OVERCOMING TOUGH TIMES
REEFER OPERATORS USING NEW STRATGIES TO SUCCEED
It was the best times, it was the worst of times,” wrote Charles Dickens in his classic novel A Tale of Two Cities. And so it is with the refrigerated trucking business today. Sure, tonnage is down, some shippers have closed their doors, others are flirting with bankruptcy, and many are dragging their feet on bill payments. The inevitable result is that several hundred trucking companies have gone out of business, but a trio of skilled reefer operators reminds us that the glass is not just half empty, it’s also half full.
Take Willis Shaw Express, for example, a 48pstate truckload carrier based in Arkansas with a fleet of more than 1,000 refrigerated units. Willis Shaw President Chris Kozak notes that declines in the temperature-controlled sector are less than half of what they are on the dry side. At the same time, he says, she is seeing many more bid packages come in, with just about all shippers looking for lower rates and more than a few who are trying to improve on contracts that are still in force.
Despite the pressure on rates, all is not gloomy. According to Kozak, lower fuel rates represent a major piece of good fortune right now, with companies like his adhering to the fuel conservation practices they developed last year when prices seemed to be marching relentlessly toward $5 per gallon. Driver availability is another bright spot today, with more skilled drivers to call on than at any time in the past 20 years. Kozak also credits the new hours-of-service rules with making the industry safer and more efficient, and says that more carriers are partnering with the railroads. “Notwithstanding the recession,” says Kozak, “most of these changes represent precious steps in the right direction.”
Tom Brennan, chief operating officer of New Jersey-based Hall’s Warehouse Corporation and Hall’s Fast Motor Freight, agrees. In addition to cutting non-essential costs, he is working hard to find the best possible drivers, to strengthen staff, to upgrade equipment, and to use this slow period to invest in the company in other ways. Halls actually raised its contribution to the employee 401(k) plan, but Brennan is especially proud of a new employee benefit program that brings a wellness coach into the company for 40 hours each wee,. The wellness coach is teaching workers about smoking hazards, handing out smoking cessation patches, pushing exercise programs, teaching good nutrition practices, and watching blood pressures, all with the goal of changing habits and catching small problems before they become real health risks. Brennan notes that drivers are responding more enthusiastically than could ever have been imagined, and that employee attitudes are higher than at any time in the past 10 years.
“Some of these initiatives may be difficult right now,” says Brennan, “but they’ll pay off over the long run. The companies that survive will come out stronger than ever before.”
Mike Bunnel, senior vice president for corporate sales and marketing at Utah-based C.R. England, also sees the pain and the promise of the economic downturn. As an executive of the largest asset-based refrigeration carrier in North America, it is clear that he gets no pleasure in seeing smaller and less well-capitalized competitors forced to exit the industry. “Fortunately, what sets us apart,” says Bunnel, “is the diversity of our business. As a full service provider with one-way transportation, dedicated transportation, contract carriage, brokerage, and other services, we have a great deal of flexibility in how we deploy our assets.” As part of that diversification effort, England is expanding internationally, with an emphasis on Mexico. Until the recent imposition of trade barriers by the Government of Mexico, in response to US action to curb Mexico truck access to the US, England’s Mexican traffic was growing very rapidly. Now, with the downturn and the decline in Mexican traffic, Bunnel is looking to England Logistics and other business units to offset the slump in these areas.
“The other good thing,” says Bunnel, “is that the economy has forced us to be better managers, while we are trying to generate more revenues, we are also emphasizing technology, driver production, driver safety, and lower unpaid miles. We are actually better at managing the business now than we have ever been.”
In the midst of the worst international economic crisis in more than a half-century, the food business has again shown itself to be one of the most recession-resistant industries around. The refrigerated trucking business has shared in this good fortune. Still, reefer operators that don’t adopt strategies for dealing with a smaller and more beleaguered food industry may well discover that the reefer industry is hardly immune to Darwinian concepts of “survival of the fittest.”