Estes Express Lines' Rob Estes on the evolution of the LTL market
Trucking - particularly of the less-than-truckload (LTL) variety — is certainly in Rob Estes' blood. His grandfather, W.W. Estes, founded Estes Express Lines (www.estes-express.com) in 1931, growing the company from one man and one truck to a staff of over 650 and $10 million in annual revenue when he died in 1971. The torch was then passed to Rob's father, Robey Estes, who in his 20 years as president saw the company's revenues increase tenfold. Since Rob became president in 1990, the company's growth has again grown tenfold, with Estes Express becoming a $1 billion company in 2004. Today, the company employs more than 13,000 people.
On the occasion of Estes Express Lines' 75th Anniversary, Rob Estes, now chairman, CEO and president, spoke to Logistics Today, focusing on the major changes he's seen in the transportation industry and in the company that bears his family's name.
LT: What have been the biggest changes you've seen in transportation and at Estes since you began your career there in 1975?
Rob Estes: Deregulation in 1980 was probably the biggest watershed event in transportation history. At that time Estes was just a three-or four-state carrier. We had to learn to take our experience with short-haul to work with interline carriers to deliver their freight and pick up their freight, and to work more with customers to handle a larger geographic area. That was one of the biggest changes.
In 1990 we moved outside of our core four-state area — Virginia, North Carolina, South Carolina and Georgia — and opened in Florida. And from that time until today, we've gone from four or five states to today, where we're now in 46 states. That's been one of the biggest challenges. Back in the 1990s we had a lot of people who had been with the company for a long time who were used to our procedures, so we've had to concentrate on teaching and expanding our new operations so everybody has the same knowledge, the same appreciation for customers, and the same customer focus.
Another big change is that in the late 1980s and early 1990s we saw a technology boom of opportunities, when companies began using computers to enter freight bills and print out the bills.
LT: What should shippers be doing to improve their relationships with the carriers? From your perspective, what makes a company a good customer?
Estes: A good customer is somebody who is willing to collaborate. I think sometimes the word "collaboration" is overused, just like the word "partnership" is overused. A business relationship is like a friendship or a marriage. Both parties have to consent to come into a partnership, and they have to be willing to share information, and be able to adjust.
In a typical business relationship, I want to keep my costs as low as I can so I'm going to do everything I can to shift costs to other people. However, in a partnership it's more a case of my looking at the total cost and figuring out if there are ways that costs can be reduced for the entire partnership. We've seen the most significant cost containment opportunities for our customers when we're able to collaborate to drive costs out of the system. There are huge opportunities, but it requires a willingness from both the transportation provider and the shipper to work together.
LT: You talked earlier about technology advances that allow the sharing of transactional data? How much has that helped improve the potential for collaboration?
Estes: It's definitely helped, and we're just scratching the surface. Most companies are using EDI [electronic data interchange] at least to a limited degree, from freight payment to electronic bills of lading. The opportunities are huge, it does help us drive cost out of our system, and we do look at that when we're looking at price. If a customer's systems allow us to be more efficient, we're able to pass those savings on to them. But there's a wide diversity [in technological sophistication] — some companies are very good at it, while some are just sticking their toes in the water.
LT: Is that wide range due to the size of the companies, or to their willingness to adopt the technology?
Estes: I don't think you can look at it as the size of the customers. This is conjecture, but I think the amount of IT work that a company gives to transportation depends on the company. What we see in the marketplace is that IT resources are usually given first to sales and operations, and transportation tends to be the last area in a company to get IT resources.
I believe it's the amount of importance an organization — and I'm talking about our customers — puts to giving IT resources to the transportation group. It's just not something that a carrier can really dictate. We're not in a position to say, "You have to use this technology." We're going to pick up your freight whether you hand write it on a freight bill or whether you electronically transmit it to us.
LT: What do you think is the proper role for government in terms of addressing the challenges facing the transportation industry?
Estes: Transportation is a key part of the economy. If trucks, rail and maritime were shut down or handicapped in any way, it would be devastating to our economy. Obviously the infrastructure needs to be changed. We need to make some smart decisions on road capacity or everything is going to be like the Washington, D.C., corridor, which is gridlocked. That's not productive for a country.
Some of the government's decisions about the pollution-reducing engines in 2010 are very important, but those decisions have added and will be adding a huge cost to transportation.
If I had any complaint about government, and it's easy for somebody to Monday morning quarterback those decisions, it would be that decisions are sometimes made without looking at the full picture. One example is hazardous materials. "Hazmat" has a bad-sounding name — you picture toxic waste and that type of thing — but there are some products that are not very hazardous, like paint, that are classified as hazardous and there have been some knee-jerk reactions where some communities didn't want any hazardous material within their city limits. There's a wide range when you talk about hazardous materials, and it all tends to get lumped into one category.
Another issue is terminal facilities. It's hugely expensive to build facilities to handle freight today, with the cost of compliance and permits. In some areas like California and the Northeast, it's almost impossible to efficiently build a terminal in today's environment. That's a scary point because if the economy continues to grow, trucking companies will be pushing more and more freight through the same number of facilities, which will be a real challenge.
LT: Do you have any trouble recruiting drivers?
Estes: We have not had near the problems that some truckload carriers have because 95 percent of our drivers are home every night, and all of them are home every week. But it's still a challenge - the drivers that I grew up with are getting on up in years, and more are falling out at the bottom than are coming in at the top as new drivers. What we offer as far as benefits and the ability to be at home and working conditions makes it easier for us to hire, but it's a challenge, especially in the major metropolitan areas where there's so much more competition for workers.
As an industry, we're going to have to incent the right type of people to want to be drivers. We're not going to have the luxury to sit back and wait for people to walk in the door, so we're going to have to be proactive to bring new drivers into the work force before they get indoctrinated into another field, like electricians or construction. We have to work hard to capture that work force before they reach 21 or 25.
LT: What are the one or two things you're proudest of in terms of company achievements?
Estes: What I would like people to think about Estes is that it's a big company that is run and acts like a small company. In today's environment, it's essential to be big because customers want you to do more things, but there are certain things you lose when you get big. I think back to when my dad was running Estes and knew most everybody who worked here. I don't have the ability to do that with the 13,000 people we have now, but we still try to run Estes like a small company.
The second is that as we've expanded nationwide, we're still known as a very good regional carrier that also is able to provide service throughout the country. Those two accomplishments make me proud.
