The Dukes of Hazard

“Hazmat pays more than van or reefer – generally between $2 and $3 a mile,” says Wes Jones of Cabool, Mo.

Starting Jan. 31, drivers obtaining, renewing or transferring hazmat endorsements will be fingerprinted and subjected to FBI background checks. Drivers hauling hazmat loads are already being inspected more often. They have to follow more rules, complete more training and stay on alert due to the dangers posed by their loads.

The upside? Hazmat tonnage is rising with the strengthening economy. Spiraling insurance rates and heightened security concerns have increased demand for experienced owner-operators with the hazmat endorsement. Hazmat offers not only good job security and often better compensation, but also friendlier schedules and better treatment at the docks.

“Drivers with the endorsement will be able to work for more companies,” says Angel Arzaga, former driver, safety/risk manager and now instructor for the North American Trucking Management Institute. “They will be ahead of the game.”

The market is ripe for hazmat-endorsed drivers now that demand for shipping common hazmat commodities – petroleum and chemicals – has been picking up in recent months, says Chris Brady, analyst for Commercial Motor Vehicle Consulting. “The general freight carriers hit capacity earlier,” he says. “But due to large chemical inventory stocks and the standard delay in demand for manufacturing goods, the demand in hazmat freight lagged. However, petroleum output is up 2.5 percent from a year ago, and chemicals are up 3 percent.”

In spite of this demand for their services, owner-operators’ pay for hauling hazmat is inconsistent, says Gordon Klemp, president of the National Survey of Driver Wages, which tracks compensation packages among medium and large carriers. “Some owner-operators collect a premium for hauling it,” he says. “The pay is largely dependent on shippers being willing to pay more, which well they should.”

Hazmat shippers pay more, but many carriers don’t pass that extra pay on to drivers, particularly drivers who haul on a mileage basis. Klemp found that the portion of carriers that pay drivers extra for hauling hazmat has more than doubled – from 3 percent to 7.5 percent of those he surveyed – since just before 9-11.

“At 7.5 percent, it’s not an overwhelming number,” Klemp says, but the trend is toward premium pay for hazmat hauling. Some carriers pay higher mileage rates to drivers who haul primarily hazmat. But most carriers that haul primarily hazmat pay their owner-operators on a percentage of revenue basis, so if the freight pays more, the drivers earn more.

“Landstar has rates between 10 and 20 percent more for hazmat than non-hazmat freight,” says Ted Lapatka, a former owner-operator and now an independent agent who solicits customers for Landstar Ranger. “The reality of supply and demand applies. If there are fewer trucks that can haul hazmat in a given area, the shipper will pay more.”

“Hauling hazmat pays more than van or reefer – generally between $2 and $3 a mile,” says Wes Jones of Cabool, Mo. Jones leases his 1994 Peterbilt 379 to Quality Carriers, the largest bulk chemical carrier in North America. Jones says about half his freight is hazmat. “Right now I’m hauling a hazmat load from Cincinnati to Houston that pays $3,200. That’s for about 1,000 miles.”

“The rate structures take into consideration the commodity they’re hauling,” says Larry Barnes, recruiting chief for Quality, which pays its owner-operators on a percentage basis. “Once the security rules and regulations get implemented, the hazmat endorsement will become even more of a valued commodity. Drivers who have hazardous endorsements are going to command a high premium.”

Steve Weinberg, an owner-operator for 27 years, enjoys a premium rate for hauling 190-proof grain alcohol with his 2000 Kenworth W900. “Since I’ve been doing this, I end up with between $140,000 and $150,000 at the end of the year before fuel and expenses,” says Weinberg, who lives near Danbury, Conn., and has a dedicated run for Dana Transport. “We even had some guys earn over $200,000 before fuel and expenses, but they ran harder than I did.”

While Weinberg’s gross isn’t unusually high, he will average between $1.50 and $2 a mile because he expects to run no more than 90,000 miles this year.

