In last week’s blog, I looked at a number of cost reduction programs that are being implemented by some carriers to survive the current economic downturn. These include by-passing “hub and spoke” terminals and re-routing freight directly to “corridor hubs,” combining or eliminating certain unprofitable operations and creating a new class of “utility” employee who (through job enrichment and increased union flexibility) will undertake an array of functions previously performed by several individual classes of workers.

There are two groups that are often most affected by cost reduction programs - - employees and customers. In this post, I would like to share some thoughts on how each of these groups should be managed.

In the March 3 issue of Business Week, Jack and Suzy Welch make the point that the cost reductions made by a (trucking) company should not appear at the customer’s door. During tough times (of which the current “freight recession” would surely qualify), companies should cut excess fat. The Welch’s argue that during good times, companies, including motor carriers “bulk up.” They put on a layer of fat that very quickly begins to be perceived as muscle. When the inevitable cutbacks are required, company management is often in denial and there is an outcry over removing a layer of fat that was not in existence even a short time ago. This phenomenon is something that I have personally observed on a number of occasions in trucking companies that I have worked for. Jack and Suzy refer to it as “Recovery Pound Syndrome.”

They make the point that one of the tests of the leader is to look for and find the “extra pounds”. While a certain amount of trimming is required, it should not manifest itself in sloppy freight handling, degraded transit times and/or lower quality or non-existent customer service. Your valued customers will quickly recognize that their freight is arriving a day late, that their usual customer service person is no longer there and that your company is taking extra time to respond to their needs. With customer loyalty being such a valuable commodity, this is not a time to place it in jeopardy by cutting corners that are visible to customers. Jack and Suzy’s encourage companies to “stay focused on your customers. You may be on a diet but they don’t need to know it.”

During these difficult times, many employees are looking over their shoulders, wondering if they are the next ones to receive their pink slips. Employee morale is critical. Not only is it mandatory to maintain Best Practices, it is also essential to have enough staff in place to provide these Best Practices. Your employees wish to perform at a high level. If customer service levels cannot be maintained due to staff cuts, this will undermine your company’s performance, undermine customer confidence and ultimately result in revenue erosion.

In addition, it is important to act responsibly and decisively with respect to staff cuts. As stated earlier, as business weakens, it is often necessary to adjust staffing levels to freight volumes. Transport companies throughout the industry are making the necessary adjustments to survive. The point is that these moves should be well planned and executed in one wave rather than multiple waves. If the cuts are made over a series of weeks or months, this will serve to unnerve your employees and encourage the good ones (out of fear) to start looking. Having your employees huddling around the water cooler discussing who they think is next to go will create a “downward spiral” that may ultimately become a “self-fulfilling prophesy.”

The best policy is honesty. If full time work cannot be maintained for everyone, reduced work hours and job sharing are worth considering. The freight recession will come to an end and your long service, high quality employees will be much in demand. Losing good employees through poor management practices may come back to haunt you.

During tough times, it is helpful for the leader to engage in a zero-based budgeting exercise. This involves a reassessment of every project, person and terminal with a view to re-establishing a set of priorities that are most likely to sustain and enhance the company’s bottom line. This may result in some dramatic changes (e.g. outsourcing certain non-core tasks to a third party, combining operations, no longer providing service in non-profitable areas, de-marketing unprofitable accounts etc.). Jack and Suzy make the point that the leader should resist the temptation to provide an “across the board” cut. While this may be more politically acceptable, it may not be in the best interests of the company.

Companies should also place more responsibility and accountability on their sales teams. It is difficult to grow a business successfully solely on the back of cost reductions. It is also difficult to increase revenues by cutting sales staff. This is the time for the company sales leaders and sales team to step up and deliver. The pre-recession list of projects looks very different when viewed through the lens of which ones will have the most immediate impact on top line growth or on short-term cost reduction.

It is also not the time for reckless rate cutting. Taking on additional business where the revenues do not even cover the variable costs is only going to move you closer to financial ruin. This is the time to know your costs and contribution margins and focus on business that will add rather subtract contribution dollars. These are difficult times. By focusing on your company’s bottom line and treating your employees and customers with respect, you will ensure your company is well positioned to face the economic rebound which may be only a few months away.

