Lower volumes, longer transit times, and higher insurance premiums have been the order of the day for the chemicals trucking industry over the past six months. Tonnage in the industry has fallen between 10% and 15%, according to experts, while increased security measures by state and local law enforcement have slowed many shipments.

"Chemical shipments are getting stopped and checked much more so than other freight, but probably rightly so," says Pete Legere, vice president of training and development at Indianapolis-based chemicals trucker Liquid Transport Inc. "It is just easier to identify a tanker trunk as a potential risk. And if law enforcement officials see hazardous materials placards, it's even more likely the truck will be stopped. We don't blame the states or federal government for the tighter security, it is just the world we are in today."

Legere says a Liquid Transport driver was stopped four times for roadside inspections en route from South Carolina to Michigan, with one stop having more than 30 trucks in line for inspection. That type of scrutiny would have been unheard of a year ago. Traditionally, if a driver were stopped in a previous state for inspection, that inspection would pass the shipment in other states along the haul. But now, each state is making its own inspections, sometimes two or three per state, making it much more difficult to plan transit times. "You always build in some leadtime for unexpected things, but we can't afford to build in time for four or five stops," Legere says. He adds that border crossings are also slowing chemical shipments' transit times significantly.

Michael Parker, CEO of Dow Chemical in Midland, Mich., said in a recent statement, the chemical industry is facing the worst business environment in decades, which is clearly affecting the average chemical shipment size. Smaller sizes have moved some chemical shipments from truckload and rail to less-than-truckload (LTL) shipments, bringing more opportunity to LTL carriers in today's market. To cater to the chemicals market, LTL carrier Consolidated Freightways of Menlo Park, Calif. recently set up a chemicals-specific sales office and trained all of its drivers on the handling of hazardous materials. Mike Rafferty, national sales executive for CF's chemicals business, says chemical shippers can expect to see more LTL carriers fighting for their business in 2002.

Creativity in planning routes can help minimize the delays for inspections, according to Scot Bishop, director of safety for Viking Freight (San Jose, Calif.). Bishop says carriers and shippers can work together to put chemical shipments earlier in LTL routes so the truck is stopped fewer times across the entire trip. "Sometimes that may even mean running the route in reverse to make sure the chemicals or hazardous materials are on the truck for as short a time as possible," Bishop says.

Bishop says there are some basic security measures that most chemical truckers should have in place (and shippers can ask about when evaluating a chemical carrier). For example, providing drivers with company-issued ID badges can streamline security checks. Upgrading entry and exit systems in trucking yards and service centers to card-only access can provide added security. Bishop also says routines and patterns play into criminal hands, so working with shippers to alter pickup times for routine chemical shipments is a good idea. And training employees to be more prepared to ask questions of any unknown personnel in hazardous materials areas should become mandatory.

One of the biggest factors affecting the chemical trucking industry is the skyrocketing cost of insurance since Sept. 11. According to a survey from the American Trucking Associations, primary or general liability rates for trucking companies increased by 32% for carriers renewing their policies in 2001, with those renewing their policies after Sept. 11 paying an average 37% more for primary insurance. Trucking companies carrying hazardous materials under an umbrella insurance policy were hit hardest, with premiums jumping 111% on average. Carriers renewing their policies after Sept. 11 saw a 159% spike.

The combination of lower business and higher costs of security and insurance are expected to have an effect on the chemical trucking marketplace in 2002. "[With those types of increases] it means that before you open the doors in the morning, you have to move more freight just to break even," says Legere. "There are a number of companies who may not be able to pay their insurance bills, so they are looking to merge or be acquired just to become part of [another company's] insurance package."

Legere says a similar situation happened in the mid-1980s and will likely put more downward pressure on rates as smaller companies struggle to survive. To cut costs, carriers will gamble by increasing the levels of their deductibles or cancel nonessential insurance policies. One bad accident could put a whole company under. Some chemical and hazmat carriers are implementing insurance or security surcharges to offset spiraling costs. Legere says shippers can expect more carriers to do this as business stays soft and margins wear thin.