TruckersB2B Inc. ought to have been among the road kill of the technology bust of 2000, when the restless ghost of Adam Smith dope-slapped investors out of their hypnotic drool over anything high-tech.
But unlike scores of dubious e-commerce ventures, the 5-year-old Web site offering small to midsize trucking fleets group discounts on everything from fuel to tires turned out to be built on a sustainable business model. The Indianapolisbased business now claims more than 19,000 participants representing 445,000 trucks.
TruckersB2B posted a record profit of $1.6 million in its fiscal year ended June 30, compared with $1.5 million for 2004. That’s despite a drop in revenue to $7.8 million, from $8.1 million a year earlier. It remains a tiny part of Celadon Group, the Indianapolis-based trucking giant with $437 million in sales for fiscal 2005.
The 15-employee Celadon subsidiary was profitable in part because its discount fuel program became more popular as pump prices soared. That helped offset a downturn in its discount tire program.
“The fuel spike, without question, is almost a mixed blessing for us,” said Jon Russell, CEO of TruckersB2B.
The Web site receives commissions from vendors, based on the number of member purchases.
In TruckersB2B’s second quarter, members bought 40 million gallons of fuel vs. slightly less than 30 million for the same time last year, according to a report by BB&T Capital Markets.
Russell said rising diesel prices have helped bring 200 net new customers per month.
“That has spiked a little bit to about 300 a month” in recent months, he said.
TruckersB2B offers up to 3 cents a gallon savings on fuel sold by a number of national truck stops, including Travel-Centers of America. That can add up to a $10,000 annual fuel savings for a 20-truck fleet using an average 1,500 gallons per truck each month.
Putting the brakes on B2B’s momentum has been its discount tire program, which has seen revenue drop because of an industrywide tire shortage.
Some of the shortage stems from gangbuster demand for tires in the Chinese economy. Another factor was increased orders from truck makers that have been busy selling models that meet tougher U.S. emissions standards.
“There are certain kinds of tires you cannot buy if you want them,” Russell said.
TruckersB2B offers tire discounts ranging from $7 to $25 a tire-or up to 6 percent per tire. A 20-truck fleet would buy about 20 tires a month, saving about $200, Russell said.
Recently, TruckersB2B struck a deal with Goodyear Tire & Rubber that gives members a uniform price for tires nationwide, instead of varying prices at Goodyear retailers. Russell said his firm made “some minor concessions” to Goodyear that lowers total revenue, but he expects better results long term.
The Web site has expanded its offerings over the years. For example, fleets can earn up to 2-percent rebates on trailers made by Lafayette-based Wabash National Corp. With a trailer carrying a typical price tag of $24,000, that’s a $480 savings.
On Oct. 1, TruckersB2B began a discount program with Arrow Truck Sales, a nationwide used-truck vendor that offers TruckersB2B members up to a $1,000 rebate.
Overall, TruckersB2B touts that it has saved members more than $20 million so far. Indiana alone has more than 650 members that have earned at least $675,000 in rebates, Russell said.
Among them is Indianapolis-based Manufacturers Transport, which has 60 trucks and 120 trailers. President Daryl Johnson said TruckersB2B has provided a better deal on tires, although “I like to go and shop around” on some items. He wrangled his own deal on fuel with Pilot truck stops.
TruckersB2B also competes with discount programs offered by trucking groups, such as National Association of Small Trucking Cos.
The Hendersonville, Tenn.-based group has operated its own group-purchasing site for its 1,800 members for 16 years, on everything from fuel to software to credit services for smaller trucking fleets.
It charges members a minimum of $350 a year, unlike TruckersB2B’s nocost enrollment. Still, the entry point hasn’t scared away growth, said association President David Owen.
Some of the association’s members avoid TruckersB2B on philosophical grounds, according to Owen. Patronizing TruckersB2B effectively helps subsidize large competitor Celadon Trucking.