The world’s three largest shipping companies have launched a set of shared services between Taiwan, Hong Kong, China, Japan, Korea and the United States west coast. In a February 29 press release, the three major shipping lines, MSC Mediterranean Shipping Company, Maersk Line and CMA-CGM indicated that they have “rationalized” their shipping services in response to the “global trade situation.” The new services will take effect in April 2008.

The first service called Eagle Express or Yang Tse Rotation, will cover Central China and South China, calling on Hong Kong, Yantian, Kachsiung, Shanghai, Quindao and Los Angeles.

The second service, the New Orient Express or Bohai Rotation, will cover Central and North China, calling at Dalian, Tianjin, Xingang, Shanghai, Ningbo, Long Beach and Oakland, California. The new services will deploy ten 8,000 TEU vessels (five on each leg) creating a weekly direct service between China and the United States. Four vessels will be operated by Maersk Lines, four vessels by MSC Mediterranean Shipping Company and two vessels by CMA-CGM.

“Given the rising cost of bunker and the distances traveled, a post-Panamax level of efficiency and cost base is need to the trans-Pacific” stated Robert Kledal, VP or Route Management for Maersk. “The 8,000 TEU vessels on the two largest loops of this new network make this an efficient, cost-effective, and environmentally friendly solution for our customers.”

The third service, called the Sunrise, in which MSC Mediterranean Shipping Company and CMA-CGM will slot charter space on Maersk Line’s service, will cover ports in Korea and Japan (Kwangyang, Busan, Kobe, Shimizu, Nagoya, Yokohama) en route to Los Angeles and Oakland. This service will be operated by five 4,000 TEU vessels.

The three companies are seeking to provide consistent weekly departures on these important trade routes, extensive port coverage and shorter transit times while reducing operating costs and improving profits.

Over the past 15 years there have been a number of technology-based innovations that have profoundly effected how we perform our jobs. We have seen personal computers transformed into laptops and the cell phone and Palm Pilot evolve into all purpose devices such as the Blackberry. We have witnessed the internet explosion and with it the ability to search for almost anything and buy almost anything at any time. In addition e-mail communication and text messaging have had a dramatic effect on how we keep in touch with one another. It is incredible to think that all of these changes have taken place within such a relatively short time frame.

More recently, we are witnessing another trend that is apparently on the verge of becoming as much a part of our everyday business lives as Outlook, Google and eBay, namely social networking via the internet. For business professionals, including logistics and transportation professionals, the social network of choice, at this time, appears to be LinkedIn. Is there anyone out there that has not been invited to become part of a colleague’s LinkedIn network?

What is the big deal about LinkedIn? Let’s start by looking at what LinkedIn is all about and what you can do with it. To join LinkedIn, you simply sign up, at no initial cost. There are costs down the road if you wish to build your network rapidly (e.g. invite more than 5 people at a time and use some of its more advanced features).

You create a profile telling the world who you, where you work and have worked in the past, where you went to school and so on. You then choose how you wish to utilize its capabilities. Are you seeking a new job, a consulting contract or do you have other objectives? You can pick as many as you like from a list provided.

By telling the world that you went to school at Michigan State University from 1980 to 1984 and worked for Roadway Express from 1995 – 1997, LinkedIn uses this information to search for and identify former classmates and business associates that are already in the “network” (with whom you may wish to reconnect).

From there you are in a position to invite colleagues and friends to join your network and to receive invitations from other folks to join their networks. This is the first major step in using LinkedIn, creating your network of associates.

At this point you may be saying, well so what? In fact some of the folks with whom I spoke in preparing this blog said to me, “LinkedIn is a waste of time.” In fact, there are a fair number of folks who feel this way. For the casual user of LinkedIn, this is a very understandable reaction.

To appreciate the benefits of LinkedIn, this is where one needs to understand its’ value proposition. This appears to be a classic case of the more you put in, the more you get out of it. If you are looking at using LinkedIn solely to scan the networks of your colleagues and then “pick off” the people that might be potential business prospects, you are probably going to be disappointed. You can phone these folks or spam them but you will probably be “blown out of the water.”

