I interviewed Rob Carpenter who discussed The Challenge With Recruiting Drivers in Intermodal Cartage Business.
It’s great to speak with you today, Rob. I’m looking forward to hearing your views on the topic of the challenge with recruiting drivers in the Intermodal Cartage business. Can you start by providing a brief background of yourself?
Sure, Dustin; thanks for the opportunity. I started in the business in 1987 with a small company in Nashville, Tennessee. We had a location in Nashville, Tennessee, and Memphis, Tennessee and concentrated on the on the I40 corridor into middle Tennessee. Today there are between 3,000 to 4,000 loads a week that are moved in this lane. We probably had close to 100 trucks where I worked and we operated all owner-operators.
The company didn’t manage their monies the way they probably should’ve been, and they were on the verge of bankruptcy. In 1993 Intermodal Cartage, a guy by the name of Mark George came in and bought them out. That’s when the change began.
Mark was very aggressive and goal oriented and had a vision to grow the company which he has done in a very impressive manor to the point that today we operate over 1,500 trucks out of 20 locations in the southeast and Ohio valley.
I started in sales with Mark, and about a year into it, a position came open in operations. We were in a very big expansion mode and I took over our Nashville, Tennessee; Charleston, South Carolina; and Savannah, Georgia, offices. We also added Atlanta, GA and Birmingham, AL during that time. I stayed in that position until 2000. We grew it to between 300 and 400 trucks, sales grew every year, and we continued to buy company trucks because, at the time there was starting to be trouble with recruiting the owner-operators; not near as bad as today, but it was just getting harder and harder to recruit them. A reason being for that is the people we do business with, a lot of them steamship lines would depress the rates, and they would just go with the cheapest rate. It would not allow us to pay the drivers what they deserve.
We are a lot different than many of our competitors. I’m operated facilities that are a 100 acres, they’re paved, they’re lighted, they have cameras for security, we offer all the EDI there is, along with 60% of our fleet being company trucks so we have a lot of expenses out there that these smaller agency-type operations don’t have. They pay their drivers a little bit differently than we do. We pay a fair wage, and we’re probably in the top one-third of all companies that I consider legitimate competitors but we don’t have a lot to offer other than you will be home every night because I cant sell them on the financial benefits to work here. There are not as many what I call true competitors, like Intermodal Cartage in the market as there are these agency operations that run 20 to 25 trucks. They are here today and gone tomorrow.
As we’ve gone through the years—I guess when I first started—the average age of our owner-operators was probably 35 to 40 years old. After 25 to 30 years in the business, I look at it now; the average age of the drivers is 50 to 60 years old, and I see it every day. There is no young blood coming into the industry and the smarter companies are starting to realize this.
I get very involved in the recruiting of trucks, and I always ask three different questions. I ask them how much their truck payment is. If they tell me its $1700 a month, they don’t need to work for me; they can’t make that kind of money just because the rates are so depressed. Secondly, what do they do for medical insurance? That’s important. Thirdly, I want to know the age of their truck because the older a truck gets, the more maintenance there is on a truck, and it costs anywhere from $3000 to $5000 from the beginning of the hiring process until you get the guy on the road. We take that pretty seriously, and I don’t want to make a mistake on the front side and have the guy quit after working for three or four weeks. That’s very important to us. We implemented a lease to own program that has worked out well for us and because of our financial stability we can afford to do this where a lot of our competitors cant.
I’ve always been the type as I moved from operations into sales, to understand what a good deal was and what a bad deal was. After 17 years I was afforded an opportunity to move to the sales side, and with operational experience I had, I could sell business that was not only good for the company but good for the drivers as well. I would always start out by telling any potential customer that I’m probably not going to be the cheapest on the block, but because I operate so many company trucks and have a lot of overheads to deal with plus being the container yard for so many of the major steamship lines, I have a lot of advantages that my competitors can’t offer. That allows me to get better rates a lot of times.
What I’m seeing out there, Dustin is Fortune 500 companies are now coming to companies like mine, and before they negotiate their door rates with the steamship lines, which typically happens in April and May—they come to me anywhere from December to March—and they get my trucking rate. I show them the advantages of doing business with me, what we can do; and they compare it to what my competitors to do, and a lot of times, they find, hands down, that people can’t compete with us on many sides of the business. There are fortune 500 companies that we have been doing business with for 5 to 10 years and because of our service a lot of times it’s just a formality to renew the contract. These companies know that truck capacity is becoming tight as the owner operator market shrinks and the realize that they need to align themselves with the Intermodal Cartages of the world that can financially afford to purchase company trucks and give them the capacity that they need.