“A lot of owner-operators have that how-many-miles mindset,” Weinberg says. “But you don’t have to run your tail off. Hazmat rates are higher, but we get paid for scaling out at the customer, for pumping off the load when that’s necessary, and we get detention pay. If I’m at the dock four hours, I’ll get paid two of them. It’s good pay, too: 62 percent of $60 an hour,” or $37.20, Weinberg says. “If it’s two hours and 15 minutes, the company tells me to write them up for the 15 minutes, and I get paid.”

Weinberg enjoys how his dedicated run gets him home every night. Owner-operator Jeff Oller also prefers hazmat because it gets him home a lot. “I have a wife and two little boys, and I like to spend as much time with them as I can,” says Oller, who is based near Columbus, Ga., and leases his 2000 Western Star to Indiana-based Liquid Transport.

Much of hazmat is hauled in tankers, a sector that offers good home time and that tends to attract experienced drivers, says Cliff Harvison, president of National Tank Truck Carriers, an industry association. “Eighty percent of the tank truck industry is short-haul, shift work, and home every night,” he says. “Most drivers are a little older when they change from regular freight to hauling hazmat with our fleets. They want to be home more, and they are more mature, which makes them the kind of drivers most hazmat carriers want to hire.”

Another benefit is treatment at the docks. “I’ve pulled reefer and dry van, and a lot of the shippers and receivers I visited acted like they didn’t even know or care if I was there,” Oller says. “But the people at most of the chemical plants are kind of nice. They treat me better and get the loading and unloading done more quickly.” Oller’s father-in-law Danny Lowis, also leased to Liquid Transport, agrees. “The customers generally don’t like to keep hazmat haulers waiting around, especially to unload,” he says.

A major cause of increasing demand for hazmat haulers is U.S. Department of Transportation regulations tied to the 2001 USA Patriot Act. It is more difficult to obtain the endorsement because of security measures in the wake of 9-11, as well as other safety concerns.

“You can’t be lackadaisical,” says Jones, of Quality Carriers. “If a dry van wrecks, it’s 20,000 pounds of tissue paper. If we wreck, it’s emergency response teams, populations evacuated and a multimillion-dollar clean-up.” Amines, used in personal care products, are particularly risky, he noted. “If that stuff spilled, the cleanup costs would be phenomenal,” he says. “We get massive amounts of extra training and equipment.”

“If I’m a driver and I want to be identified as the cream of the crop, this is the kind of work I want to get into,” says Ed Emerick, senior consulting manager with J.J. Keller & Associates, a publisher of trucking industry materials. Hazmat haulers “have taken the time to educate themselves and learn about these rules. Whether I’m an owner-operator with one truck or a whole fleet, hauling hazmat shows that I run my operation at higher levels of safety and professionalism.”

The private sector has already done much to raise the bar for hazmat haulers. “A lot of companies and insurance firms have requirements concerning age, experience, and driving record for hazmat drivers,” says Jerry Hall, Safety Director at Bork Transport in Summit, Ill.

On the public side, new regulations make it tougher for hazmat carriers to operate; the Transportation Security Administration’s background check will likewise make it tougher on hazmat drivers.

“This plan is going to be very hard to accomplish, but they are definitely going to do it,” Hall says of the Jan. 31 deadline. Most state legislatures have passed bills to comply with the federal government’s fingerprinting and background check requirements. States must remind drivers to begin the background check at least 60 days before their hazmat endorsements expire.

Harvison thinks the background check will screen out a minimal number of drivers. “But the cost and the hassles are the larger factors,” he says. TSA has estimated fingerprinting costs at $100 per driver. Carriers will probably pass this burden to the drivers, reasoning that the commercial driver’s license and endorsements are the drivers’ responsibilities.

Oller says the background check has caused a mixed reaction. “Some talk about Big Brother moving in,” he says. “If they’re going to check back too far, or if there’s something in the driver’s past he’s a little leery of, he might just go ahead and drop (the endorsement).”

“The new rules will thin out the bad drivers,” says Lowis. “But a lot of good drivers are going to quit because of the extra hassles.”