That is not to say that you cannot use LinkedIn for business development purposes. Rather, the etiquette of LinkedIn appears to be comparable to what one would experience by joining a local club or association. LinkedIn is structured to allow you to do this in a more civilized manner. First, to enhance your stature and establish your expertise, you can obtain recommendations from customers and colleagues. Anyone looking at your profile can see these recommendations. Second, you can trigger the LinkedIn “invitation” service to obtain a referral. So yes, you can do some business development work on LinkedIn if you do it professionally and discretely.

If you have a question to which you would like an answer, you can send it out to some or all of your network or anyone else you designate (that is registered on the network). If you are looking for a job, you will see the job postings for the folks that are in your network or are in one of your colleagues’ networks. This is a nifty feature if you have a large network and are actively seeking a career change. In fact this is networking in the truest sense of the term.
In addition, you can identify professionals in a range of service areas (e.g. accountant, lawyer, recruiter etc.). At the same time, you can recommend professionals that you like and respect.

The search feature allows you to enter a name of a colleague with whom you worked in the past but have lost contact. Once you enter a name, everyone with that name pops up. If this person worked for Roadway Express, but did not enter this information in his profile, the name will not appear when you enter Roadway Express in your profile. However, if they are registered on LinkedIn, their name will appear when you do a search.

In essence, LinkedIn helps you build and focus on your personal network and provides a tool to communicate with them. It lets you build and monitor the growth in the network of your colleagues. It facilitates the identification of prospects and resources in your network’s networks. At the same time, these folks can see what you are up to. This information appears on a daily basis.

While some of this may or may not be of benefit to you, one of the less understood features of LinkedIn is the message you send to people whom you wish to invite into your LinkedIn network. By inviting someone into your network, you are telling them that they are important to you and that you are there to help them.

There are other business networking tools out there. For example, Deposco is a (www.deposco.com) is a social networking site exclusively for supply chain professionals. Facebook (www.facebook.com) caters to a very different market. New developments (e.g. creating a supply chain network within LinkedIn) are under way. LinkedIn is gaining traction on an ongoing basis. This is obvious from the growth in the number of people in so many of my network’s contacts.

Clearly LinkedIn is a “work in progress.” I am still a neophyte at using it and I am learning more every day. To find out more about LinkedIn go to www.linkedin.com. It is probably time for you to learn how to use this tool to build your network and your business. This may prove to be another in the series of internet related changes that will have a profound effect on business professionals for many years to come. Since I, along with many readers of this blog are trying to learn more about internet-based social networking, please respond to this blog and share your experiences with LinkedIn or other services of this nature.

On a day to day basis, I meet with and speak to executives of trucking companies throughout North America. Every trucking company is dealing with the same issues of high fuel costs, the “freight recession” and the other challenges facing the industry at this time. What is striking is that some companies are actually thriving in these difficult times, growing their top and bottom lines, sometimes in double digits. Others seem powerless to defend themselves.

They recount their tale of woe, talking about the number of pieces of equipment being parked by one competitor and the poor financial results of another. They mention the facts and rumors as almost a source of comfort. It is alright if we “go down the tubes” since everyone else around us seems to be in the same boat.

What I notice is the CEO’s of “losing” companies speak in a different way from the CEO’s of “winning” companies. They use different language and look at the same world with a very different perspective.

When you ask a “losing” CEO about challenges, they talk about fuel, the dollar and in the case of Canada, the disappearance of southbound freight and their inability to create profitable round trips. They state that they “can’t do” this and “don’t want to do” that. They cannot enter new markets since they cannot find backhaul freight. They cannot expand their value position since they don’t want to partner with companies they don’t know or trust. They cannot find new business. Some think they can shrink their way to success. In fact, when I asked one CEO where his company will be in three years, his response was “we will be out of business.” How’s that for a self fulfilling prophesy?

The “winning “CEO’s see the world differently. They use words like “are doing” this and “can do” that. They talk about taking market share from failing or disappearing carriers, expanding their existing markets, and purchasing companies at favourable earnings multiples. They talk about growth. They inspire their teams with their positive energy.

This begs the question, is this positive energy foolish bravado or is it the confidence in knowing that you are on a path to success? Can they really lead their teams to the “promised land” during these difficult times? The answer is yes they can and yes that is what they are doing. Behind their positive energy are a sound business plan and a solid, motivated, well directed team. These companies know their niches. They are fighting hard to dominate their niches and differentiate themselves with transportation and non-transportation related initiatives.

