Local connections

Intermodal drayage may represent a critical link in the worldwide supply chain, but it`s still the small local companies that make it all happen.

By Toby B. Gooley, Senior Editor -- Logistics Management, 1/1/2001

Intermodal drayage is not the most glamorous link in the supply chain, but efficient drayage is a critical if unsung component of the chain. Drayage companies, which cluster by the dozen around U.S. container ports, provide the transportation link between the ports and inland distribution. Most are small businesses, owned by one family or by a few partners and often started with one or two trucks. They have built their businesses on intimate knowledge of the port and intermodal facilities where they work.

As business logistics has evolved over the last two decades, many of the traditional drayage companies have expanded their own services and their base of customers. They provide services not only to exporters and importers but also to ocean carriers, railroads, and intermodal marketing companies (IMCs). What follows are the stories of three of these companies.

Kellaway Intermodal & Distribution Systems (Randolph, Mass.)

The Kellaway family originally specialized in warehousing, mostly serving wool and footwear importers in South Boston. But as containerized transportation developed and trucking deregulation created new service opportunities, the Kellaways' business grew and diversified along with it. Beginning with hauling containers between ports and railheads or warehouses, the company has grown to serve not only importers and exporters but also ocean carriers and railroads.

The company now employs 600 under the direction of Chairman Ken Kellaway Sr., CEO Ken Kellaway Jr., and President David McLaughlin. It counts such major importers as Hasbro, New Balance, BJ's Wholesale Club, and the regional discount chain Ames among its customers. The company promotes itself as a provider of "single-source shipping," offering customs-bonded warehousing; a customs central examination station; customs-bonded truckload, LTL, and container transportation service; dedicated linehaul service at six regional airports; and third-party logistics services through its Quality Logistics Systems subsidiary. Kellaway also operates 24-hour inland intermodal terminals on behalf of several ocean carriers as well as a 24-hour intermodal rail ramp in central Massachusetts with access to Canadian National and Conrail service.

Like many intermodal drayage providers, the company can provide a package of integrated services for its customers. Ken Kellaway Jr. cites the example of Hasbro, the Pawtucket, R.I.-based toy manufacturer. Kellaway handles all of Hasbro's airfreight and ocean container pickups and deliveries, overflow warehousing, and intermodal container moves. "Integration is the key," he says. "There are certain inherent economies in using a single vendor for multiple services."

Another benefit to doing business with a regionally focused company, says Kellaway, is that customers get personal attention from top executives. Both Kellaways, McLaughlin, and Joel Brebbia, senior vice president of sales and marketing, all regularly visit customers.

The company has expanded well beyond New England in recent years, with customer demand leading it to launch operations in Pennsylvania, New Jersey, California, Florida, and Washington. Kellaway also got into the national scene late last year when it merged with six similar companies to form RoadLink USA, a Houston, Texas-based company that is offering the first nationwide intermodal transportation service (see accompanying sidebar below).

Kellaway doesn't think that becoming part of a national network or expanding out of the home region will compromise his company's "personal touch" and local commitment. "The beauty of the RoadLink model is that we will maintain local control, autonomy, and decision making, but at the same time we can walk in [to a customer's office] with a national product that's not brokered. We can actually do it all ourselves," he says. (For more information on Kellaway Intermodal, go to www.kellaway.com .)

Port Jersey Logistics (Jersey City, N.J.)

In 1954, Bob Russo had one truck, 13 employees, and 20,000 square feet of warehouse space where he stored imported foods. Today, Port Jersey Logistics, the company that grew out of that small venture, boasts 45 tractors and 180 trailers, 450 employees, and 11 warehouse operations totaling nearly two million square feet, almost all of it refrigerated. Annual revenues generated by serving customers like Tri-Valley Growers, Clorox Corp., Hunt-Wesson Foods, and World Finer Foods exceed $40 million.

Some things haven't changed, though. Port Jersey still focuses on imported food items, although it now serves clients in a variety of industries. The same boyhood friends who have been at the helm for years -Russo, now chairman; Tony Becker, president; and Gerry Wesbecker, executive vice president - still own and run the company. And although family members continue to play a major role in Port Jersey's growth (Bob Russo's son Rob, for example, is the information systems manager), "outsiders" have made an important contribution as well: Denise Ciok, who heads up the company's trucking operations, is a 30-year veteran of the company.

At a time when many drayage companies are looking to go national, Port Jersey continues to concentrate on regional business. "We've had offers to go to Atlanta three or four times, but we decided to stay here," says Becker. "Almost 25 percent of the country's population is within one day's drive of New York City. We have plenty of work to do here - we don't have to go national!"

