October Business Update

As most of you have noticed, business is slowing down a bit. We were down 3% on our bill count in September compared to the previous September. This is especially concerning when you consider that we opened 2 new service areas over the last year. Trucking has always been a leading indicator of our economy and inflation is taking its toll on peoples purchasing power leading to less shipments for us to haul.

However, we have been doing a great job of loading more in our trailers with weight per trailer up 318 lbs over the same month last year. Loading more in our trailers combined with the slow down in bill count has allowed us to cut very costly purchased transportation. We spent $583k less in September on purchased transportation compared to the previous September. This is a tremendous help to the bottom line and has allowed us to be more profitable even as business levels decrease.

Combine the savings we got from less purchase transportation with the great job our Pricing and Sales team has done with making sure the freight we are hauling is profitable has allowed us to do some very cool things. We would have had a tough time opening new areas and building new terminals while operating over 99 like we did from 2017-2019. We moved into a brand new Redding terminal on Oct. 7. This was our first newly built terminal since we built Twin Falls in 2006 and it gives our Redding team a much better facility to operate out of. Below is a photo of the terminal from the day before we moved in.

We have purchased 10 acres in both Patterson, CA and Olympia, WA where we will be building 2 more new terminals. Patterson will be a 54 door facility and allow us to better serve one of our biggest customers that is just 1 block away from our property and its in an area that we believe more business will be moving to in the future. Olympia will be a 40 door facility that is also largely being driven by a large customer and again we see more business will be headed to this area in the future.

One hurdle we will have to overcome is that CA, OR and WA have banded together and implemented an Electric truck rule saying that if you are a company with over 100 trucks and over $50M in revenue all your new trucks must be electric starting in 2024. There are 5 major problems with this:

1. You can’t purchase an electric truck right now because there aren’t any
2. They cost 4 times what a diesel truck costs = Over $400,000 per truck
3. We don’t have anywhere near enough power coming into any of our terminals to charge electric trucks and it would cost many hundreds of thousands of dollars to bring the power into the terminal, plus it would likely take 18-24 months to get it brought it.
4. The electric trucks that are scheduled to be built can only go 100 miles on a charge
5. They weigh 8000 lbs more than a diesel which severely limits the hauling capacity especially a box truck which would be their best use case.

We are working with the state trucking agencies to fight this tremendously terrible law and I believe we will have to win this fight as no trucking company will be able to comply with this ridiculousness.

Even with all the recession talk and slow down in business, we know we are the premiere carrier in the West and the future is very bright for Oak Harbor. We have been and need to continue to be more focused on our on-time percentage than the past couple years as customers are going to get more demanding. We are seeing almost a 5 point improvement Oct. 2021 – Oct. 2022 with our on-time percentage which means we handle that freight less and keep our customers happier. So great job and keep pushing that number higher! This will position us well to take on more market share, stay profitable and Bring Peace of Mind to our customers.