Another important factor is that my customers know that they can reach me at night and the weekends. Trucks operate 24/7 and I have to be available if there are problems that I can help with. Tenure in our upper management is another advantage that we have to offer. There is not too much that we haven’t seen or dealt with out there. Mark George started our company in 1983 and grew it from 3 trucks to over 1,500 trucks today and we are one of the top 5 intermodal carriers in the country.
What we see is that rates are finally starting to come up a little bit. I was talking to the president, Joel Henry, whom I report to, and over the past five years, we’ve seen our gross profits rise by a percent, percent and a half every year. What we have to do is if we want to attract the kind of drivers that we need, then we have to start sharing some of that money with those guys, and we have to bring their paychecks up. It’s critical, if I can get them over that first 90-day hump and meet with them weekly, make sure their paycheck’s right, make sure they feel like they’re being fairly treated and dispatched fairly, then I’ve got a driver long-term. I’ve got guys who’ve worked for me for 15 to 20 years. Even though I’ve moved in to the sales side, I still have contact with these drivers pretty much on a daily basis—sometimes on a weekly basis, depending on my travel—and that’s probably one of the things that I like the most about the business. I try to not only get to kbnow them but their families as well.
The drivers, they’re so misunderstood. It’s like, I’m riding down the road with my dad, and he says, “Oh, here comes one of those big trucks.” I’m like, “Wait a minute, Dad. If we didn’t have one of these big trucks, our country would probably come to a stop pretty quickly.” That perception of the driver has to change. I feel pretty passionately about that, and I think Intermodal Cartage does as well.
Mark George, who’s the chairman of Intermodal Cartage, he’s one of the best about taking a five-year plan and sticking to it because a lot of companies will take a five-year plan, and after six months, that five-year plan’s changed three times. He’s very good at looking into the future, and seeing how he thinks the industry’s going to evolve. We’re doing the right thing, but it takes money to do the right thing. That’s why I go back to saying I’m never going to be the cheapest rate out there, but I’m going to give you the best service and every tool that you need for your supply chain to be successful in what you do.
Thank you. Do you have a final summary or recommendations on how to deal with the challenges of recruiting drivers?
I think what we have to do—and I’ve always been a strong advocate of this. Working with blue-collar employees, to be honest, we have to help them financially. I think it would be a smart move that we had some kind of financial planner that worked with these guys. We have the least-to-own program, and it basically does a budget for them. We’ve had great success with this. We accrue money for their tags, which cost $1300 a year. We know that maintenance on their tractor is going to cost them six cents a mile a year. We accrue monies for that. We basically set a budget up for these guys, and at the end of three years, they own the truck, and hopefully, they’ve learned how we’ve done things, hopefully how to be successful and make the kind of money they want to make. We have seen their net monies, their bring-home monies; we’ve seen it increase every year over the past 15 years I’m going to say. Now we’re starting to see it level out and even grow more in a lot of cases. I think that’s very critical. It’s real important to me.
I don’t hire a guy who’s had five jobs in the past three years, because he’s always looking for the grass that’s greener on the other side. I want somebody who’s been with a company for three, five, six years but is just looking for a change, looking to be at home a little bit more because he has children growing up. That’s what I think is very, very important for us and for a lot of people out there.
As far as the companies that are asset-based, just like we are, they’re offering a 401(k) plan, they’re offering medical-dental-eye insurance, and that’s important. It has to be a good plan; it has to be as good of a plan as the office employees have. We’ve been able to accomplish that.
Our turnover ratio last year was 49 percent, well below the national standard, and we’re looking forward to even improving on that this year. It’s critical because if we don’t have the drivers, then I don’t know what they need Rob in sales for. That’s what I’m very passionate about. “They put the paycheck in our pockets” is what I’ve always told my people. Some of them haven’t agreed with me and we’ve had to part ways, but once they did, once they understood, then you can grow the operation the way you want it to grow.
Thanks, Rob, for sharing today.
I appreciate you calling.
About Rob Carpenter
Vice President of Operations at Intermodal Cartage Company, Inc.