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 2008 Truck Fleet Innovators are:
- Don Osterberg, Vice President of Safety and Driver Training, Schneider National
- Dave Berry, Vice President, Swift Transportation
- Ray Greer, President and CEO, Greatwide Logistics Services
- David Congdon, President & CEO, Old Dominion Freight Line
- Lance Craig, President and CEO, Craig Transportation
- Mike Abbott, President, SAV Transportation Group
These trucking innovators will be honored on March 26 at Heavy Duty Trucking's Economic Summit, held in conjunction with the Mid-America Trucking Show in Louisville, Ky.
Hats off to them all.
Interviews and profiles by Deborah Lockridge, Senior Editor
A Passion For Safety: Don Osterberg, Vice President of Safety and Driver Training, Schneider National
The fatal crash rate for accidents involving heavy trucks may have fallen to record lows, but the number of fatalities involving heavy trucks - nearly 5,000 in 2006 - is still "an unacceptably high number," says Don Osterberg, vice president of safety and driver training at Schneider National.
Unlike many trucking executives who grew up in the industry, Osterberg came to trucking with an outsider's perspective. He served as an infantry officer in the U.S. Army, retiring at the rank of colonel. During his seven years with Schneider National, the last five in the safety/driver training/security role, he has used that fresh perspective to develop industry-leading programs that improve both safety and driver recruiting/retention, including using high-tech driver training simulators, screening for and treating sleep apnea in drivers, and using research to gain new insights into safety and turnover issues.
"When asked what the keys are to success, I've come to rely on four foundational blocks," Osterberg says. "Hire the right drivers and retain them; train effectively; actively manage safety and regulatory performance; and leverage technology where appropriate."
Osterberg realized that high driver turnover was detrimental to safety, saying "the incessant churn in our industry was bordering on lunacy."
One of the things Osterberg has been doing to address this is using research to try to determine the characteristics that safe drivers share, so recruiters can look for those characteristics when hiring and training drivers.
One study, in collaboration with the University of Tennessee, looked at Schneider drivers who had achieved a million safe miles. "How can we learn from our safest drivers and create an environment where we're selecting the best qualified, not just adequately qualified, drivers? Some interesting findings came from that work that we used to modify our training process," Osterberg says.
Schneider is in the midst of a three-year project working with Stephen Burks, a former truck driver and associate professor at the University of Minnesota. In a project called "Truckers and Turnover," over six months, they collected data from 1,070 new drivers that came through Schneider's Green Bay training academy. In addition to collecting demographic data, researchers tested the drivers for characteristics such as planning ability, nonverbal IQ, patience, ability to do basic arithmetic, risk and loss aversion and time sensitivity. Schneider is carefully following these drivers through bi-weekly surveys and safety data collection.
"We are learning a tremendous amount," Osterberg says. Over the three-year period, "we will determine which ones are the safest, most productive, most stable workers, and based on those findings we will be able to provide even more effective screening on the front end, so we are hiring workers who are predisposed to being safe and effective in this industry."
This type of research is evidence of what Osterberg calls a "focus on learning as opposed to knowing."
Osterberg also realized that the way the company was doing exit interviews with drivers who quit was ineffective. The driver managers were doing the exit interviews. Often they weren't being done, and when they were, the results were superficial and often suspect. "If you left because you had a bad relationship with the driver manager, and the driver manager's the one doing the interview, that reason may not be included" in the report, he notes.
Osterberg searched for an outside company that specialized in doing truck driver exit interviews. He found there was no such animal. So he went looking for a company that did exit interviews in another profession that was high turnover. Schneider teamed up with Denver-based Strategic Programs Inc., which conducted exit interviews for the nursing field, to study trucking turnover.
"We're going into our fourth year, and they really have done a nice job of helping us to better understand why drivers leave our organization and in some cases why they leave the industry," he says.
After They're Hired
The second of Osterberg's key "foundational blocks" is to train effectively. One of the industry-leading things he has done to improve training is the use of high-tech driving simulators . Simulators allow drivers to train in situations you could not offer in a real truck, such as a blown steer tire or winter mountain driving.
"We've seen tremendous success in improving not only graduation rates, but also the safety performance of the driver associates who have come through our program," he says. "It now is widely recognized as a tremendous enhancement in driver training."
Another example of Osterberg's willingness to reach outside of the trucking industry and even outside of this country is a pilot program called Green Road. This is based on a program designed for the parents of teenage drivers in Israel, where an accelerometer and GPS in the vehicle are used to assess the relative aggressiveness of driver behavior and report on that to the parents. This program aims to catch potentially risky driver behavior and intervene with additional training before it leads to a crash.
Sometimes it's not technology, but just a different way of looking at things that leads to innovative programs and improved safety. For instance, Schneider changed its focus from accident frequency to accident severity. "Accident frequency is not enough. We really have to understand the anatomy of a major accident and ask ourselves, what can we do in order to reduce accident severity as well as accident frequency."
