A look back, a look forward

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The whole transportation environment has changed so drastically since we started out in 1986 that it’s almost like a totally different industry now. And it will continue to keep changing, and won’t get any simpler by any means.” –Max Fuller, co-chairman and co-founder of U.S. Xpress Enterprises

Reaching the quarter-century mark is a major milestone for any business, but it’s even tougher to achieve in the rough-and-tumble trucking industry.

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Needless to say, it’s a mark just now reached by U.S. Xpress Enterprises, a firm that’s been nursed by co-chairmen and co-founders Max Fuller (on the left in the photo) and Pat Quinn from a small 48 truck exclusively long-haul fleet to a billion-dollar multi-faceted carrier operating over 7,000 tractors and some 22,000 trailers.

Fuller and Quinn sat down on the eve of the company’s 25th anniversary with reporters (both in person and via conference call) to talk about the huge changes they’ve witnessed since they hauled their first load of freight out Long Beach, CA, back in 1986 – as well as ruminate on the challenges ahead for motor carriers. (You can read about some of this in our top news story today, as well).

The biggest change witnessed by these two trucking veterans over the last two and half decades is probably just the sheer amount of change that’s affected motor carriers. Fuller noted that in the 1980s and early 1990s, product “sourcing” for the U.S. market took place in big U.S. cities like Chicago and Detroit. Then it started shifting overseas to Asia, meaning freight volumes swung to port cities such as Long Beach on the west coast.

Now, much of that manufacturing is coming back to North America, primarily to Mexico but even into parts of the U.S. again – all due to the rapid rise in transportation costs over the last decade.

“This shift is affecting everything,” Fuller said. “Back when we started, shippers maintained networks of warehouses placed as close to the final customer as possible. Then for the over a decade we went to a one or two warehouse model – big distribution centers located in one or two critical spots. Now, we’re shifting back again to more regional warehousing – with Wal-Mart leading the way, trying to get goods staged within a 151 mile radius of their stores.”

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By extension, those “supply chain” swings, if you will, created huge ripple effects within trucking and the transportation industry as a whole. Quinn noted that U.S. Xpress’s length of haul shrunk as a result, from 1,400 to 1,500 miles down to just under 500 miles, with traditional “long-haul” coast-to-coast service making up less than 15% of its business today.

That’s also due in part to a revival of the railroads as a competitive force within transportation, added Fuller. “Rail has gone from a dying industry to a business picking up in vitality,” he said. “Intermodal especially has become far more competitive with traditional trucking services.”

Both Fuller and Quinn also believe high speed rail will have a big role to play in the freight market, but not for at least another 10 to 20 years. “You’ve got to build the rails first and that takes time,” said Quinn.

Yet, as a result of rail’s revival, truckers diversified their offerings to a huge extent over the last decade in order to retain a competitive edge. U.S. Xpress exemplifies that trend as it’s gone from a purely TL carrier to one offering LTL, port drayage, dedicated contract carriage, regional haul, pickup and delivery, brokerage, logistics services, even its own intermodal options.

U.S. Xpress also took steps to diversify its customer base, as well, to the point where its largest customer now represents only 6% of its total volume.

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“If you don't change every five or six years in this business, you will become out of sync — you must always be looking for the next opportunity,” Fuller noted in previous interviews with Fleet Owner. “We're a service industry so we've got to be knowledgeable about where the market is and go there. We find out what the customer is willing to buy and provide it.”

One example of this is found in how U.S. Xpress dealt with the manufacturing shift back to Mexico – nearly doubling its number of border terminals over the last four years. Today, the company supports between 80 to 100 truck freight border crossings per day each way and expects to see that business keep growing.

For sure, dealing with all of this change hasn’t been a bed of roses for Fuller and Quinn, but they and their company didn’t get overwhelmed by it all, either. We named U.S. Xpress our for-hire fleet of the year back in 2004 after passing the $1 billion in revenue mark (only one of five trucking carriers to hold such a distinction) and despite the hammer blows delivered by the “Great Recession” of the past few years, they not only remain standing but healthy as well.

“We’ve gone through nine ‘recessions’ since we started U.S. Xpress, but this last one was by far the worst – worse than the eight previous ones combined and then some,” Quinn said. And it occurred a time when trucking as an industry began to experience a net shrinkage in growth as opposed to the double-digit rates of expansion experienced in the 1980s and 1990s.

And Quinn freely admitted to luck playing a role in the carrier’s success, too. “We started this company right at a moment when fuel costs took a dramatic drop – that gave us a windfall at the beginning,” he explained. “Then, when we we took our company private in 2007-2008, it was almost the last deal to get financed before the recession hit. The door slammed on deal-making so hard it bruised our heels.”

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One of the bigger changes that’s occurred in trucking and will continue to create challenges (as well as opportunities) revolves around drivers.

For starters, the implementation of the now-ubiquitous Commercial Driver’s License (CDL) forever changed the “creation process” if you will for truck drivers.

“In the past, it used to be a father or an Uncle that taught truck driving to kids right out of high school,” said Fuller. “Truck drivers used to come out of trucking families. That’s completely changed with the advent of the CDL. Now drivers come from far broader walks of life, from schools, and we use driving simulators to verify their skills before they start working for us.”

Yet the driver remains at times an Achilles heel for the industry, as it’s a job with relatively low pay that few people desire. “In many cases, federal and state unemployment benefits equal what a truck driver would make – so why work if the government will pay you to stay home?” said Fuller. “That’s before you look at the impact of inflation: drivers don’t make nearly the amount of money they did in the 1980s and 1990s. Right there, you see that pay for drivers must go up.”

That’s just part of the next series of challenges Fuller and Quinn expect to deal with as they both fully expect to guide U.S. Xpress to its 35th anniversary. “We need to keep nimble; we need to keep adapting to market opportunities,” Fuller said. “That’s how we’ll survive in this business.”

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