One service center, Westfield Steel Inc., Westfield, Ind., is taking greater ownership of its deliveries with an authorized-for-hire common carrier.
Westfield Steel Express LLC launched May 1, 2008, with the first hauling revenue coming in later that month. The idea for WSE was floating around several years before that, though, according to Fritz Prine, CFO of Westfield Steel.
"The idea of a transportation company [was] first explored around 2000-2001," he says. "At that time, the truck fleet wasn't quite large enough for a separate company, and we didn't have the management time to start it. By February 2008, we analyzed the economics of it and decided it was time to start."
Westfield Steel worked with its accounting firm and attorney to establish a legal entity classified as a public transportation company to ensure it was set up properly, according to Prine. He also says WSE offers two major advantages.
"The first benefit was that a public transportation company in Indiana is exempt from state sales and use taxes," says Prine. "The second benefit was generating revenue to offset the costs of our delivery routes for steel."
The long haul
WSE delivers steel to customers mainly in Indiana, Ohio, Illinois, Michigan, Kentucky and Missouri. Its farthest haul north was to Minneapolis, and the farthest haul south was near Atlanta. WSE has gone as far east as Edison, N.J., and traveled as far west as Kansas City, Mo., and Auburn, Neb.
"Before WSE, the trucks were empty after they delivered to the customers on a particular route," says Prine. "Now, we can set up hauls on the way back to our facilities and offset the 'dead-head' costs."
Westfield Steel sources hauling services through various avenues, initially sticking to hauling directly from the company's customers and vendors. These goods include large capital equipment, cement products, and steel coils and tube from mills.
"We then worked with neighbor companies to haul lumber products and salt," says Prine. "We also use various logistics brokers and Internet Ôload boards' to find loads that reduce dead-head miles."
WSE has also hauled PVC pipe, mulch, carbon, lawnmower racks, wood flooring and aluminum.
The carrier service started with 21 flatbed trailers and 17 over-the-road tractors, one of which was a sleeper cab, according to Prine.
"We swapped three sleepers for day cabs, providing more flexibility on where we can haul for WSE," he says. "We modified four trailers to haul steel coils. We then purchased a rollback kit for one trailer, so we can haul commodities that need to be in a dry-van trailer."
This flexibility has paved the way to success for both Westfield Steel and WSE, and Prine says it has helped both companies meet certain targets.
"The short-term goal is to offset the cost of hauling steel for WSI and create another revenue stream," he says. "The long-term goal is to maximize the profitability as a stand-alone transportation company. This further diversifies the company to better weather the next recession." MM