story by Michael Tilley
mtilley@thecitywire.com
Zero Mountain is more than six months into expanding with its Zero Mountain Logistics company. The new division employs 30 people, including 17 truck drivers, with plans to employ 50 by the end of the year and have up to 35 trucks and drivers running coast-to-coast and within the region.
Michael Francks, general manager of the logistics operation, said Zero Mountain storage customers began asking for a simpler solution with respect to transferring raw materials to processing facilities and then delivering finished goods back to a cold-storage facility.
“They were needing carriers to handle their goods, and with our background in food safety, we had knowledge of the total cold-chain solution,” Francks said.
Parent-company Zero Mountain began in 1955 in a limestone mine located in Johnson (in Washington County near Springdale). The old mine had 25,000 square feet of refrigerated and freezer space. The company today is a $50 million dollar operation that employs 175 people and provides more than 30 million cubic feet of control temperature storage in Fort Smith, Johnson, Lowell, and Russellville. The company handles each year more than 2.5 billion pounds of product.
‘A ONE-STOP SHOP’
Joe Rumsey, president and CEO of Zero Mountain and Zero Mountain Logistics, said the company in July 2014 began the work to create the logistics operation. The first truck shipment happened Oct. 26. Since then they’ve hired 17 drivers and have 17 trucks and 38 refrigerated trailers. The trucks may make runs within the region, or haul products to either coast. The logistic company’s customers include OK Foods, Butterball, Twin Rivers, Mars Petcare, Gerber, and Ozark Mountain Poultry.
A key aspect of the service is that Zero Mountain was already familiar with U.S. Department of Agriculture food-handling rules. That experience, Rumsey said, is a selling point for the logistics operation.
“We want to be a one-stop shop for our customers,” Rumsey said.
Rumsey would not talk investment details, but did say a “several million dollar loan” and the support of the parent company made possible the logistics expansion. For example, parent company assets were helpful in securing financing, and the company’s existing human relations department and benefits programs were utilized to launch the logistics operation.
“Without the backbone of Zero Mountain to support us, this would never have happened,” Rumsey said.
And the support of a parent company is not an insignificant point. Equipment costs, broad federal regulations, expensive insurance premiums, and a growing driver shortage problem are just a few realities creating a barrier to entry in the trucking and shipping industry.
DRIVER SHORTAGE PROBLEM
The biggest obstacle Zero Mountain Logistics faces is finding qualified drivers. It’s a problem small and global freight companies are struggling to overcome.
John Larkin, transportation analyst with Stifel Nicolaus, has said driver shortages are the biggest concerns for trucking CEO’s going into 2015. He projects the driver shortage to widen to 240,000 by 2020. He cites increased demand and retirements of veteran drivers along with declining interest from younger generations as the primary cause for the shortage.
Brad Delco, a transportation industry analyst with Little Rock-based Stephens Inc., recently told The City Wire that it’s getting increasingly “more difficult to recruit honest, safe and reliable truck drivers.” He said just 5% of applicants industrywide meet all the requirements to be a commercial driver.
Part of what makes it tough is the working environment.
“By going coast-to-coast, we’re asking drivers to be out for two weeks. It’s tough. We have to find drivers with a great work ethic,” Rumsey said.
Francks said they have posted advertising for drivers, but “word of mouth” is their biggest tool. He said Zero Mountain Logistics offers an “extraordinarily competitive” benefit and salary package. He did admit that driver pay and benefits were 20% higher than their initial budget estimate. They company is not using owner-operator trucks, or truck teams.
They are making progress on the driver front. On May 7 they put two new drivers on the road, which boosted their seated truck fleet to 17. They hope to have up to 35 drivers by the end of the year, with an estimated 50 working for the logistics operation.
The upside of the national driver shortage is that a shortage of capacity in the industry has resulted in higher shipping rates. Companies like Fort Smith-based ABF Freight and Lowell-based J.B. Hunt have benefitted in recent quarters from higher shipping rates even if overall tonnage shipped has declined. Zero Mountain Logistics is on the right side of the ever-changing shipping industry cycle in terms of favorable rates and high demand for freight services.
“We’ve created about 30 jobs since October,” Rumsey said. “We’re helping the community out by providing new jobs, and we’re paying people good money to step into these roles.”
Expanding the new company also included acquiring a 206,000-square-foot dry goods warehouse in Fort Smith adjacent to their cold storage facility. They are in the process of renovating the facility for food and food ingredient storage.