NASSTRAC Q&A: ODFL President and CEO Greg Gantt
LM Group News Editor Jeff Berman caught up with Greg Gantt president and CEO of national less-than-truckload carrier Old Dominion Freight Line (ODFL) at the National Shippers Strategic Transportation Council (NASSTRAC) conference in Orlando, Fla.
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Earlier this month, LM Group News Editor Jeff Berman caught up with Greg Gantt president and CEO of national less-than-truckload carrier Old Dominion Freight Line (ODFL) at the National Shippers Strategic Transportation Council (NASSTRAC) conference in Orlando, Fla. Gantt provided Berman with insight into various industry-related topics. A transcript of their conversation is below.
Logistics Management: What is your view on the current state of the economy from a macro and a freight perspective?
Greg Gantt: Both seem to be good right now. On the macro side, it is strong and so nice to see because we went through so many years where it was just so flat. We were sitting there at 1-to-1.5% GDP, and now that is heading up and it is evident on the freight side, too. On the freight side, it is no big secret-and we have said it before-that we always thought we were in a better position to grow share and take capacity in a good, strong economy versus an average, or flattish, economy. A lot of that is based on price and what our competitors do. We have been bullish on pricing and tried to stick to our principles. We have certainly been able to grow our share more in this good economy certainly than in a down economy.
LM: How do you view current LTL market conditions, given that manufacturing and industrial production are both doing well, coupled with what is happening on the last-mile side as it relates to LTL?
Gantt: We are busy across the entire market, whether it is the industrial economy, the retail economy, and everything else we are in, like our medical business, for example. It really applies to all aspects of our industry relating to our customers’ business lines. There is some impact on the last-mile side, too, and there are some different ways to ‘skin that cat’ by hauling product out from the Amazon’s of the world and deliver it to somebody’s home. That is one aspect. A company like Amazon not only has last-mile, they also have middle mile, with somebody bringing freight into a DC that does not always come in as a truckload. A lot of it arrives via LTL, and we think that is where we fit maybe in many cases better than in the last-mile piece of that business. But we have outlets for that, too.
LM: There has been a fair amount of talk lately regarding the usage of twin-33 foot trailers. What do you think the odds are of twin-33 trailers moving on the nation’s highways in a meaningful way?
Gantt: There was some positive movement on that front in one of the last Congressional sessions. We had been a big proponent of twin-33s at the onset of the quest to get them approved. We spent a fair amount of time and effort in trying to evaluate the real value to us and frankly, it is minimal. While we would love to see it as an option, it is not huge for us. Better triple combinations in numerous lanes would be a much bigger benefit to us than twin-33s, and we would love to see something from that standpoint in the form of maybe some relaxed state laws. LCV combos would do us much more good. We are running LCV combos wherever we can and wish there were more opportunities to do so.
LM: As an LTL carrier, have you seen any spillover from the truckload market as it relates to the ELD (electronic logging devices) mandate?
Gantt: It is hard to provide [firm] numbers on that. We know we have seen some spillover. We deal with a lot of 3PLs, and a lot of them were making these stop-off truckloads for their customers, and I think we have seen that drop off over the course of the economic boom. Our weight-per-shipment is up, which tells us it is probably because we are getting bigger shipments and possibly some shipments that were not moving on truckloads. Our spot quotes are up so we know from those indicators that we are getting more opportunity. There is some spillover. How much is somewhat hard to say, but there is definitely some to be sure.
LM: Back when the economy was not as strong, a lot of attention was paid to the inventory-to-sales ratio. It is in a better place now, with inventories lighter and more trucks are moving freight. That said how do you view inventories as it relates to your business?
Gantt: Most everything we haul if you look at what is on our trucks is on the truck one day and probably being sold the next. In many cases, I do not see that changing. I think you will continue to see just-in-time movements, as it can be too expensive for [shippers] to invest a lot in space. If you don’t have to have it, then why make those investments? I don’t see that changing. I would expect to continue to see just-in-time to continue growing. What we are seeing is shorter lengths-of-haul to warehouses and more fulfillment centers, with customers moving them closer to their business and closer to their customers. There has been a lot of that activity lately.
LM: How do you view the intersection of LTL and dimensional pricing and where is ODFL on that front?
Gantt: We can do it, and we have the capabilities. We probably have more dimensioners than any other carrier, and we were the first carrier to implement them and have the technology and a system in place. If there is a request or a need for it, we are in a position to meet it.
LM: Looking at LTL pricing, things seem to be better than a year ago, which was considered flat. What are some of the biggest LTL pricing-relates takeaways now compared to last year at this time?
Gantt: Obviously, capacity is tight and the economy is good. It is kind of a perfect storm for carriers, and the pricing environment is in the carriers’ favor today, much more so than the flatter economy back in 2016 and early 2017. I think we are all in a better position. We have always tried to be very firm with our rates and our pricing strategies and certainly want to be fair to our customers. Back in the last recession in 2009, a lot of our competitors were cutting rates. We did not do that. In some cases, we would do things for business we did not want to lose, but we did not participate in that rate cutting game. We tried to be firm but fair and lost business because of that, but when things came back what we saw was our customers that stuck with us appreciated us, because what happened after that was the boom started back up again in the years to follow. And we saw those same carriers that cut rates like crazy going after huge, unreasonable increases. We did not have to do that, because we did not butcher the rates and did not have to take unreasonable increases. It felt like it made much more sense to be consistent, and in the long run it did not make sense to lower rates like others did.
LM: There has been a lot of talk regarding NAFTA and what may happen to it. How do you view it?
Gantt: We have a lot of cross-border business and hope nothing changes. But at the same time, if it is not cross-border, hopefully, it would be domestic. It is almost something you cannot control…you have to deal with whatever happens.
LM: Some LTL’s see a decent amount of exposure to the intermodal market. What is ODFL’s level of participation in the space?
Gantt: We have found the service not to be nearly reliable enough for our customers to buy, and that has always been an issue. When we did buy rail, it was always an issue and we just felt we were better off to put [freight] on our own trucks. We will use rail in some cases as capacity dictates…maybe during some of our biggest peaks we will use the service. Our customers are much more used to the consistency and transit times they get on our trucks.
About the AuthorJeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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