Joe Rajkovacz, an owner-operator for over 30 years, has already seen hazmat drivers giving up their endorsement. “If they can’t get guys to haul hazmat, they’re going to have to pay more,” he says.

“I hope so,” says Weinberg. “That will mean a pay increase for me.”


INSURANCE PUTS SQUEEZE ON INDEPENDENTS
Insurance costs and compliance with an increasingly complex regulatory environment are putting hazmat hauling out of reach for most owner-operators not leased to a hazmat carrier.

“A lot of the smaller, family-owned fleets are getting out of hazmat,” says Cliff Harvison, president of National Tank Truck Carriers, a trade association. “They are being bought up by the larger carriers that can attract more and bigger customers and market their services better. Larger carriers have more assets and can absorb some of the liabilities.” Other small carriers become affiliated with larger carriers for the same reason.

Hazmat insurance requires up to $5 million in liability for each truck. Owner-operator Steve Weinberg, who drives for Dana Transport, estimates premiums cost about $100 a day per truck, or $36,000 a year, to cover a small fleet.

“We generally see very few one-truck operators hauling hazmat,” says Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association. “When the insurance gets to the $5 million level, that’s high enough that it’s not attractive to them.”

Rates are high even for larger carriers, partly because few companies are writing hazmat coverage, says Ward Best, president of Atlantic Tank Lines in Charles City, Va. “Due mostly to the stock market downturn and, to a lesser extent, increased litigation costs, there are less than 10 insurance companies writing hazmat insurance,” he says.

Some carriers have restructured to accommodate the insurance market. For example, Atlantic Bulk Carriers of Charles City had 110 drivers, about 35 of them hauling hazmat. Leslie Hale, safety director, explained that covering all 110 for hazmat was not cost-effective after rates rose in the wake of 9-11. “So we broke off the 35 and formed Atlantic Tank Lines (ATL), and both fleets are now owned by Atlantic Holding Co.”


MORE RESPONSIBILITY FOR FLEETS
Since September 2003, hazmat carriers were to have implemented their own comprehensive security plans and trained their employees and owner-operators accordingly. This is to comply with Hazardous Material Rule 232, administered by the U.S. Department of Transportation’s Research and Special Programs Administration.

“These plans are carrier- and commodity-specific,” says Ward Best, president of Atlantic Tank Lines in Charles City, Va. “The greater the potential hazard, the more training would be required, and the greater the level of detail.” The training can include routes and stopping procedures, potential security risks, and driver alertness in certain areas of concern, such as Washington, D.C. “Our training lasts about three hours, and we pay owner-operators our standard hourly rate for it,” Best says. Each carrier’s plan must also include risk assessments and communication with drivers, and it must pass muster with FMCSA.

Furthermore, carriers hauling certain types of hazmat – radioactive materials, explosives, toxic inhalants, or compressed/refrigerated methane and natural gases – will need a special permit from FMCSA by Jan. 1, 2005. To obtain it, carriers must have their HM-232 plans in place, and they must pass an FMCSA audit.

Best says it was no small feat for his operation to jump through all those hoops – especially passing the audit. “Everything covered by federal regulations is fair game, including the hazmat security plan, and we had to have our insurance in place,” he says.

These requirements not only put the heat on existing carriers but also create a high threshold for any new carrier that wants to haul hazmat, he notes.

Bork Transport in Summit, Ill., also completed the requirements for the permit, says Jerry Hall, safety director. “We had to assess different scenarios the drivers might encounter on the road – hijackings, stolen trailers, things like that – and provide a plan for preventing and reacting to them,” Hall says. “We know that most hijackings occur within five miles of the driver leaving the shipper. We even looked at the risk of the wrong people getting into our computer system to find out what we’re hauling and where the loads are going.

“All our drivers have cell phones and make contact with us a minimum of four times a day,” Hall says. “Our yard is fenced on three sides, and during off hours there’s a guard who checks every truck that comes down the street.”

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