Springdale truck broker rides freight surge, decline in wake of COVID-19 pandemic

Earlier this year, at the beginning of the COVID-19 (coronavirus) heath emergency, Springdale-based brokerage Dana Transportation Inc. experienced a few weeks in which business doubled. It has since declined as the panic buying moderated and meat producers shut plants amidst the outbreak.

The majority of Dana Transportation’s business can be attributed to temperature-controlled freight for meat producers, especially poultry. While the plants of the producers that Dana Transportation serves have not been affected, carriers who serve the plants that have been shut have started to compete for the same loads that Dana Transportation has handled. And this has affected business.

“We doubled our business right off the bat whenever they started going into quarantine and closing schools,” said Nathan Lazenby, vice president and co-founder of Dana Transportation. “We doubled up for about three weeks straight.”

A little over a week ago, the surge came to a sudden stop for his business, Lazenby said, adding that the past week was slow, too. Historically, the company has been busiest leading up to Thanksgiving with hauling turkeys. This would start in September and slowdown in January. But over the past five to seven years, the turkey market has changed as the demand for fresh turkeys has fallen. And this has led to a weaker freight demand between September and January.

“Typically we are busiest from the beginning of October through the New Year,” Lazenby said. The produce season typically starts to pick up in the spring and affects the capacity for temperature-controlled trucks. But amid the pandemic, the season has yet to start as loads of vegetables are dumped because no one is buying them, he said.

The brokerage operates with about 90-95% of its freight under contract and the remainder in the spot market. The company has a pool of more than 9,000 carriers it uses to haul freight and regularly uses about 5% of those carriers. The carriers might include independent owner-operators or trucking companies with 1,000 trucks.

While Lazenby was uncertain about the outlook for his business and the broader transportation industry, he hopes the reopening of the economy will lead to a boom.

Lazenby, a Springdale native, co-founded Dana Transportation along with David Kirkland in September 2005. The two met while working at nationwide brokerage Rocky Mountain Express, and Lazenby worked there for four years. They left the company to work at a smaller brokerage, and the experience helped them learn the back office part of the business. They spent about two years there to start their own business.

Revenue rose to about $9 million in 2018 before falling to $8 million in 2019. The company has five employees and 400 customers, with 15 active.

Lazenby explained 2018 as a record year for the company while the trucking industry experienced a tightening in capacity after the electronic logging device (ELD) mandate went into effect in December 2017. The mandate restricted hours of service for drivers and led rates to rise in 2018. Meanwhile, carriers added more trucks to increase capacity and take advantage of the higher rates. In 2019, rates fell amid overcapacity, and ELD use became widespread. The decline continued into early March, and business started to pick up as a result of the pandemic.

“We’re just rocking and rolling right now,” Lazenby said in late March.

Temperature-controlled spot rates rose 0.9% in March, from the same month in 2019, according to DAT Solutions.

American Trucking Associations’ advanced seasonally adjusted For-Hire Truck Tonnage Index rose 1.2% in March, from February. The index rose 4.3% in March, from the same month in 2019.

“March was the storm before the calm, especially for carriers hauling consumer staples, which experienced strong freight levels,” said Bob Costello, chief economist for the American Trucking Associations. “But there was a huge divergence among freight types. While freight to grocery stores and big-box retailers was strong in March, especially late March, due to surge buying by households, freight was anemic in other supply chains, like that for gasoline, restaurants and auto factories.

“Because of this, and the continued shuttering of many parts of the economy, I would expect April tonnage to be very soft,” Costello added.

Spot rates have since fallen through mid-April.

“The weak freight market reflects the economic malaise due to coronavirus-related shutdowns and historically low oil prices,” according to DAT Solutions.