Kalispell Goods Don’t Come Cheap

By Beacon Staff

Looking at a map, Kalispell doesn’t make sense as a business hub. It’s Montana’s only commercial center not on an interstate, which is problematic. It can be expensive and inefficient to get goods here.

Semi-trucks hauling freight have to veer off their main truck route along U.S. Interstate 90, drive 120 miles north on U.S. Highway 93, navigate Kalispell’s Main Street, drop off a load, and then turn around to head back toward I-90.

“You get to Kalispell and you’re done,” said Jeff Steeger, director of operations for Montana’s Mergenthaler freight division in Helena. “Kalispell’s a gateway to nowhere.”

Steeger explained that trucks hauling freight have certain hubs along the interstate. For example, if a semi-truck hauls a shipment from Spokane to Billings, both freight hubs, it stops in Missoula, Butte, Bozeman, and other towns, dropping off and picking up goods along the way. Kalispell is a substantial detour.

Tariffs are one issue. Freight carriers are taxed from zip code to zip code. The Rocky Mountain Tariff Bureau taxes Mergenthaler based on a destination’s location and what it has to offer in manufactured goods. Kalispell is not a big enough commercial center nor does it have enough manufactured goods to compensate for the inconvenience of the U.S. 93 detour. Therefore, rates are higher, Steeger said.

Great Falls, which is Montana’s other commercial center off I-90, is still on a major interstate, U.S. Interstate 15. On top of that, it’s a major grain center and often sends back full loads of flour.

“You go up (to Kalispell) full and come back empty,” Steeger said. “They’ve got some jerky and furniture up there. But it’s not like there’s a Boeing.”

Also, Mergenthaler and other carriers impose gas surcharges on businesses that vary depending on diesel prices. Right now, with high fuel prices, Mergenthaler’s surcharge is 18.5 percent of total freight charges, which are determined by a shipment’s weight and value. Twenty pounds of fine china will have a higher freight charge, and thus fuel surcharge, than twenty pounds of chicken wings. The 240-mile round trip detour to Kalispell creates high fuel expenditures compared to cities that are already on the I-90 route.

Kevin Pitt, general manager at North Bay Grille, said although fuel surcharges are fairly minimal per shipment, they add up over time.

To compensate, many local businesses in Kalispell have recently imposed their own gas surcharges, usually between 3 and 8 percent, increasing the prices of their services or products.

Steeger said it’s a state trend to bring in more goods than it sends out. On
average, he said, Mergenthaler hauls 1,100 shipments per day to Montana and sends out less than 150.

“We are a consuming state,” he said.

If freight doesn’t come to the Flathead on a national carrier like FedEx or a store-specific truck like Albertsons, most likely Mergenthaler carries it, said Dan Palmer, service manager of Mergenthaler’s Kalispell freight division. His company runs three line-hauls a day from Missoula to Kalispell, each one with up to 50 different shipments. Palmer said 90 percent of Mergenthaler’s business is bringing in goods, not sending them out.

Marc Rold, chairman of Kalispell’s transportation committee, said Kalispell in fact does have important goods to offer like wood products and aluminum, but it’s no Billings, which has a huge warehouse district.

“People don’t really know it, but a lot of our goods still come from Billings,” he said.

Another difficulty besides truck transportation, Rold said, is that Kalispell’s nearly defunct railroad is not a mainline. A mainline runs along I-90 and another also runs along U.S. Highway 2 through Whitefish. Kalispell’s spurline brings in little freight today.

“It’s amazing how many goods pass through (Whitefish’s mainline),” Rold said. “But not a lot stay.”

Transportation throughout non-coastal Western states is expensive, Rold said. He cited three reasons: greater distances between cities, distances from coasts and small populations. Also, I-90 itself is not a major truck route compared to U.S. Interstate 80 or U.S. Interstate 10.

“We in Montana think I-90 is a big truck route,” he said. “But it’s very small.”

Rold acknowledged, however, that I-90 is by far Montana’s largest truck route.

Rold points out that all businesses in Kalispell are on a level playing field to each other and therefore transportation costs are relative. Relative to Missoula or Billings, costs might be higher, but no businesses have significant advantages over each other within the Flathead. Another factor to remember is that the airplane freight sector is fairly strong in Kalispell, he said.

Lad Barney of Kalispell’s Small Business Development Center agreed.

“All businesses have to deal with it here,” he said. “It’s just like any other business cost, whether it’s utilities or transportation or whatever.”

One more transportation issue, Rold said, is that companies such as some chain stores are at the end of their respective companies’ distribution routes, which makes them vulnerable.

“If you need to cut out one of your stores,” he said. “Do you take it from the heart or the outside?”