March 2007, TruckingInfo.com - Cover Story
The following pages profile some extraordinary trucking industry leaders, the winners of Heavy Duty Trucking's annual Truck Fleet Innovator awards. These fleet executives were chosen for their continuing dedication to growing their companies through innovative operations and technologies to make their fleets more safe, efficient and profitable.
The 2007 Truck Fleet Innovators are:
• Dan England, Chairman, C.R. England
• Steve Williams, Chairman & CEO, Maverick USA
• Charles "Chuck" Hammel, President, Pitt Ohio Express
• Randy Marten, President & CEO, Marten Transport
• Don Orr, President, Central Freight Lines
These trucking pioneers will be honored on March 21 at Heavy Duty Trucking's Economic Summit held in conjunction with the Mid-America Trucking Show in Louisville, Ky.
Dan England presides over a company that manages to combine big company economies of scale with the values of a small, family-run carrier.
C.R. England was started in 1920 by Chester England with a Model T truck. Today, grandson Dan England is chairman of the Salt Lake City-based carrier, which runs more than 3,000 tractors.
A look at the management team reveals a number of third- and fourth-generation Englands running the company. Just to name a few: Gene England (Dan's father) is president; Dean England (Dan's brother) is CEO; another brother, Todd, is executive vice president of maintenance; another brother, Corey, is vice president of operations support.
It's that longevity and family that set C.R. England apart from the competition, says Dan. "I represent the third generation; we have many in the fourth generation that are now in top management. We've been able to maintain that continuity of a family business. There are certain principles or values the family has, and I think we're able to maintain those principles in the running of the business."
For an example of those values, look at the company's effort to encourage employees to sign up as organ donors. In 1982, then-CEO Dan England donated a kidney to his brother Rodney, who was suffering kidney failure as an effect of diabetes. In 2001, Dean England's 21-year-old son was killed in a car accident, and his family quickly made a decision to donate his organs.
"Think of those people whom you love most; a spouse, child or other loved one," Dan says on a company web page devoted to donor registration. "Try to visualize losing one of them because of a failing heart, kidney or other organ. Think of the joy and relief in being told that their life could be prolonged through a transplant."
These kind of family values, he believes, help the company attract quality people, both in terms of drivers as well as non-driving personnel.
Pay, of course, is another way to attract drivers. England has been an advocate of significantly raising driver pay. He has been quoted as saying he feels driver pay needs to double for the industry to make the pay scale appropriate. Of course, that's more of a challenge right now, in a softer freight environment.
"When we are in a strong freight environment, we need to be real advocates on behalf of our drivers," he says. "When we're successful in getting rate increases, we've got to make sure part of that goes to our drivers. The burden is upon the owners and executives in the industry to do that, because it's in everyone's best interest for us to be able to secure a pool of competent drivers."
In 1999, England recalls, he attended a meeting with owners of large European fleets that was most enlightening. European fleet owners were astounded by the turnover problem in the U.S. The level of compensation over there places truck driving jobs above what can be earned in industries such as construction and manufacturing. Not so in the U.S. The low driver pay can be traced back to deregulation in 1980, England says, because costs had to be cut and efficiency improved in order to compete as a flood of new companies entered the business. "The American consumer has been a tremendous beneficiary of this process. The American truck driver has not."
Pay, of course, is not the only thing affecting driver recruitment and retention. Another thing England does for drivers is pay attention to driver amenities at the Salt Lake headquarters, with features such as a barber shop, bank, and a restaurant that is so good the locals eat there.
"I think it's important that you have the kind of facility that they feel good about coming in and out of," England says. "When you get to be a large company the way we are, you lose some of that personal contact, so you have to look for other ways to improve working conditions."
The company contracts with outside firms to conduct quarterly driver surveys and exit interviews to help management pinpoint what they're doing right and areas that need improvement, down to specific departments. "There are so many contact points you have with drivers; you've just got to be on top of them."
The need for good drivers also prompted England to start its own driver training school in 1991. There are now four around the country, offering three weeks of classroom training followed by behind-the-wheel training.
"We wanted to have confidence that we would always have a source of drivers," England says. About 80 percent of the drivers hired at England come through its own schools. Not only are the schools a source of drivers, he says, but they also are better drivers.