Focusing On Drivers
Some of Osterberg's innovative programs focus on the comfort and well-being of the driver - which not only helps with recruiting and retention but also with safety.
Take something as simple as seat adjustment. One of Osterberg's safety directors attended a National Safety Council meeting where a vendor displayed a seat marking system to help office workers adjust their chairs to be ergonomically correct. Osterberg decided to adapt that concept to truck seats.
"We buy a very expensive seat for our drivers, with 13 different points of adjustment," he explains. "While they are trained on how to adjust it, they often don't remember, or don't understand from an ergonomic standpoint how it should be adjusted for them." So Schneider now has physical therapists work with drivers to determine the correct adjustments for each individual. Each driver gets a laminated card with individualized settings so he or she can set the seat properly in any Schneider truck. A properly adjusted seat not only makes the driver more comfortable, but also helps reduce fatigue.
Then there's Schneider's award-winning sleep disorder screening and treatment program. Traditionally, sleep apnea, which significantly affects the typical truck driver demographic, was sort of a "don't-ask-don't-tell" situation. Truckers were afraid if they told their company or their DOT doctor, their livelihood could be affected. Companies typically just didn't want to know.
"We were first in recognizing a significant percentage of commercial drivers are afflicted with sleep disorders," Osterberg says. "You have to ask yourself, do you want to know? In the spirit of managing severe accidents and realizing fatigue is a major cause, we said, yes, we want to know."
Schneider used newsletters, posters, leadership involvement and one-on-one meetings with its drivers to raise awareness of the issue. The company tested 547 of its drivers from April to December 2006; 445 of those tested - 80 percent - were diagnosed with a sleep disorder and were provided treatment.
Osterberg says the sleep disorder screening and the seat-adjustment program have helped the company achieve a more than 40 percent reduction in fatigue-related crashes over three years.
In the future, Osterberg believes that in order to keep cutting the number of truck-related fatalities, we need to look beyond motor carrier efforts.
"Historically, safety has been viewed as being within the purview of the motor carrier. I have this belief that safety is a supply chain challenge. It's not enough to have the motor carriers focused on safety. Shippers, consignees and carriers ought to really work together to make the supply chain as efficient as we can.
"Drivers have for too long provided the elastic link in the supply chain," he notes, and with new hours of service regulations and the increasing use of electronic onboard recorders, "that driver link is going to become increasingly rigid - and it should, in the interest of public safety."
Osterberg also believes the trucking industry and public safety advocacy groups shouldn't be at loggerheads, as they are now, but should work together.
"I truly believe that we have a much better chance if we have motor carriers, shippers, consignees, regulators and safety advocacy groups working together. I've been in a lot of roles in my professional life, and I've never been in one where the safety stakes are higher."
Ahead Of Their Time: Dave Berry, Vice President, Swift Transportation
Swift Transportation is not only the largest truckload fleet in the United States, it is also a leader in idle reduction and other "green" efforts.
Vice President Dave Berry has spearheaded much of this effort.
Growing up, Berry had a neighbor who owned a trucking business, where he often used to hang out. By the time he got into college, he was so deeply involved in the trucking industry that he started his own company, fueling and washing trucks and doing light maintenance. By 1990, he was president of a trucking company that Swift Transportation purchased, and he's been an important part of Swift ever since.
Berry was there to take Swift to a paperless environment, putting dispatch and all the other company's operations on computer. He was involved in Swift's very first quality initiative and process improvement program. But when asked what innovation he's proudest of, he says, it's his contributions toward making Swift and the trucking industry more "green."
"The last three or four years, what I've been particularly proud of is being one of the industry leaders to help form the Environmental Protection Agency's SmartWay program," Berry says. "I advocated long and hard within our industry for it. There were about four or five carriers that spent the better part of 18 months working out all the protocols, the metrics and the goals. There was a lot of work in order to come up with something EPA felt would be a meaningful and effective program, and that the industry agreed would reduce greenhouse gases and pollutants."
The SmartWay Transport Partnership is an innovative collaboration between EPA and the freight industry to increase energy efficiency while significantly reducing greenhouse gases and air pollution.
Fleets wishing to join the SmartWay Transport Partnership commit to measure the environmental performance of their existing operations, identify a goal to improve the environmental performance of their operations, develop a plan detailing how the goal will be achieved, and report their progress annually to EPA.
In return, EPA commits to increase public awareness of a fleet's participation in the SmartWay Transport Partnership through national and regional events, articles and awards (and use of the SmartWay Transport Partnership logo), as well as provide technical assistance to help fleets develop and meet goals, and create incentives to facilitate the introduction of innovative technology.
SmartWay Charter Partner
Swift was one of 14 charter partners of the SmartWay program when it was established in 2004. The program's goal was saving 150 million barrels of oil each year, cutting up to 66 million metric tons of CO2 each year by 2012, and eliminating 200,000 tons of NOx each year.
When the program was announced, Berry called it "an ideal partnership." Carriers who sign on can cut their fuel costs and at the same time gain recognition for contributing to a cleaner environment, he said. "What a proud day this is to be a trucker in the United States."
