Werner Enterprises: The sky is the limit

Managing a transport business in a volatile, globalised and hyper-connected age is a daunting task, especially if based in an economy as crisis-ridden as the US. On the flipside, the idea that an individual – or even a company – is in control of its own destiny has a long history in American culture too, and so it is not surprising that Werner Enterprises has learned to make a virtue of necessity. Based in Omaha, Nebraska, the company braved the most recent economic storm and continued on building a global transport business.

To understand the company spirit, though, one has to go back in time. More than half a century ago, 19-year-old Clarence L. Werner – today known as C.L. only – went to Omaha to work in a factory, but soon found the trucking industry much more interesting. He sold his car to buy a gas-powered Ford F800 truck and started hauling freight in the area, specialising in cargo that was exempt from regulatory restrictions, such as grain. Ever since, C.L. built the company one truck at a time, focusing on regional Nebraska first and foremost.

Today, Werner has grown to become one of the top five transport businesses in the US, boasting a diversified portfolio that includes dedicated van, temperature-controlled and flatbed; medium-to-long-haul, regional and local van; as well as expedited services under the one roof.

In 1986, having grown from one vehicle to a fleet of more than 630, Werner completed the brand’s initial public offering. Today, the iconic light blue fleet can boast more than 7,700 prime movers and nearly 24,000 trailers, predominantly Wabash-built. It can also draw on a pool of more than 12,000 employees and independent contractors around the globe – transporting everything from grocery products to retail store merchandise.

In fact, it is safe to say the giant fleet still is the company’s pride and joy. “A traditional Werner hallmark is our high-quality fleet, which is also a very important part of our international brand and reputation,” says Derek Leathers, current President and COO of the company – emphasising that up-to-date equipment would not only provide maximum cargo capacity, but also minimal downtime. Not to mention that in the current driver shortage, equipment quality can be a decisive factor to attract new staff.

“Reliable, well maintained equipment allows us to better manage our maintenance costs and provides a much safer operating environment for everyone. We carry these same standards to all countries where we operate equipment.”

According to official company data, the average age of a Werner truck is currently about a year and a half. “Our assets give our clients the confidence that as a full-scale logistics company, we can quickly add capacity if needed. That’s a real point of difference,” Leathers adds.

“For instance, we reduced the average age of our truck fleet by half a year during 2011 and 2012, with net capital expenditures totalling $457 million during that two-year period. The significantly higher cost of new trucks and resulting higher depreciation expense and related diesel exhaust fluid costs is not being recovered through a single year customer rate review cycle.”

On the trailer side, the company is just as tech-savvy. Dominated by Wabash equipment, the fleet is custom built to a special Werner spec – all driven by pricing, durability and expected resale value. “In addition, our technical features make a trailer more aerodynamic for better fuel efficiency,” says Leathers.

At the moment, Werner is operating everything from classic dry vans to temperature controlled equipment and flatbeds all the way to highly specialised gear like end dumps, drop decks, and tankers to fit dedicated customer needs.  “Features vary by trailer type, but we place value on low weight trailers with roll doors that have multi-temperature ability. We also want the fleet geared for rail movement where suitable.

“Also, both RSS and EBS are extremely important for helping prevent accidents and for providing data that we can use to review what happened with our professional drivers.”

While electronic supervision is important to Wabash, air suspension technology is not that high on the agenda. While it is present within the fleet, the majority of all trailers bearing the Werner logo are based on a mechanical system. Leathers” “Air ride trailers cost more to buy and maintain for the carrier. They also weigh more than spring ride trailers, which limits the total weight and capacity an air ride trailer can haul.”

To prove the point, Werner performed scientific studies on the vibrations or accelerations of motion on both air ride and spring ride suspensions, and found that there was “no mathematical difference” found in the average acceleration. “In other words, the freight was not affected by the force or motions experienced while driving down the road, in either type of trailer.

To determine the largest factors that cause high acceleration values, correlations were calculated for cargo weight, age of trailer and type of suspension. Weight was the largest factor in increased acceleration, followed by age of trailer. “The type of suspension used had virtually no effect on the cargo inside the trailer,” says Leathers. “Spring ride suspension trailers are the most cost effective and cost efficient choice. Unnecessary expenditures, higher rates and reduced freight capacity per trailer can arise if the air ride trailers continue to be preferred and used.  Spring ride trailers are the more economical alternative.”

