A move long in the works by the U.S. Transportation Command (USTRANSCOM) to award a Global Household Goods Contract (GHC) to a single source provider has raised alarm bells for owner-operators who have been in the military HHG business for years. USTRANSCOM oversees household movements for Department of Defense members across the world.
Following a long-in-place similar single-source-type contract in the military general freight arena currently held by the Crowley company, the GHC was awarded in late 2021 to HomeSafe Alliance (HSA), a joint venture of KBR Services and TierOne Relocation, making HomeSafe the exclusive household goods move management service provider for the U.S. Armed Forces, Department of Defense civilians and their families.
According to USTRANSCOM, the move to a GHC is intended to “improve the relocation process for service members, civilian employees, and their families, and integrates functions currently performed by more than 900 commercial entities.”
Despite the contract being awarded nearly two years ago, the GHC has still not taken effect after numerous delays. A Sept. 11 update from USTRANSCOM said that “local shipments under GHC, generally those that are packed, picked up, and then delivered in the same local area, will likely begin later in 2023 instead of the initial target of September.”
Local shipments under the GHC will begin in small numbers and at specific installations, and they will slowly roll out to more areas, the update added.
What’s wrong with the GHC?
Owner-operator Fred Metzler has been sounding the alarm on the GHC for years, culminating most recently in a rally in Washington, D.C.
The problems Metzler and others in the military HHG business are seeing with the new GHC largely revolves around the rates that will be offered by HSA. Traditionally, military HHG movers’ rates were based on a discount from the 400NG Tariff developed by USTRANSCOM. Metzler said that discount, taken off the rate paid to those involved in the shipment, typically ranges from about 20% during the peak moving season in early summer to around 55% -- “relatively fair money” all in all, Metzler said.
This past June, HSA released some projected rates to agents and carriers -- Metzler said some of those computed to 49.4% lower than the 55% discount on the 400NG rate.
To put it in real numbers, Metzler pointed to a recent move August 30 going from Fort Drum, New York, to Jacksonville, Florida. At the 55% discount 400NG rate, the load would have paid in the ballpark of $15,700. Being a 12,000-pound load, Metzler said he could have put two of them on his trailer, doubling his rate. Using $30,000 as an estimate for those two 12,000-pound moves, after all the fees are divvied out, he’d bring in about $13,000 -- then he has to pay labor for people to help pack and load the truck, and fuel.
“I average about $5,000 a week in peak season as an owner-operator with my own trailer, after my costs,” he noted.
That same load based on HSA’s rate, he estimated, might have paid just $8,358 -- before the fees and costs. After paying labor and fuel, Metzler said he’d net only about $2,100.
He offered another load -- Oct. 1 going from Lacey, Washington, to San Diego, California, which would have paid more at a 72% discount on the 400NG than it would under HSA’s rate.
When the talk about the GHC started, Metzler said movers were told it would be “better for service providers because there would be more money to the [the movers],” he said. Considering all he'd seen, Metzler added, “That’s not true.”
He noted that he’d been told several major players in HHG moving have indicated that they’ll no longer participate in military HHG moves under the GHC, which will impact the quality of service provided to the military servicemembers.
Metzler, who has been in the military HHG business since 1991, said he has the flexibility to pivot to other parts of the industry if the GHC takes effect at the rates that have been suggested, but that’s not the case for many small-business movers who depend on the military. He added that beyond the movers, the biggest impact will be seen by those being moved.
“At his point, I’m not even fighting for me anymore,” Metzler said. “I’m fighting for the military members.”
He felt that at HSA’s rates, the quality movers will exit the industry, and the ones that stick around likely won’t provide the same level of service.
“One of the primary premises of the GHC contract was to get more money to the service provider at the curb,” Metzler said in a press release. “Price comparisons by independent comptrollers using HomeSafe’s own rate calculator show that the owner-operator will lose 30%-50% of revenues, even while their costs have increased 25% or more over the last few years. This decrease in revenue amidst rising cost will lead many of us going out of business, and put the ability for USTRANSCOM to move our military families in jeopardy.”
[Related: How to get access to military freight]
Taking the fight to D.C.
To raise awareness for the problems the moving industry is seeing with the GHC and HSA’s rates, Metzler organized the “Walkboards to Washington Rally,” held Sept. 26-27. It featured a group of about 20 owner-operators driving their trucks around the U.S. Capitol, among other efforts. “We pulled in, no trailers, and did three laps around the Capitol,” he said. The trucks all were decked out with banners, he added, in hopes of raising awareness.
Metzler’s not the only one who has raised concerns about the GHC. The American Trucking Associations’ Moving and Storage Conference (MSC) -- comprised of independent moving companies, large van lines, and industry suppliers -- held its annual Call on Washington the last week of September. MSC invited Metzler and seven other owner-operators to join them on Sept. 27 for meetings with Congressional offices.
According to MSC, 55 movers met with 60 Congressional offices, expressing their concerns for the HHG moving industry.
“Big business and small business went to Capitol Hill to talk about the GHC contract,” Metzler said. “They heard us.”
MSC and Metzler’s group urged Congress to address concerns that the GHC “lacks sufficient reimbursement, clarity, and simplicity to facilitate the annual relocation of 300,000 servicemembers,” MSC said in a press release.
Metzler said the moving industry has also requested that Congress direct the Government Accountability Office (GAO) to conduct a study looking at the viability of the GHC as it’s currently awarded.