In today's LTL arena, manufacturers ship more often because customers demand just-in-time delivery. They don't want to hold inventory as they did in the past.
“A lot of what used to be pool distribution for us has become LTL direct,” says David DeVries, co-owner of KRC Companies including the original LTL division, Keller Transfer, in Grand Rapids, Michigan. “That's why we're fortunate to have added more terminals and warehouses, including one in Chicago.”
Pool distribution remains a big part of what Keller does today, but for different customers, DeVries adds. In the early 1970s, when David and his brother Doug started working for the company part-time as college students, Keller specialized in fresh meat distribution. It transported swinging and boxed meat in Michigan for 15 to 20 packers. Today, meat accounts for only about 5% of Keller's LTL traffic.
“We have diversified greatly,” DeVries says. “We now haul a wide range of grocery, foodservice, candy, confectionary, health and beauty, and medical items. By being in Chicago, we can offer shippers a single transportation source.”
KRC Companies distribute in Michigan, Indiana, Illinois, Wisconsin, and northwest Ohio. Pool consolidation centers are in Livonia, Michigan, a Detroit suburb; Munster, Indiana, just south of Chicago, and Grand Rapids. In addition, the Detroit and Chicago operations provide warehousing — 200,000 square feet in Detroit and 140,000 square feet in Chicago. The Grand Rapids facility is 45,000 square feet, plus offices and a shop. One KRC division, Staley General Transportation, also has smaller terminals in Decatur, Illinois, and Rochester, Indiana.
KRC teams with other carriers to cover a broader area, including all of Ohio, Kentucky, Missouri, Iowa, Minnesota, the Dakotas, and Nebraska. “We deliver in our core area and also pick up and consolidate loads for seven other refrigerated carriers that deliver in the outlying states,” DeVries says. “We perform the pick-up, customer service, and billing, providing shippers a single transportation contact.”
Keller Transfer started in business more than 50 years ago, developing its niche as a meat hauler. As the volume of LTL meat distribution decreased in the early 1970s, Keller diversified. In the early 1980s, the company started another division, RTI Transport, for linehaul of pool distribution and truckload service. The DeVries brothers purchased Keller and RTI in 1986 on the retirement of Jay Van Daalen, the previous owner.
“Immediately after purchasing the companies, we opened a terminal in the Detroit area,” DeVries says. “At that same location, we started our warehousing division, Commerce Distribution. In January 1999, we purchased Staley General Transportation in Munster, a very similar operation to ours. Staley General distributes pool, LTL, and truckload in Illinois, Indiana, and Wisconsin.”
Chicago Is Hub
The hub of KRC's operation is Chicago, a busy shipping point. “Almost every grocery manufacturer ships its product in the Midwest from Chicago,” DeVries says. “We'll sweep Chicago one day, picking up from manufacturers, and the next day we deliver to warehouses. For instance, we do pick-ups for a Michigan foodservice company. We configure loads the way they want, and deliver to their warehouses. That product ships from their warehouse the next day.”
Keller shuttles freight from Chicago to Grand Rapids and Livonia every day, and also makes regular runs from Detroit to Chicago, DeVries adds. About 90% of Keller's freight is delivered next-day.
“We also coordinate super-pools for some manufacturers,” he says. “These shipments arrive at one of our consolidation centers for delivery across a large geographic area. Some freight moves on Keller trucks and some moves on partner carriers.
“The super-pool concept works because it results in increased tonnage and greater visibility of shipments. This creates the best chance for consolidation. Over the past five years, pool distribution has declined, in part, because some shippers lack the tonnage to ship every day. Having one pool for a wider area helps to generate the needed tonnage and improves service.”
For example, Keller receives freight from a Massachusetts shipper on a truckload carrier to Chicago. “The customer pays the truckload rate for linehaul and pays us for LTL,” he says. “We select orders and consolidate them with other freight for delivery to grocery warehouses or directly to stores.”
Traditional LTL carriers are challenged to offer shippers a way to speed products to market and keep cost down, DeVries says. Because of decreased LTL tonnage of refrigerated products, Keller has diversified into dry products.
“Candy and confectionary manufacturers have been consolidating and they do more truckload and less pool delivery,” DeVries says. “We still haul for many confectionary companies all over Michigan. But today, tonnage is down about 50%. Our strategy is to make connections with as many shippers as we can in our trade area to fill our trailers. We want to be the Midwest transportation source for both refrigerated and dry goods.”
Keller began hauling dry products about 10 years ago. Today, the company handles about 60% refrigerated and 40% dry. Keller hauls for about 20 retail mall accounts. “Retail freight tends to be lighter than refrigerated,” he notes. “We put between 10 to 20 stops on a trailer, between 15,000 lb and 30,000 lb. With retail, the trailer nearly always cubes out before it weighs out.”
Retail products have different peak seasons than refrigerated. This helps Keller maintain steady volume year-round, DeVries says. Food and candy is in higher demand from August through November. Retail moves for Easter sales in March and April, back-to-school promotions in June and July, and during the holidays.
Mix of Equipment
Keller runs 190 tractors, 325 refrigerated trailers, and 60 dry vans. Most refrigerated loads are transported at 35° F. Some of these have dry products loaded in the rear. “We deliver some frozen loads, but only to single receivers,” he says. “We provide consolidation from a specific market.”
Tractors are a mix of Freightliner FLD 120s and 112s, and International 8000 and 9200 S-Series. They are equipped with Cummins M11 and N14 engines rated at 330 to 380 horsepower. Keller runs a mix of refrigerated trailers, mostly 48 footers. They are from Utility, Trailmobile, Wabash National, and Great Dane. All are equipped Thermo King units. Newer units are SB-III Smart Reefers.
Another Keller division, Capital Leasing, has a shop in Grand Rapids to handle equipment maintenance. Besides regular preventive maintenance on tractors, trailers, and refrigeration units, Capital Leasing does all needed repairs, except bodywork, says Roger Chaney, fleet manager.
Hiring and keeping good drivers obviously is important to any carrier. To keep turnover at a minimum, the KRC Companies schedule runs so that all drivers are home on weekends. “Distribution drivers are only gone one or two nights at most,” Chaney says. “That's the biggest reason they stay with us. Turnover is less than with our truckload drivers. The truckload RTI drivers come in on Monday and are gone all week, returning Friday night or Saturday morning.”
It is easier for Keller to hire drivers to do peddle runs than longer hauls. “We have a greater problem keeping truckload drivers than LTL,” he adds. “Many of our LTL runs tend to be the same week after week, because we do a lot of custom-shipping for manufacturers. For instance, we deliver shoes for one supplier to a retail chain two days a week. With all the suppliers we serve, we have plenty of volume to keep trailers full.”