Becker attributes Port Jersey's growth over the years to a number of factors, including the development of containerization, the boom in international trade, and customer demand for "one-stop shopping," which prompted Port Jersey to add numerous import-oriented services. Customers that use the company's bread-and-butter intermodal trucking and warehousing services, Becker reports, often go on to use other Port Jersey services, such as the foreign trade zone, multi-vendor container consolidation, overweight container management, and order-fulfillment offerings, to name a few.

Because customer service is centralized, account representatives can put together an integrated package of services for clients. A centralized computer system also allows reps to see a customer's activity at any one of Port Jersey's divisions, Becker reports. In addition, the company is willing to go the extra mile and meet with its clients' customers. "We'll meet with the customer of the customer and ask how they want delivery configured, to understand their needs," says Becker. "If our customers and their customers are very happy with us, chances are they won't leave us for 5 cents less."

It has helped that the company devotes significant internal resources to information technology, customizing some of its own systems and working with outside vendors in other cases. The company exchanges information with more than half of its customers via electronic data interchange (EDI) and is introducing a variety of Internet-based technology services. In sum, says Becker, Port Jersey and companies like it have staked out their market niche by offering single-source control over transportation, storage, and distribution, as well as detailed knowledge of their customers' business coupled with up-to-date information technology. (For more information on Port Jersey Logistics, go to www.portjersey.com .)

Hawk Pacific Corp. (Lafayette, Calif.)

Hawk Pacific Corp. is a child of deregulation, according to Chairman and CEO Dennis Van Wagner. In 1980, the year trucking was deregulated, the former railroad executive and a partner hired a couple of owner-operators and started an intermodal drayage business with just one account. Through a series of acquisitions, Hawk Pacific has become a highly diversified intermodal service company that operates around the ports of Oakland, San Francisco, and Los Angeles/Long Beach. It now employs about 110 people and runs 300 trucks from nine service centers throughout California.

Originally, the company focused on domestic intermodal traffic, Van Wagner says, but it began handling international containers as a way to offset seasonal slowdowns in domestic activity. "Then the dynamics of domestic and international transportation changed," he recalls, and international business quickly became a major source of Hawk Pacific's revenues. Since then, the company's growth strategy has been to get as close to being a "one-stop shopping" supplier as possible, he says. "The more we could offer, the more attractive we would be to customers, especially the multinationals, the large IMCs, and the ocean carriers," he adds. "Overall, their costs will be reduced by both technology and the linkages that come from working with one carrier as opposed to working with multiple vendors."

Hawk Pacific's wide range of services and large number of tractors have earned it business from some of the country's largest intermodal marketing companies, including Hub Group, Alliance Shippers, Mark VII, and GST, as well as from ocean carriers like Mitsui O.S.K. Line and Matson Navigation. The company also operates stack-train ramps for the Union Pacific Railroad and Pacer Stacktrain Services, offers specialized handling for forest products, and operates a U.S. customs examination station in Oakland.

One of its fastest-growing services is transloading between ocean containers and domestic containers or trailers, says Van Wagner. The shortage of empty containers in Asia means ocean carriers can't afford to have containers tied up by inland deliveries, he reports. "If we transload from ocean containers to domestic boxes and move them by rail, it saves the ocean carriers money, including repositioning costs from the Midwest. They can turn the boxes around much faster and send them back to Asia."

Hawk Pacific's familiarity with California ports and intermodal facilities has helped its customers deal with the state's chronic terminal congestion. "We are familiar with the nuances of what it takes to get in and out of the terminals," Van Wagner says. "We work directly with the ocean carriers to mitigate or eliminate congestion." For example, the company regularly runs trucks in off hours and schedules shipments to avoid peak congestion times.

Van Wagner's company recently merged with RoadLink USA (see the sidebar below), but he doesn't think that will detract from the local, insider knowledge that is Hawk Pacific's stock in trade. The move will allow Hawk Pacific to participate in customer-service and electronic commerce initiatives that it couldn't offer on its own, he says. Customers that Hawk Pacific serves in California, moreover, will be able to take advantage of the expertise and customized logistics support of similar companies nationwide - a development he thinks will revolutionize his business and, perhaps more importantly, that of his customers.

(For more information on Hawk Pacific Corp., go to www.hawkpacific.com .)

They Cover the Waterfront

Intermodal transportation companies such as the ones profiled for this article offer a wide range of services, most of which focus on serving importers and exporters. Each company is different and may offer several, most, or all of the services listed below.

• Container yard/depot operations

RoadLink USA May Reshape Intermodal Drayage Business

John Oren, chairman of RoadLink USA, is a fervent believer in the benefits of consolidation. The Houston, Texas-based businessman has made a career of, as he puts it, "helping to create national companies in industries where ... the country was dotted with family-owned businesses but no one had a national presence." After implementing that concept in the same-day delivery, landscape design and maintenance, and truck parts industries, he's turned his attention to intermodal trucking.