Cross-border truckload carrier Celadon Group is working hard at capacity growth: It bought two regional carriers in 2002 and 2003, and part of a third this year. Stephen Russell, chairman and CEO, said this a part of an industry trend in which smaller players are leaving the market for good and are not being replaced.
“The analogy I like to use is the one of the melting snow and mountain streams that feed the big river,” he explained in an interview with FLEET OWNER‥ “In the past, you had many… small- to medium-size carriers that fed their capacity into the overall capacity available from the trucking industry. This is the big river,” he explained. “You may have had small carriers that dried up through bankruptcy or by selling out, but you always had new ones forming.”
Today, he said, those “small streams” of small- to medium-sized carriers are drying up for good and are not being replaced. This lowers the overall trucking capacity available from the big river that is the trucking industry.
“It's much harder for the have-nots to become haves in this industry now,” Russell added. “For example, I started this company almost 20 years ago with $40,000 in the bank and 50 trucks. Within three years, I had 600 trucks. You just can't do that anymore.”
Celadon is coping with these changes by focusing on finding high-quality safe drivers, largely by buying up smaller carriers. Buying the trucks, trailers and customer base of Burlington Motor Carriers in 2002, Highway Express in 2003 and the dry van operations of CX Roberson earlier this year wasn't nearly as important, in some respects, as gaining the chance to recruit the drivers at those operations.
“The drivers were almost more valuable than the assets,” he said. “We attribute much of our success to our driver-focused culture: recruiting safe and experienced drivers, providing the opportunity to drive new equipment, and offering competitive compensation and lifestyle programs. We believe the benefits of our culture show in driver turnover of less than 80% for 2004 compared with an industry average of 121%.”
“Low turnover and a strong safety program are important corporate and social goals, but we also believe they help improve our bottom line by reducing costs, contributing to keeping our trucks seated with drivers, lowering insurance and claims costs, and improving customer service,” Russell said.