Regardless of the specification, the company has a 90 day-policy where every asset is reviewed. In addition, DOT inspections are scheduled every six months instead of the required yearly inspection.

So, how did the one-man-show turn into a global, high-tech transportation giant in less than a generation? According to COO Leathers, the key to success – next to remaining a solid asset foundation – is regarding the client as an individual, not just as a business opportunity. “We aren't just another broker voice on the end of the phone – we actually provide our clientele with a face to go with. We stress relationships versus margin.”

Out in the field, the company has installed a network of so-called capacity managers to achieve that goal. “The capacity manager is the client’s advocate within the organisation and therefore actively encouraged to develop a personal relationship with each and every client. We want our team to meet our clientele in person to understand what kind of freight has to be shipped and then communicate these needs back to head office before the freight has even moved.

“Consider it a diagnosis. You wouldn’t get a prescription without consulting a doctor, right? We definitely wouldn’t prescribe a solution without first diagnosing the customer’s needs.”

But despite the success on the home front, the Nebraska-based company is already eying for more. Setting up branches in the US, Canada, Mexico, China and Australia, it is on the way to becoming a global brand name. “As our customers continue to expand their operations overseas, they are consequently looking for a global logistics partner,” says Leathers – pointing out that global compliancy and a complete product portfolio are more important than rapid expansion.

“Acknowledging a growing need in the industry to expand worldwide, we have to be able to manage our customers’ freight from the point of origin to the point of destination throughout Asia and North America. They can trust us to manage each shipment with one total service package, as we apply the same set of principles from our accredited local service.”

Proofing that standpoint, the US Customs and Border Protection (CBP) recently awarded Werner for its active role in securing the company’s global supply chain from terrorism. “As part of the Customs-Trade Partnership Against Terrorism (C-TPAT), we agree develop a proactive partnership with the CBP to strengthen and improve the overall international supply chain. Because the C-TPAT requirements are so intense, very few truckload carriers have been granted such a privilege.

Today, Werner can provide coverage throughout North America, Asia, Europe, South America, Africa and Australia, and is established as a wholly foreign owned entity (WFOE) in Shanghai, China. Already, Werner is handling over 200,000 international shipments a year and counting.

“As a global company, we are now able to provide inland-capacity services outside our home country, addressing complex and challenging local transportation infrastructure and regulation issues,” he says – admitting that ‘going global’ has made it even more important to keep an eye on developments outside the actual transport industry. “We are going to have a lot more of these external crises because we are living in such a volatile world – an age where everything is leveraged and technology moves so fast. You can be rocked by something that originated completely outside your area,” he explains.

“Then again, increased international business just means an increased focus on international relationships and an expansion of our partner network – both areas of strength for us. We continue to look at long-term relationships and growth goals through periods of strong economic times and periods of economic weakness alike.”

According to Leathers, one important key to Werner’s success is the company’s ability to attract and retain the best talented people in the industry. “From our drivers in the United States to our operations teams in China, we have local teams and the executive support from our global headquarters. With the strong logistics services base, our rock solid financial position and the diverse, talented management team, we are uniquely positioned to work our way through the regulatory, cultural and legal differences in the over 120 countries we serve.”

To Leathers, Latin America, Europe and the Asia Pacific region are currently seen as “tremendous” growth markets suitable to the Werner concept of setting up a localised, asset-based subsidiary committed to US-American quality standards regardless of the location. “We are conservative, credible and consistent, and we don’t over or under-react to market volatility. Our financial strength and flexible IT system uniquely position us to make investments and enter markets where our customers need our help and where we see opportunities for growth and expansion,” he says, adding that the current economic climate is modest at best.

“We are cautiously optimistic about the global economy improving, however the last couple of months have not reflected robust growth in the key markets we serve. Ever increasing regulatory issues, rising operating costs, and a stagnant economy have a negative impact businesses ability and willingness to invest in growth and expansion. This affects all parts of the transportation industry and companies including ours.”

Drawing on the company’s long experience and strong asset base, however, Leathers is convinced that the only forward is up. “The sky is the limit,” he says – knowing that the light blue colour and gold scheme has been chosen for a reason.

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