Last year, Swift was one of 15 carriers earning the SmartWay Excellence Award. The awards were based on actual emissions reductions and fuel savings achieved, compared to each organization's overall fuel consumption and emissions, the types and variety of strategies and technologies implemented, and the overall environmental performance of the organization. Consideration was also given to innovation, creativity, and general promotion of sustainability and SmartWay.
"Swift implements nearly every SmartWay strategy available and has some of the best-equipped trucks on the road in the United States," said the EPA announcement of the 2007 award winners. The EPA notes that Swift has a clean and modern fleet of trucks whose average age is less than three years old.
"The company conducts extensive fuel-efficiency test programs, and constantly strives to increase its efficiency, with a resulting savings of nearly 485,000 tons of CO2, a further reduction of 34 percent since joining SmartWay," the EPA web site notes. "The Swift fleet features comprehensive aerodynamic equipment and is subject to progressive operational practices, such as engine shutdown and speed management. In 2007, the company purchased 1,500 U.S. EPA Certified SmartWay tractors."
Berry recalls there was some apprehension from others in the trucking industry when he first started pitching fellow trucking executives on the idea of working with the EPA.
"It was not a very familiar scenario to be cooperating with a government agency," he says, "and there were tremendous fears that a voluntary program would morph into a regulatory scheme. But we really felt we should take a leadership position, and there needed to be a way for our customers and for everyone to recognize the companies that were going above and beyond in terms of reducing their emissions."
Speaking the Language
It turns out, he said, they were ahead of their time. "Now when customers call and are talking about your carbon footprint, the first word out of most truckers' mouths is 'SmartWay.' We have a system put together by the EPA; we can speak the language and we know what we're doing and our impact on our carbon footprint and the criteria emissions."
But Swift didn't stop with the EPA. The company also is a leader in working with federal, state and local authorities on environmental issues, such as designing the state implementation plan for how to reach attainment in non-attainment areas.
"It's a high priority with [Swift President and CEO] Jerry Moyes and with Swift that we be good stewards of the environment," Berry says.
Of course, saving fuel not only helps the environment, it also helps the bottom line. Some of the strategies Swift has used to improve fuel economy include better tires, tire pressure monitoring, aerodynamics, truck specs, trailer specs, the right engine and drivetrain specs, governing truck speeds, training drivers on fuel-efficient driving techniques, and holding people accountable for fuel economy metrics.
Swift has been testing various auxiliary power units and other anti-idling technology. "We're constantly evaluating different products," Berry says. "We have our own financial analysis we run after testing to see if those products are something to deploy within our fleet."
Idle reduction is the area where Berry believes the industry needs the most help. "We just haven't really landed on the right solution. We think there's probably two things that need to happen. One is the insulation in the cab - it needs to be much better insulated, and that will enable cooling and heating products to work much better."
He says Swift's research leads it to believe diesel-fired heaters will work fine for no-idle comfort in the winter, but cooling in the summer is another matter.
"We think where things are headed is some kind of battery-powered air conditioner," he says. "But what we are looking for is an OEM solution, where you just buy it with the truck." They want all these components to work together as a system instead of just being bolt-on.
"Reducing idle has been a huge focus for us recently," Berry says. "With fuel at over $3 a gallon, you can't afford to waste any fuel - and while you're doing that, you're reducing greenhouse gases and complying with local idling ordinances. So we've worked closely with the manufacturers to come up with different ways to reduce idling, and we've worked with regulators to come up with common-sense solutions that will be adopted by the industry."
What's In A Name: Ray Greer, President and CEO, Greatwide Logistics Services
Greatwide Logistics Services seemed to come out of nowhere starting two years ago. The non-asset-based transportation company made #360 on Forbes' list of the largest private companies that year.
"Our competition was wondering, where the hell did they come from - and there's a reason for that," says Ray Greer, president and CEO. "Prior to January of 2006, it was comprised of a number of different brand names that had little recognition in the market, and those brand names were put in place without a whole lot of thought."
In January 2006, that company, Transport Industries Holdings, announced a new name, new corporate logo and executive management team - as the press release said, "signaling the arrival of a major new player in the national transportation and logistics industry." At the time of that announcement, Greer said that the company had "been operating as one of the best-kept secrets in the national transportation and logistics industry."
You have to look back to 2000, when Fenway Partners bought Transport Industries LP, the nation's largest third-party provider of "closed loop" transportation services to the grocery industry. Under that name, Fenway acquired several other companies (mostly non-asset or light-asset-based) over the next five years, including May Trucking, Total Distribution, American Trans-Freight, Stewart Stiles, NFC, Cargo-Master, Am-Can Transport and Dallas & Mavis Specialized Carrier Co.
