Next generation leaders share vision of trucking industry’s future at TCA
March 6, 2012
KISSIMMEE, FLA – Investing in detailed and regular evaluation of business processes, having the courage to reject customer demands that are not beneficial to your company’s health and the wisdom to terminate unproductive practices...
KISSIMMEE, FLA – Investing in detailed and regular evaluation of business processes, having the courage to reject customer demands that are not beneficial to your company’s health and the wisdom to terminate unproductive practices will be key to success in the years ahead for a reenergized trucking industry, according to executives representing the next generation of leadership.
The Truckload Carriers Association today brought together five rising stars in truckload transport to discuss their visions of the future with the colorful Jim Hebe, senior vice president, North American sales operations, Navistar Inc. acting as moderator. The panelists included a Canadian, Rob Penner, executive vice president and C00, Bison Transport; as well as Michael Gerdin, president, CEO and chairman of Heartland Express; Steve Gordon, COO, Gordon Trucking; Aaron Tennant, president and CEO, Tennant Truck Lines; and Paul Will, vice chairman, president and COO, Celadon Trucking Services.
Although all expressed optimism for the opportunities that lie ahead, they stressed the need for increased discipline and analysis of all business functions.
Will, who saw opportunities for growth for his company in both Mexico and Canada, pointed out the need for trucking companies to routinely evaluate where their business is heading rather than just “running miles to run miles.”
“It’s a simple yet complex task,” he said.
Gerdin, whose father Russell had grown Heartland Express into the model for a well-run transportation company with an operating ratio that was the envy of many, also spoke about the need to be constantly evaluating the performance of all aspects of the business and not be carried away by the latest industry trend.
“You have to do what is right for your company. Don’t just do it because it’s an industry trend,” he advised, stressing the need for discipline on freight hauled.
Gerdin said that load count, deadhead, and loads on lanes are three reports he checks daily to ensure Heartland is headed in the right direction. He is also keen to ensure he is not doing business with the wrong customers.
“Be really particular about who is getting into your freight basket. If you don’t watch it, it will start to deteriorate on you pretty quickly,” he warned. “…There are customers who will tie you up on the load end and the back end and then you are only running 350 miles as a result. That’s when you are not using your equipment properly. That’s when you are running into trouble…Those who are disciplined will continue to grow. ”
That was a comment that found common cause with Gordon who warned that carriers who don’t manage their customer relationships will end up being managed by their customers.
Bison’s Penner pointed out that all the data available through today’s various information technology tools – dwell time at the shipper’s yard, for example – is allowing carriers to measure productivity in much more objective fashion and to have more intelligent conversations with customers. Penner said Bison doesn’t simply go to its customers with a price increase but rather show them where they may be adding costs to Bison’s operations and then works with them to either remove those costs or asks to be paid for them.
Tennant, whose company serves the niche market of heavy machinery hauls, said it would be impossible for his company to be disciplined on such things as load balance and density because it must deal with the difficult task of providing national coverage while running irregular routes. So instead, he focuses on pricing that supports its true operational costs.
“I don’t say no (to customers). I believe in pricing the contract so I don’t have to say no,” he said.
There is growing frustration with shippers who are pushing payment terms to 45 days and beyond. Gordon said those are practices brought to North America by multinationals who may be used to dealing on such terms in other places in the world. But all the panelists agreed that it’s in the hands of individual carriers to fight back.
“That’s up to each and every one of us. We don’t do business with anyone who wants 60-day pay terms. We just say no to them. If interest rates start going back up, that becomes real important,” Gerdin said.
Celadon’s Will pointed out that with capacity tightening up, carriers are in a better position to push back on shipper demands for longer payment terms.
“Shippers will try to push you to do it but you have to hold your ground. Eventually they will back off,” he said.
Speaking of capacity, most of the panelists agreed they are either not adding to their capacity or are growing conservatively. What most are doing is replacing the oldest vehicles in their fleet and moving back to shorter replacement cycles or, as was the case with Bison, trying to establish “the true life cycle” of these trucks.
Gerdin said he is sticking to same formula his father employed when he started Heartland Express with just 16 trucks back in 1978. His father was very focused with his money and never went into debt by purchasing a lot of trucks in response to anticipation of industry demand.
“He was more focused on making money with the trucks he had. One of our successes was in keeping it simple. We are going to continue with that,” Gerdin said.
He added that he doesn’t believe in buying trucks on cycles, opting instead to keep close tabs on what’s going on with his own fleet and the used truck market and not being afraid to make a deal when he sees a problem coming.
Penner pointed out that even when the money is available to get into new iron, finding the right people to place behind the wheel and to service the trucks is so difficult it limits the ability to grow a fleet.
“Anyone can go out and buy trucks and trailers but the ability to place quality drivers and service people behind those trucks is the limiting factor,” he said, adding he sees Bison more likely to grow by bringing more carriers under their umbrella.
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