For a business built on pledges, having new facilities certainly makes promises easier to keep. The promise at Witte Brothers Exchange in Troy, Missouri, is that any order for LTL service received by noon Wednesday will be picked up and delivered on appointment the following week according to a published schedule.
Witte Brothers has been in the LTL business for 10 years, starting in 1993, but it has a much longer history in Missouri business. It began as a livestock and feed operation in the late 1940s, hauling livestock as part of its service. The first refrigerated service began in 1974 with trailers trip-leased to the West Coast to reach produce shippers supplying wholesalers in St Louis and the surrounding area. That original refrigerated trucking operation evolved into a truckload service from Missouri to the Northeast.
Witte Brothers' LTL operation started in an attempt to provide responsive service to shippers in the St Louis area. At the time, LTL service was readily available from Chicago and Dallas, but local shippers wanted more reliable and predictable transportation than was offered at the time. They wanted definite pick-up dates and consistent delivery dates, says Harry Witte, chairman.
Shippers demand consistency
Shane Carter, operations manager, explains that consistent delivery is probably the most important part of purchasing transportation services for LTL shippers. Many of these shippers are small food processors attempting to expand their markets, he says. In a tight economy, some retailers will decide not to buy a product line if the alternative is buying extra volume to protect against out-of-stock situations resulting from inconsistent delivery.
“Our promise to shippers is consistency,” Carter says. “We will be at their customers with a delivery every seven days without fail as long as they get their service request to us by noon Wednesday. With that promise comes the ability to count on consistent sales. The shipper can plan production, and the receiver can buy only the amount needed for seven days of business. We are part of a classic just-in-time operation.”
Until January 1999, Witte Brothers operations were scattered across a relatively large area of rural Missouri to the west of St Louis. Headquarters and maintenance were located in Troy, roughly 50 miles west and north of St Louis, while the LTL service operated out of Gateway Refrigerated Warehouse in Warrenton, Missouri, about 20 miles away. Even in Troy, things were scattered. Headquarters was in a small office in the middle of town, maintenance was performed in three separate shops — one for tractors, a separate one for trailers at a different location, and yet a third location for a body shop.
New terminal consolidates operations
All that began to change in 1998, when Witte Brothers acquired 30 acres on the outskirts of Troy and began building a new terminal. The first construction on the site allowed the company to move freight handling home from Warrenton. By January 1999, Witte Brothers had a 12,000-sq-ft cross-dock building with 21 doors up and running. That facility has been so successful that it will be expanded by 4,000 sq ft with eight more doors early in 2003.
The second phase of terminal consolidation put the maintenance department all under one roof. Witte Brothers moved into the new 18,000-sq-ft, four-bay shop with a drive-through truck wash in 2000. Headquarters was the last to move. Management, operations, and clerical staff took over the new 12,500-sq-ft headquarters building in August 2002.
The result of consolidating terminal operations has been a marked improvement in company performance. Witte Brothers was handling 20 to 25 LTL loads a week from the underground warehouse. Since the on-terminal cross-dock building has been in use, that number has grown to 85 to 90 loads a week. LTL freight accounts for roughly 65% of Witte Brothers total volume, says Brent Witte, president. Until truckload volume increased in the past year, LTL had been as much as 80% of the business. “We plan on expanding LTL to about 80% again soon,” he says. “One advantage of handling LTL is that its keeps our customer base diversified. We don't want to let any single customer get so big that losing them would ruin the company. Right now, our biggest customer accounts for only 12% of the business.”
At any given time, most of the fleet of 125 tractors and 155 refrigerated trailers are involved with gathering or delivering LTL shipments. In general, Witte Brothers picks up freight on Thursday and Friday. A small part of the weekly volume can be picked up late Wednesday. Loads are consolidated over the weekend and delivery is scheduled for the first four days of the following week. Getting freight and equipment in place for timely dispatch requires two complementary operations. Equipment used for LTL delivery usually returns to the St Louis area with truckload freight to get it home in time for the next LTL dispatch. However, the LTL pick-up area is large enough that truckloads from the St Louis area are dispatched at midweek so that empty trailers are available to pick-up in outlying areas.
Volume determines pickup service
Delivery is available through the 48 contiguous states if sufficient lane balance can be found. Many parts of the country get delivery, but no pickup service. Most shippers are located in the middle section of the country inside a rough box bounded by Wisconsin to Iowa to central Texas to Louisiana and back to Wisconsin.
The key to the entire operation is the ability to get delivery appointments. “We will take any freight if we can secure a delivery appointment on the day our schedule calls for our truck to be in the area,” Carter says. “Deliveries spread out in concentric circles around Troy. For instance, we deliver in Denver on Wednesday. As long as an appointment is available on Wednesday and we can get it confirmed by noon on Wednesday the previous week, we'll take the freight if we can get it to Troy by Friday night. If the shipper or receiver insists on a different delivery day or if we can't make the pickup and get to Troy by Friday, we have to decline.”
About half the LTL volume delivers to warehouses. The remainder is a combination of store-door delivery, direct delivery to institutions such as prisons or universities, and fund-raising activity. Many deliveries are repetitive business with preset appointments. Another advantage of LTL freight is that many receivers are small businesses that want and need their inbound freight. The most difficult appointments to secure are those at the largest receivers, which is why receivers with express delivery doors are so highly valued, Carter says.
Witte Brothers has no minimum shipment size; freight just has to be on a pallet. “We describe our service as a bus line,” Carter says. “Every pallet position is a seat on the bus. We can get 30 pallets in a 53-ft trailer. Of course, we accept multiple pallet shipments. On the other hand, if a shipper wants to move a single carton, that carton gets its own pallet. We don't do top-loads on top of other shipper's freight, and we don't stack pallets on top of one another. Our shippers know that they are paying for pallet positions — a seat on the bus in our terminology.”
As a result of selling pallet positions as opposed to trailer cube, outbound LTL loads are relatively light, averaging about 28,000 pounds. In a recent week, loads of chilled product required an average of 7.1 delivery stops and had an average weight of 31,650 pounds. Loads of frozen product required more stops — 7.5 stops — and averaged only 26,800 pounds. Chilled and frozen products are handled in separate loads.
The cross-dock building is for freight handling only. Inbound product arriving before the beginning of load consolidation stays in the trailer used to pick it up. Some of those trailers arrive in Troy as early as Wednesday. By Friday afternoon, as many as 80 loaded inbound trailers may be sitting on the yard, Brent Witte says. LTL operations begin when the refrigeration system on the cross-dock building is started on Friday night. With the building cool, the handling crew arrives and begins to sort freight by 5 am Saturday. The crew of five handles five trailers at a time, usually taking an hour to build a complete load. The operation is normally finished between 8 and 8:30 pm on Saturday.
Running LTL requires more of drivers; they actually touch a lot more freight than is required in a conventional truckload operation. However, Witte Brothers' drivers are well compensated for their work. The average driver runs 2,200 miles per week and earns 44 cents per mile, a total that includes stop pay. The more stops a driver makes, the more they get paid, Brent Witte says. In addition, all drivers get at least 1½ days at home every week. Most drivers return to Troy on Thursday and leave again on Saturday night. “We still have to be careful how we describe the job our drivers perform,” he says. “When we advertise for drivers, we talk about multi-stop routes, not LTL.”