"We feel we offer very high-quality training. The performance of the drivers that come through our schools is superior to drivers we hire from other schools, measured in things like accident rates and on-time performance."
With four schools, England says, they have taken pains to ensure that the training and curriculum in each school is consistent. England is also training drivers for another large company, about 10 to 15 a week, and plans to expand that area of the business.
A former president of the Utah Trucking Association, Dan England has spoken out on issues ranging from driver pay to toll roads to the burdensome new requirements for hazmat CDL endorsements. Future challenges to be faced by the trucking industry, he says, include highway congestion and how to fund highway improvements; the regulatory environment, including the recent proposed rule on electronic onboard recorders; and, of course, drivers.
"You'll have temporary letups, like right now, when things are a little soft in the economy, you'll get more applications – but overall the driver situation will continue to be challenging."
TAKING A STAND
Maverick's Steve Williams looks ahead to industry as well as corporate growth.
Chairman & CEO
When he started his business with one truck in 1980, Steve Williams could not have envisioned how large and successful Maverick Transportation would become. But it's not the growth of his own business that has him most concerned. It's the growth of the trucking industry in general and its future ability to handle the country's increasing amount of freight.
Williams grew up in the trucking business. His father and both grandfathers were truck drivers. When he got out of college in 1975, he went to work for Steel Haulers, the same company his father worked for, running a terminal in Benton, Ark. In late 1979, he and his friend and co-worker Larry Leahy, with a whopping $8,900 investment, quit the business, incorporating in January 1980 at the birth of deregulation.
"We didn't have very ambitious goals," he recalls. They were mainly interested in being their own boss, and in the opportunity posed by deregulation. "I'd been involved in some [ICC authority] hearing work before, so I understood the obstacles during the regulated environment. So when those obstacles were removed, I seized the opportunity."
Williams bought out his partner a few years later. Today, Little Rock, Ark.-based Maverick Transportation operates more than 1,500 units, hauling everything from steel to glass to building materials from coast to coast on flatbed and specialized trailers. Williams is chairman and CEO of Maverick USA, which includes not only Maverick Transportation LLC, but also Maverick Logistics and Maverick Truck & Trailer Sales.
Williams was working for a 150-truck carrier before he started his business. That was a pretty good-sized carrier for the flatbed industry. "So to envision owning a carrier that is 10 times larger, it would have been hard to envision."
Maverick owes its growth to what Williams calls "pretty conservative financial management," as well as several acquisitions. The largest and most recent of these was last year's addition of Schneider's Specialized Division, which hauls glass. That purchase increased Maverick's fleet size by 30 percent – from 1,200 units to 1,600.
He admits the company was cash-strapped at points in the early years. "There wasn't much interest by the commercial banking industry to loan us any money," he says. "At the time it was very upsetting, but quite frankly they were making a smart decision."
At one point he positioned the company to go public. "We weren't quite ready, and that window closed because of the market change, and we're really glad it did," Williams says. "I'm very happy we remained private.
"By their nature, truckers in general are pretty independent thinkers," he explains. "When you are a public company, you have public shareholders that you have to deal with." He's talked to some colleagues with public companies that are envious of Williams' independence. Public companies, he says, are constantly under pressure from shareholders for growth or for financial performance. "Often times that's in conflict with some short-term or long-term solutions that need to be dealt with."
As an example, Williams points to his company's adoption of high-tech safety equipment. Each Maverick truck is equipped with Eaton's Vorad collision avoidance system, Meritor Wabco Roll Stability Control and Iteris Lane Departure Warning System.
"We went early with Vorad on the collision avoidance system, and we had a lot of people ask us a lot of questions. They wanted to know the return on that investment, and we said 'Well, we don't know. But it makes perfectly good sense to us that it's going to work, and we're willing to do it.' We didn't have a board or shareholders to have to explain that, so we were able to quickly adopt that technology, and the consequences of that, of course, have been very favorable."
Maverick was also an early adopter of satellite tracking technology. "We are recognized as embracing a lot of technology on the truck. We're also recognized for embracing a lot of administrative technology – and for being good users of both. It's one thing to go out and buy all this stuff; it's another thing to be able to get the best use out of it."
