Charger Runs Out of Diesel

J.B. Hunt spinoff fails, claims still being filed

Charger Inc. had the business and the customers. It just couldn’t keep the wheels turning.

A privately held spinoff of J.B. Hunt Transport Services Inc. of Lowell, the flatbed trucking company filed for Chapter 7 bankruptcy Dec. 28 at the U.S. Bankruptcy Court in Fayetteville. As late as Feb. 2, Charger hadn’t filed its assets and liabilities schedules with the court.

But 150 claims against the Springdale company had been filed. At the time of the three-year-old company’s bankruptcy, it listed 566 creditors and more were expected in the secondary filing. Court officials say claims were coming in at a rate of 20 per day.

Hamco Business Solutions Inc. of Springdale, a computer systems integrator, is one of the 28 Arkansas-based companies on Charger’s list of creditors.

“We’ve done business with Charger since their inception,” says Everette Brown, Hamco’s general manager. “This will hurt us from the standpoint that Charger has been a good customer. We were also in the process of putting in a major computer system for them. We hated to see them go out of business.”

What happened with Charger is not unlike Springdale poultry producer Tyson Foods Inc.’s expansion into seafood and pork. But while Tyson eventually decided to stay with what it knows best — chicken — and sell its other interests, J.B. Hunt spun Charger off into a separate but closely tied business. As a result, J.B. Hunt remains one of Charger’s biggest creditors, and analysts are waiting to see what kind of hit the publicly held truckload carrier will take.

Jerry Walton, chief financial officer at J.B. Hunt, didn’t return calls to the Northwest Arkansas Business Journal. But one J.B. Hunt insider who asked not to be identified says “it’s no secret what happened” with Charger.

“When you have 600 trucks and half of the fleet is not moving, that’s the kind of straw that breaks the camel’s back.”

Former Charger president Mike Bradley couldn’t be reached for comment.

He purchased the former J.B. Hunt division in July of 1997 for $40 million in cash. Charger’s assets recently included 700 trucks and 1,000 trailers, and it employed about 1,000 people including 800 drivers.

Reasons to quit

Tim Quillin, the trucking and logistics expert at Stephens Inc. in Little Rock, says nearly all flatbed companies were hurt the last two years by cheap foreign steel that was unloaded into American seaports. The ports are notorious for maintaining long-term partnerships with specific trucking lines. But many carriers, and especially J.B. Hunt, had always dealt directly with manufacturers.

With a surplus of underpriced steel sailing into U.S. markets, stateside manufacturers couldn’t even afford to produce steel. That left many flatbed firms all gassed up with no freight to haul.

“The flatbed business in general is more difficult right now because it’s more tied to manufacturing and industrial production,” Quillin says. “Dry-van operators like J.B. Hunt are much more tied to consumer spending and retail sales, and the flatbeds don’t necessarily benefit from a strong consumer environment.”

But Quillin says, just as with the trucking industry as a whole, driver recruitment and retention was Charger’s biggest problem. Coupled with fuel prices that have climbed sharply since 1997, it was simply difficult for Charger to maintain a positive return on its assets.

Flatbed cowboys

Maverick Transportation Inc. of Little Rock, a privately held flatbed carrier with 600 trucks, is similar in size to Charger. It operates late-model Freightliner Conventional tractors in 48 states and, most recently, opened a lease-purchase division in California.

About 85 percent of Maverick’s cargo is steel; the rest is wood products.

Lori Furnell, Maverick’s director of organizational management, says the flatbed industry is generally more competitive than the van business for a number of reasons. Van carriers use cheaper equipment and often make the more profitable less-than-truckload hauls.

Flatbed trucks haul heavy, sometimes dangerous loads and require more physical labor than vans. Drivers often must wrestle 120-pound tarps, lift chains, tie-down cables and be willing to work outside in the weather. Van drivers usually back up to a dock, get their trucks filled, slide the door closed and take off.

Furnell says flatbed driving is for men who enjoy “living a cowboy lifestyle.” Traditionally, that’s given the industry an even smaller pool of drivers than the van segment.

“We look at our flatbed drivers as the last cowboys, blazing new trails,” Furnell says. “It takes a different breed. The van industry doesn’t have the same rough-and-tough image. Less people want to drive flatbeds because it’s a tough job.

“There are a lot of drivers who come to us and say, ‘I’ve watched Maverick for years and I’ve always wanted to be a Maverick.”

Besides knowing how to market itself, Maverick is also adept at keeping its trucks full and rolling. The company’s 1999 occupancy rate, or the percentage of its trucks that were manned at all times, was 97 percent.

Its turnover is about 50 percent, while the industry average is 100 percent.

Furnell says that’s helped the company maintain planned growth. She says making sure that 97 percent of its drivers make it home every weekend, and a new lease-purchase program also makes a difference.

Maverick gives its lease purchase drivers two checks — a 31-cent per mile weekly check accompanied by all the benefits of a full-time employee. The remaining 69 cents per mile goes toward the truck, which the driver will eventually own.