Greer joined the company in 2005, coming from a background with FedEx and Ryder. "We were known only by those who did business with us, and it was our strong desire to begin to create recognition in markets we don't serve or with customers we currently do not service. To support the growth strategy of the company and the mission of the company, we believed we needed to create a brand that's recognizable, that people remember, and that can sustain over time. That's how Greatwide came about. We want to become one of the top in the industry, and we think the only way you can do that is make sure you have a brand you can push in the market, a brand you can stand behind, that people will remember."
Today, the $1.2 billion company operates a wide range of non-asset-based, owner-operator truck fleets from coast to coast, a multimillion-square-foot network of warehouse space, and a broad array of truckload management and truckload brokerage capabilities. Late last year, the company announced a deal to manage the owner-operator based transportation services of Tyson Foods, the world's largest processor and marketer of chicken, beef, and pork.
The concept of corporate branding is not one that has made a lot of inroads in the trucking industry. A lot of trucking "brands" simply developed over the decades as companies grew from a founder's one-truck operation into larger operations with names like Schneider, J.B. Hunt, Werner.
"When we began to research it, we found that most trucking companies are either a surname of the founder, or it's named after an animal or a bird, with no real brand strategy behind it."
So Greer hired the chief marketing officer from DHL, Dick Metzler, whom he had worked with at FedEx, to be chief commercial officer. "He painted the world yellow when DHL rebranded," he says.
Key to the Greatwide branding strategy is that they're not just pushing the brand to customers, but also the owner-operators, independent contractors and small fleets that provide their capacity.
"We want to be the destination of choice for capacity providers," Greer says. "One of the most significant things about Greatwide is we have built our business around the owner-operator. Most people use owner operators as a means to satisfy some temporary increase in demand, and when that demand goes away, they reduce their usage of the owner-operator. They are our only revenue producer."
One of the ways Greatwide went about using their new brand to attract owner-operators was an award-winning recruiting ad campaign in 2006. Metzler said he wanted to treat the Greatwide name as a brand, just like Coca-Cola or Nike, and create recruiting ads with the same kind of creativity and emotional appeal used for retail advertising. So he teamed up with an ad agency, telling them "to make our message jump off the page and burn it into the brain of our owner-operator audience in a way they will never, ever forget," Metzler says.
The "Choose Your Road" campaign was designed to illustrate the fact that Greatwide offers owner-operators a number of different options, such as long-haul or short-haul. It used emotion and humor to get the point across in print and radio advertising. The most attention-getting ad in the campaign was the "Hot Wife" print ad, which suggested to drivers that if they have a hot wife, they might want to run short-haul - but they might like long-haul if they want to escape a nagging ex-wife. It was a little controversial, but the campaign also resulted in double-digit call volume increases and a corresponding rise in the number of owner-operators leasing on to the company.
The company also carried the brand through in its innovative programs to help owner-operators succeed.
Greatstart, for instance, is a program that helps the company create owner-operators. They don't just help set up things like truck financing and insurance, but also set up the new owner-operators with American Truck Business Services, which acts as a financial advisor and bookkeeper. Owner-operators get a statement each month showing them their revenue and expenses, and alerting them to expense categories that are higher than the norm. The company also can file their taxes for them.
Greatwide also gets reports on their Greatstart members. "Rather than waiting for the driver to come to us and say he's got a problem, we can call him and say, you need to do some things differently" in order to succeed, Greer explains. "One of the most common things we've found is the owenr-operator too often is waiting for that perfectly load. With today's hours of service constraints, that is wasted revenue opportunity."
The turnover rate among drivers in the Greatstart program is in the 20-percentile range, Greer says. This compares to the company's 58 percent turnover overall, which is already lower than national averages.
"Whether we recruit 'em in or create 'em on our own, we have a program we call Greatcare that offers them programs and services they could never get on their own, and in some cases couldn't get anywhere else," Greer says. Key to that program is affordable health insurance for the contractors and their families. "In the past they might never have had the means to do that."
Greatcare also includes services such as a variety of other insurance options, purchasing discounts, tax/financial services and business consulting from ATBS, 401(k) programs, and a pilot wellness program called Greathealth. "We basically go out in the market and develop these programs on their behalf. We have built Greatcare so it becomes a menu of available programs that provides the capacity providers things they could never get on their own."
Last year, Greatwide launched a driver relationship management program. "We are training every employee that is interacting with drivers, from the dispatcher all the way up to me, the CEO of the company, on how to manage the relationship with these individuals. Dan Baker has a saying that they don't care what they know 'till they know how much you care. We are essentially trying to implement a program that says, 'Our job is to look out for your wellbeing, to make you successful.' In many ways we're trying to turn the organization upside down so the driver's on top."
Of course, the company is also doing a number of things to build awareness of the Greatwide brand. "As we developed the brand, we then began building web sites, to-to-market materials," Greer says. "We have built new ad creatives around Greatwide, whether it's for customer purposes or recruiting. We just launched a customer newsletter called Greatnews. We have sponsored trade shows at significant levels to create presence. As the fleet in the market is transitioning to the Greatwide name, with the decals on doors and trailers, more and more people will see us on the highways and read about us in the news.