They are looking at the offence and defense of their competitors. They are devising solutions to put them out of their misery. They are growing their businesses by adding value, building their existing beachheads, adding new ones, thinking out of the box. They are moving positively and aggressively while others are hunkering down, cowering, waiting for their companies to fail.

Clearly, it is all about leadership. Is your trucking company going out of business because of you? Are you so married to old paradigms that you cannot or will not reach out for help, cannot or will not listen to the ideas of your employees, customers and others? If you cannot do it, either on your own or with some new leaders, isn’t it time you reached out for help?

To turn the ship around, invite your leadership team into the boardroom and complete this exercise. Prepare a list of the major opportunities and challengers facing your company at the present time. Rank them in terms of bottom line impact if you could overcome your challenges and turn your opportunities into successes. Once this exercise has been completed, go through the exercise of identifying everything you could do to overcome these challenges. Develop action plans, timelines, and accountabilities and make it happen. Commit to a “yes we can” and “yes we will” attitude and you are on your way. Now, go do them. Good luck and let me know how you make out.

Canada is the world’s leading forest products exporting nation. In 2005 the industry had sales of C$84 billion, accounted for 60% of Canada’s merchandise trade surplus and three percent of total GDP. The industry employs 900,000 people, directly and indirectly. Due to economic challenges, it has been forced to shut down 50 mills in the past year.

Total U.S. exports of paper and paperboard reached almost 10.1 million metric tons in the first 11 months of calendar 2007, up 14.5% over the comparable prior year according to figures released by the American Forest & Paper Association. For the same period, the dollar value of these exports rose a full 15% to nearly $8.18 billion U.S.

To understand the differences between the two countries, you don’t have to look much further than the impact of the change in the value of their currencies. The 60% appreciation in the value of the Canadian dollar against the U.S. dollar over the past 18 months has hit the Canadian forest products sector very hard. Compounding the problem have been low price levels and a difficult ocean shipping environment. A lack of space, a shortage of containers, constant rate changes, and the fall-out from big carrier mergers over the past year have had an impact.

Forest products constitute Canada’s third largest export to the United States and Europe. The industry is driving efforts to penetrate markets in the Asia-Pacific region and is achieving some success. While Canadian newsprint exports to the United States fell by 13.2% in 2007, overseas shipments increased by 5.4%. Forest products are currently Canada’s largest export to India, China and Japan and there is growing penetration in Korea.

The weakness in the U.S. dollar has helped spur exports of paper products from the United States. According to the American Forest & Paper Association, the leading destination for paper and paperboard exports is Canada, with increases of 3.8 and 4.3% respectively over the past year. Mexico, ranked second, saw a modest 2% gain. Much larger increases were seen in the number three market, Western Europe with a gain of 32.2%.

To cope with higher energy and transportation costs, manufacturers in both countries are refining their supply chain and transportation strategies. Eastern Canadian manufacturers use the ports of Montreal and Halifax and at times Norfolk when the shipping lines have offered space. The rates of the shipping lines are being carefully scrutinized to determine where there may be favourable backhaul rate opportunities.

In the United States, a number of strategies are being employed to mitigate transportation costs. Production plans are being adjusted to ensure multiple grades of paper are manufactured and that the right mill is selected to serve each customer. Others have adopted strategies such as switching to barge or truck service to help reduce the cost of moving pulp. Some companies are using rail, rather than truck on short distances, to move freight directly to the ports.

Of course, one of the challenges resulting from an increase in exports brought on by a cheaper U.S. dollar is a decline in imports. This has changed the balance of import versus empty containers and helped make it more of a carriers’ rather than shippers’ market. With the bulk shipping market at an all time high, this is driving more freight into ocean containers. Container pools are gaining increased use to ensure there is an adequate supply of export containers.

It should be noted that paper producers in other countries are not standing still. With labour, energy and fiber costs that are below North American levels, Brazil, Russia, Indonesia, China and Eastern Europe are moving aggressively to capture market share. Some of these countries face less pressure to address social and environmental issues. In the case of newsprint, younger people are receiving more of their news from the internet rather than newspapers, resulting in annual erosion is domestic newsprint sales. The global market for paper and paperboard products will continue to evolve and North American producers will have to continue to develop innovative marketing, production and distribution strategies to grow their businesses.

