Jax Transport turns to the oil patch and boosts its business

Redline said his company does all of Affiliated’s outbound and inbound freight. Its footprint of business is about 700 stores and it stretches all the way into Wyoming and Kansas, as well as more regional states. 

“Let’s go make some money, I told them,” Redline said. “That side of the world is dying at $20 oil and fracking is shutting down; rigs are shutting down. But guys with trucks, there’s a need for food out there.”

Nobody knows just how sweeping the layoffs will be in the oil patch. Bloomberg reported that the 2008-2009 collapse in prices “cost 200,000 roughnecks, almost half the entire workforce, their jobs.” Halliburton is furloughing 3,500 people in the largest move announced so far. 

Yet still, when Jax spoke to some oil patch drivers, “there were some guys who said, we don’t know what we’re going to do,” Redline said. Jax has been hit with so many food orders that it was about a half a day behind, he added. He said his company recently issued 1,800 purchase orders versus a normal number of 400-500 for a weekend.

But even with that influx of drivers, it hasn’t been enough. Redline said while his business with Affiliated is on a contractual rate, he has needed to use his brokerage division to find capacity at times. And that capacity is getting expensive; a load of broccoli from south Texas to the Amarillo-area warehouse that formerly cost $1,800 is now $4,000 to $5,000.

The question then becomes – if the rates are that good for an independent owner-operator to haul that load at those prices, why don’t the ex-oilfield drivers he’s hiring just run those routes at those prices?

“The biggest thing is I pay every seven days,” Redline said. “They can go on their own and hope they’ll get paid in 30 to 45 days. With me they’ll get paid next Friday – direct deposit. You can’t cash papers. It’s on the books but it can’t be used to pay the bills.”

“That attracts a lot of guys right now,” Redline added.

Redline, who doesn’t come up for air too often when speaking with FreightWaves, praised the easing of Hours of Service rules. “We’ve added 40% capacity without adding people or resources, just because of Hours of Service rules,” he said. “Whoever did that is a genius and I’d high five them and buy them a beer.” 

As far as the 10-hour break rule, he said, “Nobody needs to take 10 hours. You can self-regulate and you’ve got to remember to get your sleep. We’ve been very lucky this week but you’ve got to be smart about it.”

 Dishing out the high-fives is going on internally right now, Redline said. “We’re printing money.”