"Brands take years to develop, but we're not here just to build a company for 2008 - we're really focused on the long term strategy of this company."
Daring To Be Different: David Congdon, President and CEO, Old Dominion Freight Line
When deregulation hit the trucking industry in 1980, Old Dominion Freight Line was the 60th largest less-than-truckload company in the country. Today, there are only a handful of those pre-deregulation companies still in existence. OD not only survived, it has prospered, and today is the sixth-largest LTL in the country, says David Congdon, president and CEO.
They've gotten there by doing things differently, with a clear vision for growth implemented by Congdon and his leadership team more than a decade ago - and a strategy that's quite different than the other major LTLs.
Old Dominion was founded by Congdon's grandparents in 1934 in Virginia (hence the name), and primarily ran between Richmond, Norfolk and Newport News. His grandfather died in 1950 at age 43, and Congdon's then-19-year-old father, Earl, became general manager and ran the company along with his mother and younger brother, Jack. It was under Earl that the company started making acquisitions, beginning with the one that moved the headquarters to North Carolina in the mid-'50s.
David Congdon began working for the company at age 14. "I worked on the dock for a couple of summers and some on weekends to keep me out of trouble," he says. When he turned 16, he worked in the shop for a couple of years, then started traveling to various service centers and learning about operations.
After graduating from the University of North Carolina-Wilmington with a bachelor's degree in business and a concentration in management, he says, "my graduate work was at North Carolina Truck Driving School in Raleigh. I went to an eight-week driver training program and learned officially how to be a professional truck driver." He drove a truck for six to nine months, both as a local and as a road driver for Old Dominion.
Then he went on to work with the engineering group, doing things such as designing dock layouts and improving pickup and delivery efficiency. In the early '80s he had a brief stint as director of employee relations, then was in charge of equipment and maintenance until 1986. From there he moved to the furniture-hauling division (shut down shortly before the company went public in 1991 - even though Congdon had managed to turn it around, it still was not making enough profit to keep it going.) Next up was vice president of line haul, running all OD's over-the-road operations.
New Ways Of Managing
So when Congdon in 1993 started spearheading the company's efforts to implement new quality management processes, he had a broad background in nearly every aspect of the company. That process took several years.
"When I look back on that, I think that was a real turning point for me personally and also for the company, because it began to implement some different ways of managing our business. We created our initial vision, which we still have today, which is to be the premier transportation company in the markets we choose to serve. We're going to be the best wherever we choose to be. Being the biggest is not as important as being the premier service provider in the markets we choose."
When Congdon was promoted to president and chief operating officer in May of 1997, he says, he was able to take that quality foundation to another level.
The first thing he did out of the chute, in June of 1997, was gather the rest of the senior management team. They spent a week together "nearly locked in a room, reviewing and reworking our vision, looking at all of the elements of success for the company. We looked at who we were, what our position in the marketplace was, how we got there, and what we visualized the company would look like five to 10 years out. It's with the strategic plan we developed at that time that we have moved forward as a management team toward the vision that we had."
What is that vision? Expanding to where OD has a national presence, with full coverage in every state - at the same time being a viable and competitive player in next-day regional markets and maintaining its strength in inter-regional markets.
This is a very different approach than others in the industry. ABF, for instance, survived through deregulation with a strategy that assumed it was very difficult to be both a dominant regional LTL carrier and a nationwide LTL carrier.
But OD decided it could do both short-haul and long-haul freight, and that it could do both with a single company.
"One of the prime elements of our vision was we were going to break out of the old paradigm that said you could be a long-haul or a short-haul carrier but you could not do both," he says. "That was the paradigm of the '60s, the '70s and even the '80s."
The result, he says, is a unique and successful blend of regional and inter-regional services all under one company.
"When I think back to the development of this strategy in 1997, we did what we did because we thought it was a good way to grow. But I wouldn't have dreamed of how successful it has been. When you graph our revenue growth rate over the last 12 years, we have averaged 8 to 10 percentage points more growth than all our industry peers."
In fact, OD reported record fourth-quarter revenue, increasing 12.3 percent to $358.7 million from $319.4 million in the fourth quarter of 2006. For 2007, the company achieved record revenue of $1.4 billion, an increase of 9.5 percent from $1.3 billion for 2006. (Like many companies, however, net income for both the quarter and the year were down from the previous period.)
In January, Congdon assumed the title of chief executive officer, while his father, Earl, was named executive chairman of the board. David says his father is still a big part of the company. "I call him the entrepreneurial spirit behind our organization," he says. "When it comes down to the strategies of where we're taking the business, he plays a big role."
Growing Toward A Goal
OD is growing both through acquisitions and organic growth. Just last year they announced two acquisitions: Bullocks Express Transportation in Denver and Priority Freight Lines in Sumner, Wash. In 2007, OD opened new service centers in Georgia, Iowa, California, Pennsylvania, Arkansas and Oregon, and expanded and relocated several others.