Safety technology also is key to something Williams believes must be done to meet future transportation challenges – increasing truck size and weight limits. Williams cemented his reputation as living up to his company's name when he was chairman of the American Trucking Associations in 2005.
Believing it was time the trucking industry started taking a more long-range view of the challenges it faced, Williams spoke out on some controversial issues, including truck size and weights, highway funding and environmental issues.
"I feel good about the changes that we have made, encouraging people to think a little differently about policy positions that we take in the industry and how they're perceived by the general public," Williams says. In the past, he says, the trucking industry – and ATA as its spokesman – was bad about just saying it was against things such as emissions requirements and electronic onboard recorders.
"We are much better served in the perception of the public if we take a progressive approach on these issues and be a part of finding the solution," he explains. "If you are willing to be a part of the solution, then you're able to sit at the table and help hammer out constructive solutions to these challenges that we face."
Looming large among those challenges is how the trucking industry can remain productive in the future. The amount of freight to be moved will continue to grow, while a labor shortage, a crumbling infrastructure and congestion will make it harder to accomplish.
"The economy's going to double in size over the next 20 years, and 87 percent of that's going to move by truck. We're going to have to move much more product in a much more congested environment and improve safety."
To Williams' way of thinking, maintaining productivity will require larger loads.
It also will require better highways. "I've missed no opportunity to remind people in our industry that we have been part of the fact that this nation has not invested properly in infrastructure. We have no one to blame but ourselves."
The trucking industry has been so vehemently against raising the fuel tax that instead it ended up with tolls and privatization.
Williams urges his colleagues to get involved in industry associations. In addition to being a former ATA chairman, he served three terms as head of the Arkansas Trucking Association and is still active in both groups.
"The participation – year in and year out – in industry trade groups is how you create a paradigm shift in what it will take to improve not only our own organizations, but the industry's performance in general.
"There are many in our industry that don't see trucking for what it is – it's a privilege to do this. It's not an entitlement. And we are all going to have to do the right thing in order to meet the challenge of moving all this new business that will continue to grow along with our population."
A STEP AHEAD
Charles 'Chuck' Hammel uses creative approaches to keep his companies ahead of the competition.
Charles 'Chuck' Hammel
Pitt Ohio Express
Competition in the less-than-truckload world is fast and furious these days, and that's the way Chuck Hammel likes it, adding, "That's the fun part of the business."
Hammel is president of Pitt Ohio Express, a regional LTL carrier based in Pittsburgh. He's seen the LTL business change and change again over the last few decades.
Hammel's family has been in the trucking business since 1919, when Charles' grandfather got his start with a horse and buggy. Eventually he moved to trucks.
"My father took over when he got out of high school and built it to about a 50-truck local Pittsburgh operation," Chuck says. It ran under the name Hammel's Express. "This was the foundation from which I began to learn and love the transportation industry."
In the '70s, Chuck says, with three sons in the business, his father bought a dormant ICC certificate to start Pitt Ohio Express. "It was a very small geographic area – Pittsburgh to Youngstown to Wheeling," Hammel recalls. They operated with that operating authority for about a year and a half. Then deregulation gave them the opportunity to thrive.
"Shortly after deregulation, there was this concept that hit the market called just-in-time," Hammel explains. "The companies that couldn't survive were the ones with these hub-and-spoke networks, where all the terminals sent freight to a central location. That took two days, three days. Even if they could think things through and change them, probably the unions at the time wouldn't have allowed for such a radical change of operations. But most of them thought that this was just a fad."
Unlike the big LTLs that dominated the business before deregulation, Hammel says, the family's company was a local operation. "A local operation always has next-day service. So we grew up with this. You had to deliver tomorrow, because we had no room on our dock to store it. So when we started going greater distances and still delivering next day, people said, 'You can't do that.' But that was all that we knew. And of course, as just-in-time continued to catch on, it was just amazing. The other carriers said, 'No, we can't.' We said, 'Yes, we can,' and we grew 15 to 20 percent year after year."
Eventually, of course, just-in-time and next-day service became commonplace. Today, the challenge has changed.