Here is a link to a video clip from the Canadian news broadcast, The National, that appears daily on CBC television. It shows Jody Orr, a Challenger Motor Freight driver, taking a load from their Cambdridge, Ontario terminal to the border at Detroit, Michigan. This driver speaks in a very articulate way about the challenges and frustrations of trying to cross the busiest border point in North America. The clip also contains an interview with a shipper, Casco, that highlights some of the issues they are facing in light of the tightened security and additional processes brought on by 9/11. It is definetly worth a watch. When you open the clip, move the cursor ahead to 37 minutes and 21 seconds, the starting point of this piece. Since the news broadcast changes daily, make sure to dial in somtime on Wednesday, March 19. It is definitely worth a watch. Enter this address into your browser.

http://www.cbc.ca/national/latestbroadcast.html

Yesterday Senator Barrack Obama gave a speech on race relations that was astonishing in its eloquence and in what it tells us about his leadership skills. It contains a number of lessons for executives in the Transportation and Logistics industries. I would like to share these lessons with the readers of this blog.

Senator Obama was facing a major crisis in his bid for the leadership of the Democratic Party and ultimately for President of the United States. The crisis was brought on by video clips taken of his Pastor making inflammatory remarks to his congregation about race relations in the United States.

Senator Obama had several options. He could ignore the remarks which were having a derogatory impact on his campaign, he could distance himself from the Pastor or he could face up to the crisis and speak to the issue of race relations in America which he had not previously addressed before as the centerpiece of a major speech. The fact that he chose the latter approach says a great deal about him as a leader.

In this remarkably crafted speech, he took the risk of communicating his vision of America as it pertains to race relations, his vision of hope and change and collaboration that he has championed since the beginning. He did not throw his longtime Pastor “under the bus” as so many leaders do when they face a crisis. In fact, he presented a very balanced view of Reverend Wright, a man who officiated at his wedding, baptized his children and shaped his life. He highlighted that the Pastor is from another generation and still carries the frustrations of that era brought on by being raised as an African American in the United States. While Senator Obama stated that he disagreed with some of the Pastor’s views, he supported his spiritual leader during this crisis. This was a brave thing to do.

Senator Obama demonstrated a number of excellent leadership qualities in this speech. He has a vision that he is able to communicate with great eloquence, passion and charisma. He shared his vision of a better society, a society that he hopes to transform with his skills as a leader, motivator and collaborator. He takes risks and will do the right thing when he is faced with a difficult situation, not take the easy way out. He is loyal to the people that have helped shape his life. He is brave to speak out on a topic that is so emotionally charged at this pivotal point in his run for his party’s nomination. He is also inspiring.

Quite frankly, I wish we had a leader like Senator Obama running our government in Canada and running many of the trucking companies in North America. I wish him the best of luck. He is a remarkable person and a remarkable leader.

The increases in the value of the Canadian dollar and the decline in the American economy have resulted in a major contraction in southbound freight from Canada to the United States. For Canadian trucking companies, heightened border security has discouraged drivers from seeking positions with trucking companies that require them to cross the border.

What should I do now? This is a question that I hear a great deal these days from many Canadian motor carrier executives as they seek to refocus their companies’ strategies away from the cross-border freight market to other segments. For companies that have built their businesses around the U.S. market, this is a significant challenge. It is forcing them out of their “comfort zone”, away from their “sweet spot” and into new areas that were undeveloped or underdeveloped in the past.

While many companies are seeking to refocus their assets and personnel, they are faced with a broad spectrum of opportunities. Should we increase our business to Quebec, Atlantic Canada or Western Canada? Should we provide both LTL and truckload services? Should we enter new markets such as temperature control or heavy haul? Which opportunities represent the best potential for revenue and profit growth to us?

This also begs a series of other questions. Should we look at exiting those markets where we cannot create profitable round trip movements? Should we be parking or selling some equipment? Should we bolster our sales team or in the case of some companies, hire some sales reps to help develop markets for which we have no relationships or customer exposure? Are there other opportunities to increase profitability (e.g. utilize intermodal equipment on lanes where it is difficult to find backhaul), deploy certain assets (e.g. short term warehousing service) to create new sources of revenue, form strategic alliances or seek out acquisitions that may allow entry into new markets?

