The Roemer Report September 1986
- Leased Operator Semi Truck Insurance Quotes
- Bobtail Semi Truck Insurance Quotes
- Occupational Accident (Occ Acc) Semi Truck Insurance Quotes
- Cargo Semi Truck Insurance Quote Form
- Commercial Auto Liability Quotes
- Physical Damage Semi Truck Insurance Quotes
- Owner Operator New Authority Semi Truck Insurance Quotes
- Non-Trucking Liability Semi Truck Insurance Quotes
- Contingent Liability / Contingent Cargo
- Motor Carrier Liability
- Primary Auto Liability
STRATEGIES OF TRUCKING'S TOP PERFORMERS:
Consider the organizational toll resulting from the deregulation of trucking in 1980. ATA says there have been more than 1,500 failures, while an estimated one-third of today's outfits are losing money. Moreover, ATA suggests that another 250 truckers remain in business because of the pension fund liabilities that would incur under ERISA. Amidst what might be called a carnage, five outfits have managed to thrive. Trucking's big five now include: Yellow Freight System, Overnite Transportation, Carolina Freight, Consolidated Freightways, and Roadway Services. Industry watchers are now expecting earnings of all five to increase by 10% to 14% per year for the next five years. How have they pulled it off? Some key elements in the unique strategies of each organization are surveyed in a feature story appearing in the September 22 issue of Forbes. The common denominator in the success of each firm is its uncommon skill in handling less-than-truckload (LTL) shipments. With LTL rates now running roughly triple the level of full truckload freight, it's not hard to figure out where the profits are.
SOME COMPANY SPECIFICS: All of the above outfits collectively still haul less than 1% of the nation's truck freight. This testifies to the diversity of trucking. Common elements in all of the organizations include extensive terminal networks, very sound truck fleets and extremely good computer systems. CF spent a bundle 250 million over the past decade in tripling the size of its terminal network. The company has employed its computers and shrewd loading procedures to boost productivity enormously. It calculates that its dockworkers are now handling 3,450 pounds of freight each hour, compared with 2,400 pounds ten years ago. Carolina Freight has enjoyed some huge sales gains by being extraordinarily customer sensitive. It has a toll-free number that will give customers both pricing and tracing information. It logs an incredible 27,000 calls monthly and is capable of tracing a shipment within 60 seconds. Overnite, of course, enjoys the status of a non-union outfit. Its $16 per hour wage costs are well below the Teamster rate of $21. Moreover, the firm goes to exceptional lengths to provide its workers perks (stock options) that make organizing them very tough. Roadway is the biggest risk taker at the moment. Its year-old Roadway Package Service is taking on U.P.S. Despite all the economic heat trucking has experienced during this decade, the performance of these five outfits suggests that sound management and investments in the future still pay dividends in today's trucking.
STEEL'S MEAT GRINDER: The U.S. Steel strike remains unsettled...indeed nobody is even talking. What's happening? Management is obviously resigned to accepting a huge shakeout in the industry. As we go to press some nine steel companies repre5enting about 25% of this country's steel shipments have moved into bankruptcy or reorganization. They will probably emerge slimmer and more competitive from this process. Moreover, they are likely to topple those firms who have yet to go through the meat grinder. The newly "reconstituted" mills are now able to produce a ton of steel at 25% less than the cost of esta blished companies. The upshot? We think it's highly unlikely that the major U.S. steel companies will be able to survive in their present form.
OUR DEREGULATED BRETHREN: Truckers may recall that the airline industry served as a lead dog in the transportation deregulation movement. Well, don't look now but some experts are beginning to call for a re-regulation of the industry. It seems that the wave of mergers, emerging cartel-like conditions and mounting safety concerns are caus ing some to re-examine their original zest for deregulation. We have even heard talk about a renewed interest in regulation in the banking industry. Don't be shocked if we hear calls for greater regulation of the trucking industry in a few years. This country often evidences a manic depressive approach to public policy issues. The pendulum may well swing back in the other direction in a few years.
SOME POSITIVE LONG-TERM INSURANCE SIGNS: We have talked about the wretched financial performance of the insurance industry in recent years as a key factor behind today's insurance crunch. Well, there are now economic signs on the horizon suggesting that some easing in today's extremely "hard" insurance could be developing downstream. Second quarter results of property and casualty insurers show that the industry is slowly returning to financial health. The industry reversed a $1 billion operating loss for the second quarter of 1985, posting earnings of $1.5 billion for the same period this year. While operating results are still not at a healthy level, the trend is now in the right direction. Continuation of these earnings levels should mean a moderation in rate increases and a substantial easing of the availability of insurance.
BEHIND THE SALES SUPERSTARS: Truckers are now facing exceptional pressure to improve the quality of their sales and marketing efforts. We thought you would be interested in dissecting some of the traits of the great sales performers and review them in light of your outfit's sales approach. Top salesmen have always been more than order takers. But what makes them so…besides their output? Recent studies suggest that outstanding salesmen share other common characteristics, no matter what their product or industry.
Traditional values--such as confidence, persistence, pride and initiative--are timeless. But today's best combine these factors with a thorough understanding of the customer's situation. As virtually all markets increase in complexity, sales people must invest more time winning customer trust. Many top performers actually appear to be working for the customer, rather than for their own company. That's because today's salesmen are primarily concerned with matching their services to the prospect's precise needs.
Often this involves teaming up with others--consulting service technicians, trainers, etc.--for the exact information the customer wants. The best sellers know which "buttons to push" to expedite or enhance his services. Surveys show that customers are most impressed by: (1) a salesman's knowledge of the prospects plight, and (2) his/her ability to present sales arguments logically.
WHEN GOOD COMPANIES FACE BAD TIMES: Most motor carriers go through troubled periods. It is not the crisis that makes or breaks the company...it is how the managers face the crisis. Think caution, not calamity during bad times, suggests James O'Toole, author of Vanguard Management. In a recent article in New Management magazine he states that managers have a choice…of high moral standards and ethical practices, or a "get rich quick" mentality. And a crisis period should not be a reason to change from one course to the other. To do so only invites disaster. O'Toole cites such formerly "progres sive" companies as ARCO and Control Data Co. as examples. Had such companies resisted panic they might still be examples of excellence. But they failed in spite of their innovative ideas. Cynics may use the failure of such companies as "proof" that the new management style doesn't work. But, in fact, believes O'Toole, it was the desertion of their standards of excellence that got them into trouble. While it may be prudent during a crisis to make changes in service or promotion, the basic principles of a company should not be abandoned. Crisis management that returns to "get tough" policies during a slack period demoralizes employees and jeopardizes business relationships. The principles of great companies--(1) treating employees and business associates with respect; (2) providing a quality service; (3) using profits as a means to a better life for employees, not as an end in itself; (4) dedication to continued learning; and (5) high moral and ethical values--are still worth striving for.
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