With the February purchase of Bob's Pickup & Delivery in Montana, ODFL reached its goal of providing direct coverage to all of the 48 continental United States."We see a lot of potential growth in our domestic networks going forward," Congdon says.
How does OD compete so successfully in a world where behemoths like YRC, FedEx and Con-way reign? "I think it's the fact that we are a single company that grew up as one company, that built the strategy as one company," he says. "We've got one management team, one corporate office, one computer system, one pricing system, one fully integrated dispatch system - all these service capabilities are managed as one entity, and that makes us more flexible and more agile. Sometimes you can be more nimble as a smaller company than you can as a larger one."
At the same time, OD is doing some of the same things the big players are doing as far as value-added services and global offerings. A year ago, OD announced it would offer transportation services between China and the U.S., seamlessly integrated with its domestic LTL, TL, container drayage and expedited services. They are looking at expanding to other countries, as well.
"We are dealing in a global environment, and there are lots of other value-added services that round out our platform as a single-source provider." Indeed, Old Dominion's slogan is "The power of OD: Your ONE source."
Yet the key to all this, Congdon says, is the company's people.
"When you look at our positioning in the marketplace today, investment analysts have said ODFL is best in class," Congdon says. "You can't help but be proud of that. But what I think I'm most proud of is the fact that we have gotten to this level as a team. Even though we have nearly 14,000 employees, we have a family atmosphere. The Old Dominion family spirit is just as strong today as it did when we had 5,000 employees, if not stronger. And that, I think, is the backbone and the essence of our success."
Focusing on People Power: Lance Craig, President and CEO, Craig Transportation
Many companies tout themselves as "people" organizations, but seldom in this industry do they delve as deeply into the potentials of their people as Lance Craig, president and CEO of Ohio-based Craig Transportation. His company's success is built around the principle that it's the people who move the freight, not the trucks.
"We work really hard at trying to invest in our people," Craig says. The people focus is evident in the company's low turnover - about 35 percent. Several years ago, Craig put one of his top salespeople, Eric Stegman, in charge of recruiting and retention for the company's drivers, who are primarily owner-operators.
"You really need your best people talking to your drivers," Craig says. "It's just as important as talking to your customers."
Stegman uses the same method with drivers he did with customers, one that focuses on building rapport, and on being upfront about each other's expectations.
"The key to recruiting and retention is treating drivers like you want to be treated," Stegman says. "One of the best quotes I heard from a current Craig driver was, 'You and everyone at this company have been so friendly, there has to be something hidden!' Three years later he still stops in weekly to visit."
Stegman emphasizes that everyone in the company, from the top down, is vital to keeping drivers. "Lance supports driver retention 100 percent, and he's made it well known to the rest of the company - not just in recruiting, but from accounting to operations, anywhere in the office - they know that we need to take care of driver retention. If we mess up a guy's settlement several times, he's going to leave because we screw that up."
Drivers, of course, are not the only people that make the freight move. One of Craig's more recent efforts is training employees to get to the root cause of problems or inefficiencies and empowering them to make improvements.
"We've got a real stable workforce here - I've got folks that have been here up to 30 years," he says. "One of the challenges you run into is you want to avoid people working on autopilot and just doing things the same way. Once you give them tools, simple things like 'The Five Whys,' you can teach people to go about trying to problem-solve something."
"The Five Why's" was invented by the founder of Toyota and is part of Six Sigma and other quality improvement programs. By asking "why" there is a problem, then asking "why" again of the answer to the first why, and so on, you can peel away the layers of the symptoms and get to the "root cause" of a problem. A simple example:
My car will not start (the problem).
Why won't the car start? The battery is dead.
Why is the battery dead? The alternator is not functioning.
Why is the alternator not functioning? The alternator belt is broken.
Why did the belt break? The alternator belt was well beyond its useful service life and has never been replaced.
Why hasn't it ever been replaced? I have not been maintaining my car according to the recommended service schedule (the root cause).
"It's something we've pretty much trained our whole staff here to go through that process and expose areas where we think we can improve," Craig says.
It's vital to have a thorough understanding of current conditions and causes before you can improve them, Craig says. Otherwise, "you tend to rush to 'fixes' before you thoroughly understand the problem."
Craig Transportation has been using this method to find ways to keep new drivers longer. "We sat down with the folks who deal with drivers directly and asked questions about why drivers leave. One of the things that came out of that was having drivers come back in for retraining. You go through a two-day orientation process, and drivers can't absorb enough." So the drivers are brought in for more training after their first 30 days. "You could say that's very costly to take them off the road, but when you really examine the cost of losing drivers, that's a spit in the bucket."
Craig has decreed that no improvement initiative is too small. "One of the things that we did when we first started this was where to put the coffee pot in the kitchen to reduce the coffee grounds falling on the floor and [discarded] sugar packets - we'd find a mess all over the place." The root cause? The coffee pot was on the other side of the kitchen from the trash can. "Very simple stuff, but in the end, it's not just that we solved the problem, but that we had folks go through the process of identifying the problem and coming up with a method to be able to fix it. And it led them to be able to launch into other things that might be a bit more involved."