"We never used to compete with package carriers like UPS and FedEx," Hammel says. "It was more big, unionized or regional carriers. Today the competition is totally different. The package companies are taking freight on the lower end of the weight categories, and the Jevics of the world are taking the freight on the upper end of the weight categories. So from a competition standpoint it's fast and furious."
How does Pitt Ohio deal with it? Creativity and non-traditional approaches.
"We have departments in our company you won't see in any less-than-truckload company," Hammel says. A Business Intelligence Group and an information system that's second to none help the company understand its customers as well as its own profitability.
"We've got a very robust customer information system that we developed in-house, and we tied it in with our costing module. This gives us actionable information about what's going on in our company."
This lets the company pinpoint lanes that are over capacity and identify customers that are unprofitable in those same lanes. In 2004, when capacity was tight, Pitt Ohio used that information to make some changes with customers to bring those lanes into better balance. Basically, they went to those unprofitable customers and let them know Pitt Ohio couldn't keep serving them at that price.
"These are the things that technology allows you to do," Hammel says. "This is where information has helped us with the ebb and flow of the market."
As you might guess, Hammel is a big believer in technology. For instance, the company uses the PeopleNet tracking and communications system to record every pickup and delivery. That information is posted in real time to a web site where customers can track their shipments online. "Which is pretty much like if you ship something by UPS," Hammel says. "That's really not available to many companies using LTL."
Why do all this? "Our main focus as a company is to provide value to our customers," he says. "Increasing our value proposition to our customers is our driving force in being creative and innovative. Our systems allow us to understand our customers, which in turn gives us actionable data in which to drive the value proposition we offer."
Focusing on customers' needs has allowed the business to grow beyond Pitt Ohio. The Hammel Companies also includes Pennsylvania-based regional truckload carrier ECM Transport, commercial vehicle maintenance organization Martera, and properties development group Terminal Leasing.
Under the name Thought Drivers, the company has commercialized some of its information systems and other core competencies. "We took what we got really good at at Pitt Ohio – safety and IT – and are leveraging them in the commercial market," Hammel says."
For instance, Pitt Ohio has teamed up with The CEI Group to offer driver safety training; safety consulting; and risk, claims and collision management services under the brand TruckGuardian Group. BI3 Solutions offers specialized, cost-effective business intelligence solutions to small- and medium-sized motor carriers. The BI3 software, called CUBE-IT, is designed to help companies more easily find and view customer data. (This was basically the program that Pitt Ohio created to help it identify areas of unprofitable business.)
"We spend a lot of time and effort finding out what our customers need, now and down the road," Hammel says. "It's not so much to keep up with the competition as to beat them to the punch."
Randy Marten leads one of the top temperature-controlled carriers in the country, but doesn't take all the credit.
President & CEO
Randy Marten insists he's no innovator. It's not like he invented the refrigerated trailer, he says. Yet the president, chairman and CEO of Mondovi, Wis.-based Marten Transport manages to combine the best features of being a public company with his own hands-on management style to make the company one of the most respected carriers in the business.
Randy's father, Roger Marten, started the company in 1946 at age 17, delivering milk and dairy products. In 1986, the year Randy was named president, the company went public and surpassed $50 million in annual revenue. In 1993, Marten surpassed $100 million in revenue for the first time, and Randy assumed leadership of the company after the death of his father.
He's done pretty well by his dad. Last year, the company cleared more than $500 million in revenue, and at press time had nearly 2,200 company tractors and more than 350 owner-operators. In 2005 and 2006 Marten Transport was named one of the 200 best small businesses in America by Forbes magazine. In 2005, Randy Marten was named a regional winner in Ernst & Young's Entrepreneur of the Year award. And the company has a driver turnover rate far below the national average.
You'd have a hard time hearing all this from Randy Marten, what with his plainspoken style, wry sense of humor, and quickness to share credit with the people around him. When asked how he has accomplished all this, he is quick to respond: "An absolutely great, fantastic supporting cast and group of people who I'm fortunate enough want to work here."
So how does he attract these great people? It's probably not the location, as Marten notes, tongue in cheek. "We got a lot of positives here. We're in the middle of Mondovi, Wis., population 2,500, so it's kind of the epicenter of all cultural things in Wisconsin."
