Losing ground: The military hauling niche

| February 06, 2014

military freight ratesMissouri-based driver Hal Kiah was active primarily in military freight more than 10 years ago. As a company driver with Tri-State Motor Transit then, he was paid 23.5 percent of the load. Back with Tri-State in 2013 for a brief period, however, mileage pay prevailed, and Kiah got a better sense of where the market for military freight had gone.

“Competition is up,” Kiah says, for both security-sensitive arms, ammunition and explosives – or AA&E, typically the better-paying type of military freight – and general government freight (FAK). Like any kind of general-type freight, he says of the latter, “everybody’s out there trying to make the best bid they can possibly make to be profitable.”

Kiah isn’t alone in his assessment. With the federal government increasingly outsourcing its logistics, it’s harder to break in to the military hauling niche, and those who’ve made it find that rates aren’t what they used to be.

DID YOU HEAR THE ONE ABOUT THE TRAILER-MOUNTED MISSILE…

Hauling freight into and/or out of U.S. military installations, despite rate dynamics, remains a vocation near and dear to the hearts of many a trucker. Drivers report a wealth of experiences dealing with often-young military service members at forts and other installations, hearing stories of patriotic lives in fast flux and hopes for the future.

Stories like this one are legion: Hal Kiah formerly ran in the heavy-haul division of Tri-State Motor Transit, which does a lot of contracting for military freight. He once hauled an unarmed training missile from one base to another, he says. No tarping, no crating — the missile was strapped to a wheeled carrier. Kiah had the servicemen load the missile facing backward.

“It was the first, and only, time that nobody ever tailgated me, followed alongside or even wanted to be anywhere near my rig,” he says. “If they passed me, they wasted no time.”

It also made for good CB conversation. While cruising along, another driver came up behind him and asked what he had on the trailer. “I’ve got this little button up here,” Kiah joked with him. “All I have to do is push the trigger, and it’ll be laying in your lap.”

As for tales of the stereotypical bureaucratic waste and stupidity, Tom Moore recalls a 2010 brokered Menlo-managed load moving from a DOD site in New Jersey to another in Sacramento, Calif.

There were three tractor-trailers on hand, including the Moores’ flatbed, at the pickup location. After some mistakes loading, the Moores were loaded with a “little bitty trailer with a generator on it,” Tom says, taking up 8 feet of length with the trailer tongue. Every other load that came out that day similarly was small.

“I went back into the office,” says Tom. “I said, ‘I have to ask you something. … Together we’ve only got 24 feet of deck filled’ ” between the three units, “ ‘and we’re all going to the same place in California.’ The guy says, ‘That’s the federal government for you.’ ”

The Department of Defense “does a great job of keeping prices competitive,” says Ted Alling, chief executive officer of Access America, a Chattanooga, Tenn.-headquartered brokerage that deals with DOD shipping sites for general freight. Alling says Access America also does some business with Menlo Worldwide, the prime contractor that manages 44 percent of nonsecurity-sensitive domestic freight shipments.

So strong is the competition today that three out of four owner-operators report rates for military freight have dropped over the last five years, according to a survey of Overdrive readers.

Some longtime owner-operators blame the federal Defense Transportation Coordination Initiative for that. The DTCI brought Menlo onto the scene in 2007 to cut shipping costs as a third-party logistics manager contracted by the Surface Deployment and Distribution Command. Commercial practices “not normally embraced by the government” have been brought to bear in order to produce the savings, says SDDC Public Affairs Officer Mitch Chandran.

At the time DTCI was being implemented, Landstar-leased owner-operator Bryan Manley says he commonly ran Menlo loads out of Fort Bragg, N.C. After the third-party logistics firm came on board under the initiative, “the loads were less frequent and paid less.”

Mitch Chandran, public affairs officer for SDDC, says working with Menlo has exceeded SDDC goals for transporting domestic military freight more efficiently. “The program has also improved visibility, updated antiquated IT systems and fostered positive partnerships with the commercial sector while streamlining” domestic movements.

Today, Chandran says, contrary to the beliefs of many owner-operators, the DTCI continues, though there are no plans to expand it further to include other shipping sites. “All sites … that intend to be in the program have already been implemented,” he says, accounting for about 44 percent of all nonsecurity-sensitive military freight more than 150 pounds.

Related

Taming the beast

Military hauling examined in the pages of Overdrive in the year 2007.

Menlo estimated that as of September 2010 it had “achieved $167.4 million in cost reductions on DOD shipments within the continental United States,” according to an August 2012 report by the Department of Defense Inspector General.