Craig says he often holds back a comment or a possible fix he's thought of and allows the employees to go through the process and use those mental tools to select an issue, thoroughly study the problem and develop a plan to improve it.
"Our investment is not so much in fancy technology and different software; we've really, really focused on trying to find ways to invest in our own people, to help them make better decisions. It's been received well, and in a sense takes some of the pressure off the managers and lets people realize they can make changes and suggest improvements."
Some of those changes have meant getting customers on board to improve efficiencies.
"In today's environment, trucking is really expected to do more with less," Craig explains. "In contrast to reducing rates, the opportunity that really exists from a long-range standpoint is reducing costs through improving processes in how you serve your customers. The difficulty comes when all the fixes have to be done on your end. In reality, to truly get the most waste out of the system, you have to work with your suppliers and your customers."
The company has had success working with shippers to improve hours of service utilization in a couple of lanes, reducing the number of trucks ordered but not used, and reducing dwell time.
In one instance, Craig had to improve service in a particular lane or risk losing it. They worked with the customer to improve the staging time of the load, and to tweak the appointments on the delivery end. In-house, when they went through the root cause analysis process, they discovered what they needed was a better monitoring system for that customer. They went about solving the problem in a low-tech way - a "process control board" that was nothing but a white board with color coded magnets.
"We were able to use a visual solution," Craig says, "and it also involves our staff, who literally had to - at two-hour increments - get out of their chairs and go up to this board and update where these trucks were. Everybody was able to visually go up there and see the status of this particular run. If loads started coming out slow, there was a defined SOP."
While Craig certainly doesn't eschew higher-tech solutions, in this particular instance, he said, a low-tech approach was better. "There are certainly great dispatch systems out there that give you a lot of visibility, but we found the interactiveness really made a difference. Going back to that low-tech thinking puts the person back into the process in a physical way. We were able to turn around our service levels [in that lane] to where now we're nearly flawless."
Craig's emphasis on people goes outside of the company, as well, especially when it comes to involvement in associations. Lance Craig was chairman of the Truckload Carriers Association in 2004, like his father, Dale, before him. He's also heavily involved in the American Trucking Associations, including serving on the Safety Policy Committee, and he's currently vice chairman of the Highway Policy Committee.
"It's just one of those things I kind of grew up doing," he says. His grandfather, Norwood S. Craig, started Craig Trucking in 1927 and was a member of ATA "back in the early '40s, if not the '30s," Lance says. The Craig family has been in TCA longer than any other. When Lance's father bought Hofer Transportation (later renamed Craig Transportation) in the early '60s, he followed in N.S.'s footsteps in more ways than one.
"My father always believed in association work; he obviously took that from his father," Lance says, serving as TCA chairman in the '70s and two terms as ATA chairman in the '80s.
"You can really feel alone in this tough business unless you have friends to work with, and I think that's one of the most important things you gain from association work is the camaraderie."
Following his example is Lance's son John, who joined the company in 2003. John is chair of TCA's Committee on Operating Practices and helped put together and is chairing the new Young Transportation Executives group at TCA.
With help from the right people both inside and outside the company, Craig Transportation's longtime slogan is no stretch: "It Can Be Done."
Rapid Re-Invention: Mike Abbott, President/Founder, SAV Transportation Group
A visitor to The SAV Transportation Group's Coon Rapids, Minn., offices might be surprised to find executives, employees and contract drivers competing in a whiffle ball game or mingling at a chili cook-off. If it's Wednesday, they'll be playing bingo. On Friday they'll be wearing loud Hawaiian shirts.
There are reasons for all this.
When Mike Abbott founded a small brokerage company 20 years ago, his philosophy was two-tiered: (1) deliver top-grade service to attract high-caliber customers; (2) achieve that service with dedicated people who enjoy their jobs.
It worked. Today, SAV's host of clients include Toro, Supervalu, Valvoline, Mills Fleet Farm and Best Buy. The company operates three divisions - in brokerage, long-haul trucking and logistics - and just added a fourth, an Internet-based LTL/special projects division.
SAV (which stands for Service And Value) manages 100-plus owner-operators and 250 company trailers from its headquarters, which has 30 core employees. Its 2007 revenues of $41 million were up nearly 10 percent from 2006, despite a tightened trucking economy. In the five years prior, it nearly quadrupled revenues. It's never had a losing year.
As for efficiency, its logistics operation, with 15 owner-operators and 100 trailers, won Best Buy's 2007 Carrier Partnership award for 100 percent on-time delivery of nearly 400 loads. SAV also has won numerous awards for excellence from Toro.
Abbott is the first to say it's not all his doing. Soon after he started SAV, two old friends, Joe Speltz and Don Divine, bought in. The three owners share management responsibilities; Speltz is chief financial officer and Divine is sales vice president. They also share in their beliefs about how people - both customers and employees - should be treated: as family.