The attraction seems to be a corporate culture that emphasizes people. As he says on the company web site, "When my father started Marten Transport over 50 years ago, he developed a philosophy that still guides the way we do business today. Treat your employees and customers with the respect they deserve, and success will come naturally."
Unlike many businesses in the trucking industry that are family-owned, he says, Randy Marten is the only family member actually involved in the company. As a result, there's less likely to be a perception among potential employees that they are outsiders coming into a family-controlled operation. "These people are entrusted with growing our company, and I think that means a lot to people," he says.
Nevertheless, Roger Marten's influence is still strong, both in a philosophy that Randy continues to utilize, and on a personal level. "I guess if you want to call me an innovator, my drive is not to be the son that lost his father's business," the younger Marten says.
So he runs a tight ship.
Being a public company, Marten says, has been a good thing, because it forces the company to keep excellent records. By knowing their costs, he says, they know what rates they need to charge in order to get a fair rate of return. And yes, it's possible in an industry where rate competition can be cutthroat.
"In order to grow your company, in order to re-invest in equipment and in infrastructure, in order to pay your employees and drivers more money, you have to have a fair rate of return," he says. "Negative rates of return don't do much for you. I know none of my top customers look for a negative rate of return, and I respect my customers because they don't expect me to look for a negative rate of return, either.
"It's in all our best interests to have this product on the shelf for the customer so he can buy it. It doesn't do him much good if it's sitting in the truck, because the truck broke down or the driver quit because he's not making enough money, because you don't have the rate of return to fund those things."
Marten says the company is positioned with some of the top temperature-controlled shippers in the country, and most of those have been Marten customers for 10 years or more. It's obviously not because he charges bargain-basement rates, so what prompts such loyalty?
"It's nothing but my charming personality," Marten jokes. Seriously, he says, "We work very hard for our customers. We consider ourselves to be an extension of them when we go to their customer."
Another thing Marten works hard at is driver retention. The company's turnover rate hovers between 65 and 70 percent on a consistent basis – well below the 100-percent-plus average figures cited by the American Trucking Associations. Nevertheless, Marten still calls the figure "outrageous," and says it's something you have to continually work at.
"Everyone seems to experience the same issues, but we continue to work at it – we don't just throw our hands up in the air. We try different things; some things work, some don't. Understanding the demands of the driver is probably No. 1." Driver pay, of course, is one issue, and Marten says they strive to remain in the top five to 10 in pay in the country. But issues such as home time, relationships with dispatch, and good communication are key, as well.
"How you address driver turnover is a four-letter word," he says. "W-O-R-K. You've got to work at it. I tell you, some days you think you've got a handle on it, you think you understand it, and then you wake up one day and find out how stupid you were after all."
The personnel issue is the trucking industry's top challenge for the future, Marten believes. "In our industry, in order to grow your company, you have to put another truck on the road. You have to put a driver in that truck. After you add so many trucks, you have to hire another maintenance person. After you add so many trucks, you have to hire another fleet manager, and so on.
"Our industry will figure out how to get through 2007 and 2010 emissions, but finding the personnel to put in these trucks and do a safe and efficient job, and finding the people to manage them on a daily basis – that's the biggest challenge."
Don Orr has been quietly building a reputation as the go-to guy to help change the course of struggling trucking companies.
Central Freight Lines
Is Don Orr a trucking turnaround guru? When asked that question, he laughs a bit ruefully and admits, "I know way too much about it."
Like so many of his colleagues, Orr grew up in the trucking business. His father was a traffic manager and bought a small LTL and warehousing operation in Maryland. After graduating from college and spending a stint in the Army, Orr worked with Indiana-based Schilli Transportation for 15 years. He became widely respected in the industry while working for Roger Roberson of Roberson Companies for 14 years. After leaving Roberson in 1999, Orr spent some time working for a company involved in Internet heavy truck parts marketing.
From there he went to serve as executive vice president and COO of Smithway Motor Xpress, which had been hit hard by changes in the steel industry.
