Where are your logistics risk areas? Assess your logistics maturity with 5 simple questions. Take the quiz now.

The Oilfield Trucking Industry Series – Part 2: Diverse Carriers in the Industry

Posted - February 2, 2016

The Oilfield Trucking Industry Series – Part 2: Diverse Carriers in the Industry

Contributing authors: Keith Richard, Vice President of Operations, Managed Transportation Services and Joe Looper, Manager, Carrier Relationships & Development

As we discussed in part one of this three-part post, it’s important to look at how the growth in the oilfield trucking industry has affected its players and the specific modes or types of trailers they operate. The oil and gas industry has long consisted of two or three giants, medium-sized regional companies who specialize in oilfield trucking and transportation, and scores of mom and pop companies with 10 or less trucks and trailers. While independently refuted statistics of a company’s size and ranking in the U.S. trucking industry are not readily available, what we can see is growth in several trucking companies rankings in reports like the “Top 100 2015 Carrier for Hire Rankings.”1

This is specifically related to the owner-operators or independent contractors that work in the industry. Let’s not be mistaken; the independent operator is a significant value and contributor to the success of the industry. The question is “how can the industry feel confident that they can enhance and contribute in developing a long term sustainable model through the peaks and valleys of the industry?”

Niche players, often referred to as “mom and pops,” generally specialize in one type of trailer and are dedicated to a specific region. The largest oilfield-specific trucking companies in the U.S. have more than 100 terminals in towns that are in the various shale plays and ports around the country. This is a specific model that works well for the industry.

And as new plays are discovered, these companies can quickly adapt and adjust – they can deploy drivers into and employ drivers to support various modes and equipment types, including:

Bulk Equipment

  • Vacuum Tanks (Water): While less fresh water is being used in the onshore industry due to a decline in drilling, production is still being generated and has to move. Although there are bulk carriers that move water ranked in the “Top 100,” most of the carriers doing this work are regionally based carriers that have been, or will be, hit hard as a result of less work, and will continue to be exposed to high operating costs.
  • Pneumatic Trailers (Frac Sand): The coming months and years could be especially tough for this subset. Thousands of these trailers were constructed in North America over the last five years, and as recent as the fourth quarter in 2014, there were four month waiting lists to take possession of new equipment. Operating costs are high and optimization/utilization is low. Frac sand will still move, but in lesser quantities than during the peak.

Dry, Specialized and Heavy Haul

  • Flatbed (Drill Pipe and Casing), Floats, Mini Floats, One Tons, Goose Necks, etc.: This subset of materials is moved on legal weight/dimension flatbeds. Those with pipe stakes can move on a backhaul, but there are companies who have long subsided off of this for generations. Operating costs are not as high with special equipment, so these carriers who have been involved can cross sell their services to other industries. Floats, mini floats, one tons, goose necks and pickup trucks are specialty equipment used by trucking companies to service the field.For the most part, these are owner-operator companies with small fleets. It will be tough going for these companies as there is less work to go around.
  • Heavy Haul (Rig Moves): The U.S. rotary rig count from Baker Hughes was down 7 rigs at 885 for the week of August 21, 2015. That’s 1,011 rigs lower than the 1,896 rigs drilling in August of 2014. 2 And less drilling activity equates to fewer rig moves. Rig moves require pole trucks, winch trucks and heavy haul flatbeds. This group is for the most part managed by regional carriers or operators, who have become vertically integrated. Walking rigs, will also, cut down on the number of rigs moved short distances.

These equipment types are not the sum of all equipment used in the oil and gas industry, but are an example of the highly specialized and niche environment – these are the types of equipment that move the largest volume of materials used to power the shale revolution in the U.S.

Stay tuned for the third and final part of this series, in which we address what all of this means for both trucking companies and oil and gas shippers.

¹Top 100 For-hire Carriers in the US and Canada, www.ttnews.com/top100/for-hire/.

2Baker Hughes Rig Report, www.bakerhughes.com.

What are some ways that different sized companies can adapt and adjust in the oil and gas industry?