Related

AA&E: Where the money is, if anywhere, in military freight

FedEx custom-critical expediters Andy and Myrian Johnson are sunny about high-security military freight, where the money is -- if it's anywhere -- in the niche. ...

Some readers believe that what’s happened with the rate dynamics is that so many of the entities now involved in arranging for transportation of military freight are “just brokers and don’t own any equipment,” says an owner-operator who prospered during pre-DTCI days hauling freight out of Fort Campbell, Ky., and declined to speak on the record.

It’s not uncommon for transportation officers at sites not covered under DTCI today to “start with the lowest-cost company and work up, even though they can’t provide the best service or sometimes enough equipment for the job,” he adds. 

 

Part 2 in this series: AA&E, where the money is

  • Steve

    Anytime a broker is involved, it’s going to pay 20-25% less than it should. For a trucker trying to survive on 5 to 10% of the gross, it shouldn’t be too hard to figure out where the problem is.

  • hotdog

    In 2004 I obtained direct military hauling authority with the DOD. My nationwide tender rate for an A30 (what the military calls an RGN trailer) was $3.69/mile. I got calls frequently from various military shippers and hauled at least 2 or 3 military loads every month. By the time I dropped my military authority in 2012 I had lowered my rate to $2.50/mile for the same trailer in an effort to be competitive to no avail. I seldom got any calls from military shippers and hauled less than 5 military loads in 2012. Many brokers had their rate at less than $2/mile and stupid truckers would haul the loads for even less than that. I say let them go broke.

  • mousekiller

    A few years ago when I loaded a truck from Texarkana to Ft Lewis Washington. The load paid pretty darn good. Loaded it then I got the bills and attached was a note stating that Menlo was taking $4700 off the load for them. I knew something was wrong because several came to me to ask if there was a note attached to the BOL . They were Very nervous. I of course said no. The rate showed the cut on the bills. I still did the load but that was the last time I did a menlo load. Menlo is made up of retired high ranking military people like generals and other ranking officers with DOD classified abilities as side from a very few civilians.

    Military freight now pays about the same a load of toilet paper. Less BS involved in hauling Toilet paper.

  • haller

    The answer is simple;;; The military should have their own trucks and haul their own freight.. Military trucks don’t stop at scales, no logbooks, no cdl’s, and all the cost is on the taxpayers.

  • haller

    Steve you’re wrong,,, anytime a broker is involved you are hauling for cost or less then cost.. My cost is $1.04 per mile plus fuel, plus refer charge, plus refer fuel, plus waiting time, plus $125 per stop, plus a loading fee of $75, plus an unloading fee of $75..

  • Certifiably Nutty

    That’s the problem right there…you know your costs. I would say these days, there are a lot of truckers taking load just to take a load without taking the time to see if they are going to make money.
    Generally speaking, I think we have seen a decline in the business savvy of the trucker compared to years ago. I think too many people are getting into the industry because they lost their job doing something else. As a result, they approach trucking as a job and not a business.
    Of course you can take a load that doesn’t pay well … you will be working for sure, but you won’t be earning. They don’t understand that it could ultiamtely cost them less to park vs. take a low paying load.

  • trucktracy

    The problem is T R U C K E R S!!! I have an RGN sitting in the yard right now. I will not bring it out unless someone is willing to pay what I want. I want a minimum of 3 per mile for a legal sized load going to an area that I can get 2 plus out of to get back home. My thoughts are, I can do that with my reefer or close to it, so why pull a trailer that as soon as I hook up to it, I lose 1 mile per gallon, it is specialized equipment, and I have more exposure to the DOT and more risk liability wise. I get calls every week from companies wanting the RGN, but few will meet my payment requirements. So why do people pull these loads? If you let it sit they will start to pay. To blame the broker is to not take responsibility for your own actions. Brokers are just doing what everyone else that is in business would do; make as much money as you can. If 1/3 of the truckers would J U S T S A Y N O to cheap freight , it would not be cheap freight for long.

  • G

    The problem is the guy that just unloaded next to your house is looking for a $2 plus load home too. Rgn loads are a one way street. The government can afford to pay for that rgn to deadhead home. A loads a load, doesn’t matter if it’s coming or going. Anyone worried about a back haul with a rgn should sell it and buy a flatbed. Way more loads for them.

  • Certifiably Nutty

    I agree trucktracy, it is the truckers. That’s what I was trying to get at…there are truckers who take crap paying loads just to haul a load, even if they will not clear money.
    You are 100% correct, say no to the cheap freight, show some self respect and honor the job you do and realize you are providing a service that DESERVES adequate and appropriate compensation for the task being performed and the risk incurred every time you haul a load out of a yard.

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