IT worked once, convincing David Summitt that starting a second truckload carrier offers the potential for success. Summitt is president and owner of Summitt Trucking LLC in Clarksville, Indiana, one of the cluster of communities on the north bank of the Ohio River across from Louisville, Kentucky.
Like most overnight success stories, the rise of Summitt Trucking is the result of almost 20 years of grinding work, producing an enviable growth curve with some unexpected turns along the way. In particular, today's Summitt Trucking can trace its history to two bankruptcies and an unexpected death. The first of those bankruptcies occurred in December 1982 with the liquidation of Commercial Motor Freight, then the largest LTL carrier in Indiana. That business failure following soon after the 1980 deregulation of trucking left the employees of Commercial out of work and without benefits.
However, William R Summitt, David Summitt's father, took Commercial's fall as an opportunity, sensing, as many others soon would, that flexible truckload carriage offered a competitive advantage over the highly structured systems and rates of LTL carriers. About 90 days after Commercial closed its doors, William Summitt opened the doors of Bestway Trucking Inc. The company had start-up capital of $2,000, one 17-year-old single-axle tractor, and three total employees. A little less than two years later — the end of 1985 — Bestway has six tractors, 11 trailers, and was generating annual revenue exceeding $650,000 annually.
Unexpected death
Then the roof fell in. William Summitt died unexpectedly on Christmas Day 1985, leaving the company in the hands of David Summitt and the two original partners. In the aftermath, David Summitt was elected president, one of the partners became secretary-treasurer, and the other partner sold his stake to the remaining partners and resigned. David Summitt was 20 at the time.
As the company and David Summitt matured, Bestway was primarily a dry van carrier serving a customer base in southern Indiana and northern Kentucky. Although it did operate 30 refrigerated trailers, many of them used to serve those same customers. The company grew, generating revenue for investment in the fleet and for other ventures. Among other investments, David Summitt owned the Carrier Transicold dealership in southern Indiana from 1996 to 1998.
By late 1998, Bestway was generating $60 million per year. “At that time, we made a careful evaluation of the company,” David Summitt says. “Our financial data showed that we had cut expenses just about as deeply as possible. At the same time, capacity in truckload carriage seemed to be greater than demand, shippers were resisting rate increases, and all signs pointed to a drop in the national economy. We were as good as we could get, and all the indicators pointed toward slower growth. Our inclination and the advice from lawyers and financial advisors was to sell the company, which we did to the Transit Group.”
Transit Group was one of several companies through the mid-1990s that made a practice of rolling up smaller trucking companies into larger but debt-ridden operations. Like AmeriTruck and others, Transit Group fell prey to soft freight demand, a collapse in the value of used trucks, and a crushing debt load.
Non-compete ends
The Transit Group experience was essentially an extended vacation for David Summitt, who sat on the sidelines of trucking from January 2000 until December 2002 in compliance with an agreement not to compete with the purchaser of Bestway. When Transit Group was purchased out of bankruptcy, it had to release all of its non-compete agreements. Within 60 days of that release, Summitt Trucking was formed.
“We started with what we already knew would work,” David Summitt says. “That meant a dry van truckload operation, but the plan was always there to provide refrigerated service as well. At the time of the Bestway sale, the company had 70 refrigerated trailers. Summitt Trucking acquired its first reefers in January 2004 when it bought Big T Trucking, a local company that had eight refrigerated trailers in its dry van fleet. The first order for new refrigerated trailers was placed in March 2004, when we ordered 30 new 53/102 trailers with Thermo King SB-210 units from Wabash National.”
Those first eight trailers now have been rotated out of the fleet, replaced by the new arrivals. Demand for refrigerated service has been strong enough that Summitt Trucking has ordered an additional 10 trailers for delivery by October. In fact, the company would like to more than double refrigerated fleet size to 100 trailers by the end of 2004.
Considering results on the dry van side of the business, that does not seem out of the question. Summitt Trucking started from nothing in January 2003 and in mid-2004 had a fleet of 225 tractors and 450 dry vans. Company projections call for 277 tractors and 564 trailers by the end of 2004. David Summitt says that the company has the infrastructure in place to double in size within the next two years.
High-cube reefers
The new refrigerated trailers are built to be compatible with low-density dry freight loads. With two inches of insulation in the sidewalls, interior width is almost 98 inches. Interior height is 107 inches. Bulitex composite wall liners are protected from pallet damage by extruded aluminum scuff bands 12 inches high. Loads can be secured in place with two rows of logistics tracks, one 30 inches off the floor and a second row 60 inches above the floor. The last 10 trailers ordered by Summitt Trucking run on Michelin wide-base single tires. “We're trying to cut 1,000 pounds out of trailer weight,” David Summitt says. “Using single tires and wheels gets us most of the way to that goal, dropping trailer weight by 754 pounds.”