"Not only is there an open door policy," says Abbott, "there are no doors."
Turnover? What Turnover?
The record speaks for itself. SAV has built a customer base of 5,000 companies, using a service mantra from the old TV character Alf, the furry little alien life form who responded to any situation with "No problem."
Its internal culture, at times bordering on wackiness (there's a "Commissioner of Spontaneity," and you never know when a beanbag toss might break out), follows the same lines. In its 20 years, the company has terminated just three employees. The last time one left for another job was three years ago, "but he's back with us," Abbott says.
Turnover among SAV's owner-operator contractors is under 50 percent - less than half the industry average for long-haul drivers. Most who leave, Abbott says, are first-time truck owners who decide they'd rather be company drivers. But in the past two years, a dozen contractors who left SAV have returned.
The company supplies employees with health and dental insurance, long-term disability and $50,000 in life insurance, along with matching 50 percent of their contributions to a 401(k). After one good year, SAV flew the whole team to Las Vegas to celebrate. And Hawaiian Shirt Friday is a reminder of Abbott's promise to take them all to Hawaii when revenues hit $100 million. "We've always shared our profits with employees," he says.
As for retaining owner-operators, SAV offers quarterly safety bonuses, raffles for prizes, and rewards when customers and/or dispatch reports a contractor has done something special. Rewards can be cash, truck washes, gift certificates or "whatever we think is appropriate," Abbott says.
The company has a toll-free, 24-hour road service number and supplies its owner-operators with fuel cards so they don't have to carry cash. They pay a dollar each time they use the card, and pick their own fueling spots - which sometimes offer the cash price or a discount for using the card.
"We try to educate our drivers about money," Abbott says. "We use an outside third party to help them set up budgets and get their taxes done." And when employees or owner-operators find themselves in need in their personal lives, the SAV family is there for them. "It's not a big deal," Abbott says. "If someone needs some help and we have the resources, we give them some help."
The Magic Letter
Last year, as business slowed, management began work on strategies to sustain growth. "Some of the fun was slipping away," Abbott says. "People who've been with us awhile have never been afraid to speak their minds[but] we weren't seeing it anymore."
That changed in September. As managers were looking into reorganization possibilities, a letter arrived from a veteran husband-wife driving team who had just signed on. It suggested there were problems with SAV's dispatch operation.
"We'd been planning a driver survey, but hadn't got to it," says Joe Thomas, director of safety and recruiting. "The letter was the magic to go forward immediately."
It was also a catalyst for a rapid re-invention of the entire company. SAV not only crafted a survey for its owner-operators, but also conducted customer insight sessions and focus groups that resulted in a plan to "re-energize the company and make it fun like you've never seen," Abbott says.
Abbott met one-on-one with every employee - all in one day - to explain the reorganization. The message: No one would lose a job, but there would be new opportunities in different positions. People were asked if they would like to change positions. Purpose: Find out what they do best and put them there.
A third of the owner-operators were picked randomly for one-on-one survey interviews with management, and were asked to grade the company in several areas. The results bore out the contents of the "magic letter." Nearly all drivers surveyed liked how management was treating them, but 70 percent felt dispatch lacked fairness and respect for them. Some 80 percent cited difficult night and weekend communications; at times dispatch was not answering phones or returning calls.
The driver survey took just 10 days, and also solved a mystery. SAV relies on word-of-mouth to attract new contractors, and offers a $500 "bounty" to any driver who brings in a new one who stays 90 days. But the bounty was not producing much new blood. The survey revealed that some drivers wouldn't recommend the company to others "until dispatch is fixed," as one put it.
When survey results were compiled, each owner-operator got a "we heard you loud and clear" memo outlining changes to come: better dispatch procedures and new personnel; improved night/weekend communications; and plans for the new LTL special projects division, which would offer them new opportunities.
True to the SAV culture, no one was dismissed in the dispatch overhaul, which began quickly. The people involved were moved to other positions for which they were more suited.
"SAV listened, and it's a whole different company now," says Gerald Beebe, the owner-operator who authored the magic letter. "You don't have the stress - like I've had at other companies - since we went through this." Several contractors complimented management on the changes and how fast they were made.
Thomas, the director of safety and recruiting, says, "All of a sudden I added 10 new drivers after the change in dispatch." Thomas, incidentally, got a 100 percent vote of confidence from drivers in the survey.
Meanwhile SAV management moved on the rest of its rapid reorganization plan, which by now was finely tuned and included deadlines for each element. Among its goals: Switch the sales group to team selling; integrate traditional and online marketing efforts; streamline operations procedures and fit people to their jobs; install a uniform technology platform (LoadTech) across all divisions; cross-train all employees with redundant back-ups; and set up a corporate-wide bonus plan.
The plan was implemented in just three months, and 2007 profits were good enough to pay for the new technology, reorganization and expansion. Abbott is confident the investment will pay off.
"We plan to forge ahead and be more profitable," he says, "regardless of the trucking industry's economic status."