In March 2002, speaking at Newport Communications' Economic Summit, Orr reported that Smithway's revenue per mile had declined almost every year since 1996. Smithway's core business, the steel market, was going through major changes, with many customers being consolidated or sold, declaring bankruptcy, or going out of business altogether. The company survived seven bankruptcies of major customers.
To turn things around, the company took a couple of bold steps. The Ft. Dodge, Iowa-based carrier started turning away business. And despite trucks that were parked for lack of drivers, the company tightened its hiring requirements.
It wasn't an overnight success, but that same year, as the trucking industry was seeing an economic comeback measured in fits and starts, the company soon saw revenue per seated tractor go up, service and turnover improve, and insurance premiums drop.
Orr is low-key about his role in the comeback. "The Smithway turnaround was more about some of the people who joined me," he says. "We brought in people that were really good at sales and really good at cost management. And many of them are still there – there's a good group of people at Smithway."
From there, he headed south to be senior vice president at Florida-based Comcar Industries. Then three years ago, he signed on as president of Moyes Enterprises – Swift Transportation founder Jerry Moyes' umbrella for a variety of endeavors, including a specialty motorcycle company, an aviation services business, an air transportation carrier, an Indian casino company, a restaurant chain, a magazine and a variety of real estate development projects.
But last year, when Moyes decided to take Waco, Texas-based Central Freight Lines private again, it was natural for him to turn to Orr to get things back on track.
Central is a non-union, less-than-truckload carrier specializing in regional overnight and second-day markets. Moyes bought Central from Viking Freight Lines in 1997. The company went public in 2003. Moyes remained a major player in the company, owning a large percentage of the stock. But the company struggled. One observer called Central's financial performance "dismal," noting that its operating ratio was over 100 percent. There was controversy about Moyes' role, with Moyes stepping down as chairman of Central in 2005 after the Teamsters alleged conflicts of interest because of "the multiple, incestuous business relationships at Central Freight with Moyes-controlled entities." Teamsters complained that Central Freight stock had lost 80 percent of its value between December 2003 and May 2005.
Last year, Moyes took the company private again, and he and "certain related parties" became the owners.
One of the problems was that as a public company, Orr says, Central's management "spent a lot of time focusing in damage control in the market as opposed to really focusing on the business. The only way to get back focused on the business was to take it private. We now have more flexibility to react to opportunities and problem-solving as a private company."
"The central issue is, we have to gain our customers' confidence back. We have some issues we have to improve in the areas of performance and productivity, and to some extent accountability. We have a very strong core business in Texas and the surrounding states, and we've got to build on that. The company's kind of taken a defensive posture, since it didn't do well the last couple of years, so we've got to reshape it into a very vibrant competitor."
So how's he going to do that? While the situation is very different from what he faced at Smithway, Orr says, the solution again comes down to people. Orr has a reputation of being a strong people person, and for expecting high performance from his team.
"We're blessed. We have a lot of customer loyalty and a lot of very good people, so it's not as hard as it sounds. We have to give our people the tools they need to succeed. We haven't been aggressive in basic technology. We've got to be responsive in terms of certain service offerings and supply chain solutions, and we've got to make investments in equipment and technology."
Orr's talents have not been limited to trucking companies. He was chairman of the Illinois Trucking Association twice as well as chairman of the Truckload Carriers Association. While at TCA, he tackled several issues, including lobbying to increase the meal deduction for truck drivers, working to help members take advantage of emerging technologies such as PrePass, and taking over the reins of the struggling Professional Truck Driver Institute. Orr currently is chairman of TCA's Scholarship Fund.
In these latter efforts, he is working to address what he says will be the single biggest problem the trucking industry faces for the future: "How do we attract high-quality people to the business, whether it's the driver, on the dock, in the office, sales? Nobody sits at home in today's world and says, 'I want my son to be a truck driver.' We've got to find ways to make jobs more appealing."
And each company needs to work to keep those employees. "Every company has unique benefits; you've got to find the right pool of people, and you've got to do a good job of internal marketing and make people understand what the good things are about the company and what we're trying to do, and make sure they feel they're part of the solution. You've got to understand what their goals are and how to align those goals with the company's – whether that person's driving a city truck, a line haul driver, a salesperson or a fleet manager."