“I was so busy making a living that I didn‘t have time to make a fortune.” -Ted Griller, veteran truck driver, who has spent 24 of his 32 years on the road with Cowan Systems and its predecessor, W.T. Cowan Inc.
It wasn‘t a great day for snapping photos - gray skies kept spitting rain at regular intervals - but it was the only one in my week that worked for a drive an hour north to visit the headquarters of Cowan Systems LLC, a regional truckload carrier based outside of Baltimore, MD, that operates primarily east of the Mississippi River, north to Maine, and south to Florida.
Cowan specializes in providing dedicated fleet service, mainly for beverage and other retail customers. Its fleet consists of 800 three-year-old and newer trucks, predominantly Volvo VN tractors (making up about 80% of the fleet), along with 450 owner-operator trucks - all pulling some 2,600 new 53-ft. lightweight plate trailers, most equipped with wide-base tires on their axles.
They'd just finished building this gorgeous new HQ building (like something straight out of Frank Lloyd Wright‘s sketchbook) but the interesting thing to me was the huge glass wall that let visitors look into the operations room, where the dispatchers and load planners plied their trade. Few companies like to show off that part of their business, yet here it was on display with pride.
It should be noted that Cowan is, in many ways, an “old dog” doing some new tricks here. Though technically founded in 1994 by Joseph W. Cowan, its origins date back over 80 years to 1924 when Joseph Cowan‘s father established W. T. Cowan, Inc., an LTL carrier providing service throughout the Mid-Atlantic states. As deregulation occurred within the trucking industry, W. T. Cowan, transformed into an irregular route truckload carrier, expanding its focus to become a specialized truckload carrier in the 1990s, leading to its “rebirth” as Cowan Systems.
Dennis Morgan, Cowan‘s COO, dropped down for a chat to follow up on a discussion we‘d had about the impact fuel prices are having on his company‘s business. Then he walked me into the operations room to meet Ted Griller, one of Cowan‘s long time drivers (and the spitting image of rock and roll star Ted Nugent, I might add.)
(Ted Griller, fueling up.)
Now, this is when you typically find out what a trucking company is really like - when its executives meet with senior drivers. An example that sticks in my mind is when I visited Celadon Group a few years back and Stephen Russell, its founder and chairman, took me into the driver‘s lounge for lunch, obviously at ease. Drivers dropped by to ask questions as we talked, on a first name basis with Russell, and a couple of new drivers asked him where they could find a supervisor to talk to. “You can talk to me,” said Russell. “And what do you do, dude?” the driver said. “I‘m the chairman - can‘t go any higher than me,” he replied nonchalantly.
The same thing occurred at Cowan. Ted and Dennis spoke on a first name basis and when Dennis felt Ted should have a new ball cap and pullover emblazoned with the company name, he didn‘t send Ted to get it - he asked one of the supervisors to do it. And I stress “asked” by the way; Dennis didn‘t order anyone about, just a simple “Would you mind getting Ted ...” and that is all it took. Gee, too bad other business executives can‘t act with such simple class.
So then Ted and I drove around the area, with me talking photos and asking him a lot of questions that he more than cheerfully answered. A former merchant marine sailor and one-time wedding photographer, Ted told me he thoroughly enjoyed being a truck driver, while recognizing just how hard it can be on families.
“It‘s hard when you are gone for two or three weeks straight - it takes a lot of understanding and patience within a family to accept that, and it‘s not always possible,” he told me. “You also must realize that, hard as this job it cane be, it‘s not the toughest. You and I could buy a truck tomorrow, then start hauling freight and earning money. Commercial fishermen, now, they can spend loads of money on a boat, equipment, and crew ... then come up completely empty. That‘s a lot riskier profession.”
Not that trucking is easy today, especially with diesel fuel at $4 and even $5 a gallon in many parts of the U.S. now. “We‘re attacking fuel from a number of different angles. Fuel surcharges are important but they are always subject to being renegotiated,” Dennis Morgan told me. “Many shippers are trying to lower them to reduce their exposure to higher freight costs - that‘s not good for anyone in trucking; neither carriers nor owner-operators do well with fuel surcharge cuts as diesel fuel continues to spike.”
(Dennis Morgan, Cowan's COO.)
He said that while not every shipper tries to cut the fuel surcharge they pay, far more are doing it than before. “So if we get a lower surcharge, we have to get higher linehaul rates, because we need to offset the high price of fuel,” Morgan noted.
Cowan is also trying to buy fuel smarter - buying bulk fuel for terminals that have filling stations and negotiating with fuel stops/truck stops to get volume discounts. “Bulk fuel purchases saves us 10 to 15 cents off the street price of fuel,” he said. “We instruct our drivers to fuel up at terminals or at certain truck stops to get the lowest price we can.”
Drivers are a key resource, Dennis explained. “We try to be as involved with the drivers on fuel economy as we can,” he said. “For example, when the new trucks with ‘07 engines came into the fleet, we had a safety meeting with our drivers to go over how they are geared completely differently. You have to shift them differently to reach the ‘sweet spot‘ for the best fuel economy. We‘re also focused on idle time reduction and are looking at slowing our trucks down.”
Cowan also spent the last several years converting its fleet from a ‘heavy‘ to a ‘light‘ spec - using aluminum wheels on its tractors, for example, and spec‘ing lighter trailers, using wide-base tires on the axles. But that ‘lightness‘ aimed at productivity improvements, not fuel economy gains as such, Dennis noted.
(The wide-base tires on Cowan's trailers helps cut down on weight significantly.)
“Our trailers could haul 8% to 10% more freight - basically hold 50,000 pounds instead of the 45,000-pound average for truckload carriers,” he said. “Basically, you ship 10 pallets and the 11th is free - what we call ‘windfall freight‘ for the customer. But while the tractor and trailer are lighter, we add in more freight, so we‘re not gaining any fuel economy benefits from that.”
Right now, Cowan is staying away from fuel hedging - seems like too much of a guessing game, to Dennis‘ eyes. “Instead we‘re trying to cut down on empty miles and out or route miles; more focused route management on our part,” he said. “We‘re testing software right now that map out the most fuel efficient routes for our trucks and overlay the lowest price diesel fuel stops over those routes: and it would stay up to date on pricing changes. It‘s reputed to save us five cents a gallon by using it but we‘re just considering it for now. We‘ve shied away from software like this in the past but with the price of fuel the way it is we‘re looking at everything.”
Dennis noted that, for the last year and the 20 years prior to it, drivers were the carrier‘s number one cost. “This year, however, it is fuel,” he said. “You never cover the entire added cost of fuel, even with surcharges: you never recoup the cost of empty or deadhead miles. The spread between what is covered and what‘s not continues to grow as the price of fuel rises ... and it eats materially into our margins. While our business volume is the same versus last year, our costs are a lot greater. On average, we get a fuel surcharge of 50 cents a mile and $1.50 average rate per mile. That‘s still not enough to pay for the higher price of fuel.”
It‘s tough, that‘s for sure, but Cowan is getting by - and by working with its drivers, saving fuel and improving productivity where they can. That‘s a good thing to see, all in spite the tough times this industry is facing.