Many companies don’t seem to have the tools and discipline to address these opportunities in a systematic way. They cannot develop a Business Plan that capitalizes on the company’s core competencies while adding new capabilities. One such tool that has been around a decade and is still not used by some Canadian trucking companies is a Strategy Map and Balanced Scorecard.

I first got exposed to these tools almost a decade ago. The trucking company with whom I worked brought in a team of consultants to help us develop a Balanced Scorecard. The concept of a Balanced Scorecard made very good sense. The intent was to develop a series of measurements for the key elements of the business – dock operations, customer service, sales etc. You then align the work of your people around these measurements to ensure you achieve your desired objectives. We went through all of the key functions we performed and then came up with a set of metrics to measure these activities.

While this was an interesting exercise, it was doomed from the start for two reasons. First, the Balanced Scorecard was developed independent of the company’s core strategies. It was a set of measurements that were relevant and useful but they were not tied directly to the company’s Business Plan. Second, when we walked out of the workshop, we all went back to using the KPI’s that we had already put in place. In other words, we had two sets of metrics, one that we used to manage the business and another than were developed as part of this exercise.

For the past number of years, several companies have been working with a Strategy Map and Balanced Scorecard. They are the backbone of their business and drive everything their companies do. A Strategy Map addresses the issue of how your company creates value for its customers and how it differentiates itself from its competitors, a problem being faced by the many “me two” companies in the trucking industry today. The so-called “value” is created through a company’s internal processes. Effective and aligned processes determine how value gets created and sustained. Companies must focus on the critical few internal processes that deliver the differentiating value proposition and that are most critical for enhancing productivity and maintaining the organization’s franchise to operate.

In their book, “Strategy Maps”, Robert Kaplan and David Norton outline how a Strategy Map identifies the themes, processes and objectives of the company’s core strategies. The beauty of a Strategy Map is, as the name implies, it is a visual representation of the company’s core strategies and the linkages between the various elements of strategy. It allows a company to see how the various components of the company work together or don’t work together to create its “differentiated value proposition.”

The Balanced Scorecard contains the measurements, targets, initiatives and budgets associated with each of the core strategies. As the authors point out, the targets will not be achieved just because they are identified. They argue that “organizations must launch a set of action programs that will enable the targets for all the measure to be achieved. The organization must supply the scarce resources – people, funding and capacity – for each action program” or strategic initiative.

Developing a Strategy Map and Balanced Scorecard is not a “one day wonder.” In fact, if you are in a rush to develop these tools and you do not have buy-in from the various leaders on your team, they will probably be ineffective or counterproductive. I would suggest that you employ an outside resource to at least facilitate the development of your first Strategy Map and Balanced Scorecard.

If done properly, they will drive what you do and what everyone else does in your business, they will answer the question of what you do best, where you want to take your business and “what should I do now.” They will provide your organization with a competitive advantage in this very challenging environment we are facing in 2008.

During these recessionary times, carriers are looking for new sources of revenue to boost their top and bottom lines. For some trucking companies this means hiring more sales staff and/or entering new markets. Sometimes the most obvious source of revenue is overlooked. Many carriers have assets and resources that can be deployed or redeployed in new ways to drive revenue growth.

Once such source of revenue is daytime cross-docking. Many LTL carriers find their docks quite empty by early to mid-morning after their delivery trucks have been dispatched to perform their deliveries. For shippers that cannot or do not wish to perform these services, this allows the carrier to provide added value and solidifies the relationship.

This service can consist of stuffing or de-stuffing containers or performing specific distribution services for the freight that arrives on their dock. Instead of reloading the freight and sending it to the customer, the carrier sorts the freight on their dock and trans-ships it directly to the customer’s customer or retailer. The benefits to the shipper are less freight handling which can translate into reduced damage and greater speed to market. One carrier recently reported that cross-dock services now generate thirty percent of their revenues.

It should be pointed out that those carriers wishing to build their daytime cross-dock business may have to make an investment in either bar-code scanning technology or some type of warehouse tracking system to ensure that the client can perform an effective track and trace function. For some carriers the benefits clearly outweigh the minimal cost of entry as daytime cross-docking can provide a new revenue stream and offer added value to its customers.

Another low cost method of increasing revenues is through marketing or interline partnerships. The benefit for regional carriers is that it allows them to gain market share without investing in terminals, trucks and personnel in new markets. This permits a carrier to offer more added value. Rather than turning the customer away to a super-regional or national carrier, the regional carrier can provide a “through service” from one region of the country to another.

