From the outside, the delivery business seems straightforward: You pick up parcels from Point A and haul them to Point B. Do it in a timely and cost-effective way and voilá — you’re in business.
If it was that easy, there wouldn’t be the relentless slow churn in the trucking industry. Mergers, acquisitions, closures and bankruptcies fill the corporate histories of trucking companies coast to coast.
Many once-well-known trucking brands have disappeared. Gone from western U.S. highways, for example, are big tractor-trailers adorned with once-ubiquitous trucking names like Consolidated Freightways, ONC (Oregon, Nevada, California), and PIE (Pacific Intermountain Express).
Some companies succumbed to bad management and rising costs. Others have been swallowed by aggressive companies seeking economies of scale, greater market share and wider geographic reach. The list of come-and-gone companies is so extensive there are websites devoted to tracking the disappearance of familiar truck lines.
The churn in Idaho companies, however, has been less dramatic.
“There were many [national] companies that closed during the recession,” says Kathy Fowers, president of the Idaho Trucking Association in Meridian. The trade group represents the interests of motor carriers and affiliated businesses. About 150 of its 235 members are trucking companies and private carriers.
“Nationally there were over 5,000 trucking companies that closed their doors from 2007 to 2010,” Fowers says. “It was a very difficult time for the industry. You have to realize that a trucking company in the very best of conditions only has a margin of about 3 percent profit. So when something like this [recession] happens, it doesn’t take long to give back that 3 percent margin.”
Fowers later adds, “But I don’t have that many members that actually closed their doors. A lot of them had to make some deep cuts, but we’ve done pretty good.”
One of Idaho’s trucking successes is Diamond Line Delivery Systems in Meridian. Beginning with their 2000 purchase of assets of a small Emmett trucking company, majority owners Calvin Fillmore and his wife, Myrna, have parlayed organic expansion and a string of acquisitions into one of the fastest-growing and largest trucking companies based in Idaho.
They’ve bought companies in Lewiston, Portland, and Kent and Moses Lake in Washington state. Seven other Diamond Line terminal and delivery operations in the region once belonged to other businesses.
Calvin Fillmore, 50, grew up on a ranch in Albion in south-central Idaho and studied agribusiness before transferring to Boise State University, where he took up business management with an emphasis in traffic logistics. He helped pay his way through school by working on a trucking company’s loading dock. Today he is Diamond Line’s corporate secretary and head of operations, while Myrna Fillmore is president and head of administration.
“Calvin’s been a smart businessman in how he’s doing it,” Fowers says. “His drivers are treated well. And the people who do business with him have trust in him. He’s taken his time to grow his business, and he’s a hard worker.”
Travis Huffman, a vice president and relationship manager for U.S. Bank in Boise, praises the Fillmores, who have been customers since Diamond Line’s start. “They’ve got a real solid management team,” Huffman says. “Calvin sets goals, and he puts steps in place to reach those goals. It’s easy for us to work with him.”
Business Insider spoke with Calvin Fillmore at his office west of Eagle Road and south of Fairview Avenue.
Q: What were the origins of your company?
A: My wife was with Ore-Ida Foods for close to 20 years, and I was with Ida-Trans Freight Systems. Both of the companies were bought out. She was given a severance package, so we used that to buy [assets of] a company in Emmett called Salskov Transfer. We stayed in Emmett with seven employees, and then we moved to Boise and began our expansion.
Q: What causes the continual churn of companies in this industry, the coming and going of trucking companies?
A: That’s a big question, but I think there are probably several factors. One is expanding way too fast — not having enough assets and capital behind the expansion. To buy a new truck right now is about $115,000, so it’s not something you can just jump into the market and start doing unless you’ve got the capital.
Another issue could be losing sight of what got you there — service. I think as a carrier expands to a certain level, they may forget what got them there. Taking care of your customer is the absolutely No. 1 thing you have to continue to do. I think some companies lose sight of that.
And I think the other issue is competition. The free market system is continually driven by price and competition.
There could also be a change in management. And not paying attention to their costs [including diesel fuel] — that’s another thing.
Q: Why did you and your wife decide to structure the company with 30 percent employee ownership?
A: First off, I think our success was created not just by us, but by our employees. We wanted to figure out a way to empower our employees so they could make decisions and create a system inside our organization that would be successful for us and for them. So we decided to go with an employee stock-ownership program. I think by doing that it has created a great deal of the growth and success we’ve had.
Q: What is your target market?
A: Prior to [the recession], we were hauling quite a bit of construction material. Our mixture was probably 30 percent construction, 30 percent agriculture and about 40 percent a mix of other products, including food products, automobile parts and a variety of other loads. Once the construction industry slowed, construction material dropped to about 10 percent. So we looked to the medical industry, we looked to the food service industry, the used auto parts markets and others.
Q: You try to market your services directly to the shipper, as opposed to freight consolidators or brokers?
A: Those consolidators are called a 3PL, a third-party logistics company. And they are typically a marketing firm that sells trucking services for a variety of companies. They’ll contact us. The bottom line is still if you can provide the best service out there, they will come to you. Actually, in many instances we are competing with 3PLs.
Q: Is price the highest consideration for most would-be shippers?
A: Price is very, very high on the decision chart. It depends on the customer and their needs. For some customers, delivery speed may be the most important. Service.
Q: What’s your definition of service?
A: Pick it up on time. Deliver it on time. Don’t damage it, and bill it correctly. Service, on-time delivery is critical.
Q: Do you have a core group of regular customers?
A: Yes, I would say that about 60 percent of our revenue comes from about 25 percent of our customers.
Q: Who is your biggest customer?
A: Actually, it is another freight carrier called Roadrunner Transportation Systems [based in Wisconsin, with subcontracted services across the nation]. They don’t have any trucks here. We act as their agent and deliver a lot of freight for them. We also do a lot of business with R&L Carriers based out of Ohio. We do business with ABF [based in Arkansas]. We do business with YRC [based in Kansas]. We’re kind of the little Idaho niche carrier that goes to all the cities in the state. And by doing that, the other carriers use us.
Q: What is your largest expense?
A: Labor. Fuel is No. 2, and capital expenses for equipment is No. 3.
Lennon S. Reid: sreid@nextploration.com.