Trailers are equipped with SB-210 refrigeration units with Thermo King's new SmartReefer2 electronic control module. In addition, the units provide untethered trailer tracking from Trac-King, a real-time, wireless monitoring and control system. Units equipped with Trac-King can communicate with headquarters using satellite or cellular telephone technology. The system allows fleets to locate trailers within a radius of only a few meters and to start, stop, or change unit operating parameters from remote locations. Trailer locations are accessed across the Internet in real time, eliminating the need for custom software installations. A malfunctioning unit or a trailer moving without authorization provides alarm notification to cell phones, pagers, e-mail addresses, or all three modes.
Summitt Trucking does not use the unit remote control feature a lot, but it does monitor units a great deal. “We watch the reports on unit activity closely,” says Kevin Hostettler, manager of refrigerated operations. “We check every unit and its operating settings about three times every day to make sure loads are properly protected. If we see something that looks out of line, we immediately send a message to the driver across our Qualcomm communication system.”
High-tech tractors
The same concern for up-to-date technology goes into tractor purchases. Model 387 Peterbilt tractors are some of the most recent fleet purchases. The low-drag conventionals are powered by Cummins ISX engines rated at 475 horsepower and use Eaton Autoshift2 automated mechanical transmissions. For increased fuel economy, the final drive ratio of the drive axles is 3.55:1. Modern electronics are an important part of tractor specifications. Summitt Trucking stays in touch with drivers using Qualcomm satellite communications.
To help ensure safe operation, tractors are equipped with Eaton Vorad collision avoidance systems. Vorad is a Doppler radar system that senses other vehicles or obstacles in front or to the right side of the tractor. When a Vorad-equipped tractor follows too closely or is about to veer into an obstacle, an audible tone sounds and lights begin to flash. The system can work in conjunction with the engine cruise control to maintain a safe following distance from other vehicles. This function is especially useful in low-visibility situations such as fog, a Summitt Trucking driver says.
The goal of expanding the refrigerated fleet to 100 trailers by the end of 2004 could happen sooner than later. Summitt is in the middle of negotiations to purchase the assets of a fleet that is ending operations. If successful, the purchase will add 50 tractors and 75 refrigerated trailers to Summitt Trucking almost immediately.
In its present form, Summitt Trucking's refrigerated fleet operates from the Louisville metro area into 11 western states. More than half the westbound traffic is dry freight or products handled under light protective service, Hostettler says. Return freight is almost all frozen foods. Produce or brokered freight is used only to get equipment home when regular customers do not have frozen loads available.
One example of protective service loads is special to Summitt Trucking's home region. North central Kentucky is bourbon country, and as a result, it has a thriving cooperage industry. Bourbon whiskey must be aged, in accordance with federal law, for at least two years in new white oak barrels that have been charred on the inside. This requirement for a steady supply of new barrels has produced a community of barrel-makers who also supply wineries in California. Wine barrels are not charred on the inside and are a different size than whiskey barrels.
Summitt Trucking has a regular customer that makes barrels for California wineries. Custom-made wine barrels can cost up to $1,000 each. The barrels are made from French oak rather than the American oak required for whiskey. The customer ships barrels 220 at a time in refrigerated trailers as a humidity control measure to keep the barrel staves from drying out and shrinking during transit.
David Summitt says openly that he is a technology addict who has to have all the latest toys as soon as they become available. That's why the fleet is equipped with satellite communication, untethered trailer tracking, collision avoidance radar, wide-base single tires, Autoshift transmissions, and the latest versions of EPA-compliant engines. “We've got engines from every supplier in the business in our fleet,” he says. “Given our choice, the fleet would be standard on Caterpillar engines, because our C15s operating at 475 horsepower are running at 6.7 to 6.8 miles per gallon, almost half a mile per gallon better than others in the fleet. We also have a group of Detroit Diesel engines in the fleet, because we bought a block of trucks from Freightliner. A few of those trucks have Mercedes-Benz engines as well.”
David Summitt says he has been told and tends to believe that the major problems that could affect engine performance under the new 2007 EPA emission regulations were solved during the 2002 development process. The transition to 2007 engines should be smooth and should provide fleets with equipment that gets better fuel economy than current engines, he says.