One such interline partnership that is just being launched is called the “Reliance Network”. Six U.S. and Canadian regional less-than-truckload carriers have formed a marketing and operational alliance to provide service to and from their respective areas. The six companies in the Reliance Network are Averitt Express (that covers the South and Southeast), DATS Trucking (that covers the West), Lakeville Motor Express (that covers the Midwest), Land Air Express (that services New York and New England), Pitt Ohio (that has coverage of the mid-Atlantic and Great Lakes region) and two divisions of TransForce Income Fund, Canadian Freightways and Epic Express. The latter are really two entities that form part of the same company with Canadian Freightways serving Western Canada and Epic Express serving Eastern Canada.

The intent of the partnership is to pursue regional shippers that have the occasional longhaul or interregional shipments as well as shippers that move predominantly longhaul freight. While regional freight was seen as the engine of growth a few years ago, longhaul freight is now growing at a faster pace. The six carriers are expecting to generate $30 million in new revenue, directly as a result of this partnership. They are seeking more freight on their trucks and more freight through their networks at a time when the economy has hit a rough patch.

During my twenty-six years in the transportation industry, I cannot recall a time when I have heard more “moaning and groaning” from carriers. There is no doubt that this is one of the most difficult times that the industry has ever faced. In fact, in the current (April) issue of Truck News, The President of the Ontario Trucking Alliance and CEO of the Canadian Trucking Alliance, David Bradley, encourages carriers to “think before you act”.

In his article, Mr. Bradley comments on what he calls the “mind-boggling” rate cuts that some carriers are offering shippers which he attributes to “desperation”, “a complete lack of business sense” and a “disregard for their obligations and/or people they share the road with”. He highlights the fact that by taking these actions, they “are putting their businesses at great risk and many will not likely survive”.

There are no easy answers to the challenges being faced by the industry. As Mr. Bradley points out, some of problems are structural (e.g. decline in the U.S. economy, increased cost of fuel, American sub-prime housing crisis) and there is nothing any Canadian or American carrier can do about them.

However, as I speak with carriers in the industry, there are some things that they can do to help themselves. Here are some thoughts.

1. Hang on to your Good Sales People

There is no doubt that some sales people are more productive than others. Do you know who your good “hunters” are? Do you have the proper measurement systems in place to determine who is really working and who is really producing for your company? Does your company’s compensation program motivate them to produce? Is this the time to be cutting sales people when business is so soft and additional revenue is so important?

2. Add Natural Business Extensions

Every trucking company that is still in business has some customers. What other business do these customers have? Can you obtain some day time cross-docking business? Can you handle some of the loads or shipments that don’t move through on your equipment through a brokerage division? Can you partner with other carriers that will handle your overflow business or shipments in areas that don’t work for you and provide you with shipments in lanes that don’t work for them?

3. Get some Help/Try some New Things

Some companies and people simply run out of ideas or courage or leadership. They sit there and fret about how bad things are. Get some help. Add some new blood. Shake things up. Many companies go stale. Ask your customers what they need and what they are not getting today. Find a way to provide this service for them.

4. Add Value

Trying to compete solely on price is a recipe for disaster, particularly in this era. Don’t give your customers a reason to switch. Provide added value, whether it is excellent customer service or very reliable on-time service. Yes, may shippers seem to be looking solely at price. Yes, some shippers are putting the same freight out for bid two or three times in a year. But many shippers do recognize the value of truly good carriers.

5. Don’t Assume other Carriers Don’t Know What They are Doing

One of the laments I have heard throughout my career in this industry is that a trucking company’s competitors don’t know what they are doing. In fact, this is one of the arguments in David Bradley’s article. This may be true in some cases but it is often false. Some carriers are able to price low on some specific lanes because they have good paying head haul traffic. They need the backhaul and can price it lower than some other carriers. They have a different costing structure. They have a different customer base.
Are you sure your company’s costing model is up to date? Can your company attract better paying head haul freight? Are you applying the same costing model across all of your lines of business? Have you found the enemy and it is you or your costing model?

There is an old axiom that says “heaven helps those who help themselves”. Are you and your company doing everything possible to help yourself?