"While I take inspiration from the past,
like most Americans, I live for the future."
As I write this column, we are between Christmas and New Year's holidays. This is a good time of year to reflect back on 2010 and to plan for 2011. Trucking in 2010 emerged from the worst and longest recession (2006 to 2009) that most anyone can remember. 2010 was a year of recovery. 2011 will be even better.
What did we learn from reflecting on the past year?
We learned the value of relationships. We know intuitively, but it holds especially true during tough times, that it's our people that are the key ingredient to our success. I was so impressed with how our people worked together, worked harder and persevered during the last 12 months, and it's during times like this that we come to appreciate the hard work and dedication of our team.
At the risk of sounding brutally honest, we also learned that not all customers are the same. We now know which customers will treat us fairly and which are likely to take advantage us when the opportunity presents itself. We learned that some customers appreciate the service we provide and will always look for the win/win propositions, while others will cut our rates as rapidly as they can. For these customers, price is the only differentiator. From them we heard things like, "We like your service, but you need to get below this rate." We learned that many of our competitors are all too willing to set prices below costs just to keep their trucks running. Deservedly, some of them are no longer in business.
We also learned which of our suppliers see themselves as our partners, during the good times and the bad, and which are out for themselves. While it's true that during difficult times, when trucking companies are hurting, suppliers are generally hurting even more, fortunately many of our suppliers were willing to work closely with us during these down times.
Lastly, we learned that to survive a recession, a trucking company needs to be well capitalized and well managed, that it's important to have a good depth of customers in our major markets and to keep a cost conscious mindset during the good times.
What does 2011 hold in store?
We are in the middle of an onslaught of new Federal regulations: CSA, new Hours of Service regulations, EOBRs, cell phone regulations, and more restrictive rules on driver health. We've planned for these and we know we can get ahead of any changes the government decides to put in our path. While other carriers might struggle with their CSA score, ACT has no deficiencies in any area. Why? Because instead of giving into fear - fear of change, fear of the unknown - we worked with our drivers to get things in order before most carriers were even were aware of what was coming. This gives ACT, and its drivers, a big competitive advantage. And we'll do the same when other proposed new rules come our way.
The good thing about some of the new rules is that they will level the playing field. ACT has always been a "by the book" carrier, but we compete with many who aren't - who violate the rules. As the rules have a direct impact on productivity, violating them allowed these carriers to cut their rates. With CSA and EOBRs becoming the norm, these carriers will be forced to comply or be shut down by the FMCSA. They'll be forced to start enjoying the same costs we've been incurring for years by doing things right.
We recognize that the trucking industry is once again experiencing a driver shortage that will get progressively worse. ACT has always hired the most qualified drivers. What has changed is that others are starting to copy us. CSA will make it difficult for many in the driver population to find employment.
We believe the US economy will continue to make a slow rebound. However, trucking will do much better than the general economy, because so many carriers succumbed to below cost pricing and went out of business. There are many other "zombie truckers" out there which will not make it to the end of 2011. Consistent Profitability will be the focus. We will continue to zero in on the basic blocking and tackling of one way freight: Seated trucks, utilization, rate per mile, and empty miles.
We believe that a driver's time in valuable and shouldn't be wasted. As of the writing of this article about 1/3 of our drivers have volunteered for EOBRs and like it. We notice by tracking numbers each week that they get as many miles as drivers without EOBRs. But we also notice from driver efficiency reports it generates that a large percentage of their time is wasted. We will get visibility into this, so that we can determine the cause. With all the rules coming down the pike it will not be acceptable in the future to have a driver's time wasted at the docks. Our sales force will be targeting "driver friendly" freight.
We recently rolled out our 2011-2013 Strategic Plan and I believe the swing from over capacity to under capacity will allow us to accomplish many great things. As before, when the next recession comes (which happens every 5 to 7 years) the ACT Team will be ready.
Wishing you a Happy and Prosperous New Year! -Tom