from local educators that there may be hope on the horizon.
“I think it’ll turn around,” he says. “They say … there’ll be a larger labor pool entering the workforce in two to three years.”
Until then, Produce Supply Express is keeping operations as efficient as possible, especially for drivers.
“We utilize a lot of spot trailers to help so drivers don’t have to load or unload trailers in Spokane,” Hutchins says.
The company has a crew of workers to deliver local loads so that drivers don’t have to, as well as sometimes loading trailers before the driver arrives at the truck yard. Hutchins says this makes the job a little easier for drivers and gives them more time at home.
“It’s better than the guy who gets here at 10 or 12 at night and now he’s got to wake up and go in at 5 a.m., because everything happens at zero dark thirty for our big trucks to get around, so we’re out there really early,” Hutchins says. “The drivers can be home for one to two nights and get out and make the miles on the road instead of having to deliver the load in town.”
Produce Supply Express’ distribution territory covers Washington, central and Southern California, Arizona, Utah, and Colorado, Hutchins says, adding that California routes make up at least 50 percent to 60 percent of the company’s business. Hutchins says Produce Supply Express currently has about 40 trucks and 60 trailers; the average haul is about 800 miles. With so much ground to cover, Hutchins keeps an eye on fuel prices, which he says are currently at a three-year high.
“We have fuel surcharges that will offset some of that,” he says. “It’s been causing the price of everything to increase. Oil goes up, there’s all the lubricating fluids you put in the truck, those go up correspondingly. They never seem to go down correspondingly.”
Hutchins also is concerned with the costs of maintenance and vehicle upgrades.
“Maintenance costs are up, mainly due to environmental treatment of the exhaust,” Hutchins says. “Those create more down time with maintenance on our emissions systems. The emission stuff is great; it cleans our air, scrubs everything very well now. You don’t even know the truck’s running next to you, besides the noise, because there’s no smoke. But they’re complicated systems that have issues as the trucks get older.”
Hutchins says this has led the company to buy new trucks at increasingly shorter intervals.
“We used to be able to run trucks out for five or six years,” he says. “We’ve shortened our trade cycle from 60 months down to 48 or 46.”
Emissions systems also have increased the number of sensors on each truck, which Hutchins says means more time in the shop and less time on the road.
“Before, a truck had 40 to 50 sensors on it, and the new emissions systems have pushed that north of 100 sensors on the truck,” Hutchins says. “When you have issues with any one of those, the truck de-rates, it won’t run properly.”
De-rating means a decrease in a truck’s engine power output, meaning a truck can’t pull freight as efficiently or drive as fast as it would otherwise. When a truck does have problems on the road, the delay can cause a domino effect for Produce Supply Express and its customers. Hutchins says a delay may mean a customer can no longer sell the product because it will quickly spoil or because the quality is reduced.
While Produce Supply Express does haul some produce, Hutchins says the company primarily transports beverages, including beer and wine. He says they’ve been primarily hauling beverages since the mid-1980s, long before neighboring Johanna Beverage Co. bought the former Olympic Foods Inc. in 2007.
“Produce Supply Express is a bit of a misnomer, because that’s just where we started. It’s a very small percentage of what we do today,” Hutchins says.
The Odom Corp., Food Services of America, Tree Top Inc., and Johanna Beverage Co. are some of the largest of Produce Supply Express’ 68 customers, Hutchins says.
A growing demand for products that use few or no preservatives has led to a decrease in the shelf life of many products—a trend that he says could exacerbate the need for more trucks on the road.
Hutchins says the company has begun to feel the effects of ongoing trade wars as equipment costs rise.
For now, however, he isn’t too worried.
“The key is to have good customers, and right now we’ve got a great group of customers that support us well,” he says. “We don’t go out and solicit a lot of customers. We tend to grow them organically through our existing relationships, and our existing relationships tend to blossom new customers all on their own.”