USA Motor Express
Location: Florence, Ala.
President: Leon Balentine
Equipment: 240 total trucks, 108 company-owned and 132 owner-operators. Freightliner, Volvo, Mack, Sterling, and International tractors.
ENGINES & TRANSMISSIONS: Meritor 10-speed transmissions; Detroit 60 series engines.
TRAILERS: 272 company owned Trailmobile and Strick dry van.
FREIGHT: Dry van, flatbed, intermodal rail and ocean containers.
Challenge: Remaining profitable and growing during a weak economy and preparing to accommodate an upturn in freight.
Solution: Adding capacity through affiliate arrangements; monitoring all cost centers weekly/ monthly and managing improvement aggressively; motivating employees through profit sharing and performance bonuses; investing in technology that improves data flow.
Although the economy remains sluggish and many carriers are scaling back – if not altogether eliminating – plans for growth in 2002, USA Motor Express is moving “full speed ahead.” For President Leon Balentine, right now is the opportunity of a lifetime.
During the past 15 months, Balentine’s strategy has been to add capacity and position USA Motor Express for rapid growth once the economy resurges, which Balentine believes will be the first quarter of 2003.
“As a rule of thumb, most customers we talk to say they’re running about 85 percent of capacity,” Balentine says. Meanwhile, carriers continue to fail. “Trucking will have less capacity by the first and second quarter of 2003.” This capacity drain, however, is hidden by soft industrial production, setting the stage for a major lack of trucking capacity when the economy rebounds. “We’ll have more capacity and should be able to provide that to our customers.”
Since launching in 1996, the Florence, Ala.-based carrier has grown by 50 percent or more power units each year and now operates 240 trucks with four terminals – three in the Southeast and one in New Jersey. Balentine credits his entire team for the success, but the principles and process that move the company forward come straight from the top. These include, among other things, continual monitoring and improving the company’s financial performance, incentives designed to achieve performance and smart technology investments.
Balentine says the extra capacity he has added during the down market is already starting to evaporate. With a vast, nationwide customer base and a network of brokers, the company has been able to keep its trucks loaded, but now business is really starting to pick up. In the first quarter of 2002, the fleet went from 12 percent excess capacity down to zero as freight volumes started to bounce back.
“Now and for the next 12 months, there’s going to be plenty of freight,” Balentine says. Over the past year, Balentine has grown USA Motor Express mostly through adding owner-operators and small carrier “affiliates.” Advantages of an affiliate relationship are adding more equipment capacity at a fixed cost with no overhead. It also broadens USA Motor Express’ customer base.
An affiliate carrier is essentially a contractor for USA Motor Express. So far, the company has entered into six such arrangements. The most recent affiliate was Merit Transportation, a 48-truck carrier in Memphis, Tenn. Merit Transportation now operates as USA Motor Express and its office and customers become, in effect, USA Motor Express’. USA Motor Express pays the affiliate’s cargo and liability insurance on a per-mile basis. The carrier is also 100 percent responsible for Merit’s compliance and safety record.
“Everything is scrutinized by our corporate safety and compliance department,” Balentine says.
Each time USA Motor Express hauls a load from an affiliate’s customer base, it pays out a commission. On the other hand, USA Motor Express does not pay a commission when it arranges a load for the affiliate – usually a backhaul to Memphis or central Alabama.
“More and more people are going to this type of arrangement,” Balentine says. “Landstar is doing it 100 percent.” Balentine says he looks for affiliates in locations where it would make sense for his company to have a terminal. Because of the rising cost of insurance, more carriers are willing to enter into this type of arrangement, he says.
All eyes on success
To continue to grow – and remain profitable – in a down market, the company must maintain healthy financial results. Balentine considers the hallmark of his career to be fanatic attention to detail. He began USA Motor Express after 20 years as a terminal manager and general manager (truckload) at Roadway Express and 15 years as president/CEO of three other truckload carriers.
Balentine meets at least once a week with his management team to scrutinize 108 lines of financial data in the income and expense (I&E) report. The accounting staff prepares weekly, monthly and quarterly reports on all business cost centers, down to the profit-and-loss statements on each company truck and driver. The company also maintains separate reports for the owner-operator fleet. I&E reports include company-wide averages and all costs as a percentage of revenue for benchmarking purposes.
“This is an educational process,” Balentine says. “These are basic principles we follow. We treat it like a public company so [managers] can see where the opportunities are and how to cut the costs.” Key measurements include revenue per truck, mileage, deadhead, revenue-per-mile, out of route, fuel mileage and maintenance costs.
“If I look at a certain area, and it’s not meeting my guidelines, I get involved with fleet managers immediately,” Balentine says. “They run a query and see what’s happening.”
Robert Walker, senior vice president of operations, and his team of fleet managers monitor individual driver performance to improve profitability. Each fleet manager is responsible for about 35 trucks and drivers. During their daily contact with drivers, the fleet managers notify them when a measurement, such as fuel economy or out-of-route miles, dips below company standards.
“Usually if someone knows they’re being measured, they already know what they’re doing wrong,” Walker says. If a driver continues to not adhere to company performance standards, the fleet manager routes him in for a personal meeting.
“It used to be that a large percentage of drivers did not make [the company] money,” Balentine says. “We have a quality control program here. Can we ever have 100 percent of our trucks in a profitable mode? Maybe not, but we can get all to at least break even.”
To give employees a vested interest in company performance, USA Motor Express has a profit-sharing plan for office employees and a standards-based incentive for company drivers. To give employees more self-interest in the company’s success, Balentine has office employees do the math themselves for their quarterly bonus. They pull the numbers straight from the income statement and follow the company’s profit-sharing formula.
Balentine gives approximately 25 percent of the company’s net income back to employees based on their individual salaries and the contribution they make to the company. Twenty percent of each quarterly bonus, however, is withheld and paid back in October – the month after the fiscal year ends in September – provided there is no shortfall in profit for all consecutive quarters.
Company drivers have a separate incentive program called Team USA. To qualify, drivers must keep out-of-route miles under 10 percent. Their miles per gallon and fuel cost per-mile must match the average of the top 50 percent. They must also keep idle time under 45 percent and have no preventable accidents. The team USA incentive is a $1,000 savings bond each quarter and an additional $1,000 savings bond to drivers that qualify four straight quarters.
At USA Motor Express, information is the key to managing people, processes and the company’s continued growth. To expedite the financial reports, the comptroller uses a custom-programmed Excel spreadsheet with macros that execute reports and pull data directly from the company’s McLeod LoadMaster system.
The company populates its McLeod system with driver- and vehicle-related data through its Detroit Diesel’s DDEC Reports and data from its PeopleNet mobile communications system. The fleet uses PeopleNet’s PerformX system to capture data from the vehicle’s ECM. Fleet managers also watch reports on idle time, hard brakes, fuel economy, shift range, excessive speeds and over-revving.
One technology that Balentine and others at the company see as the wave of the future is the handheld personal digital assistant, or PDA. Balentine plans to begin using a Palm-based PDA that operates with the carrier’s PeopleNet system soon. The handheld devices will allow drivers to capture signatures electronically, eliminating the need for paper copies of the bill of lading and proof-of-delivery documents. Once signed, the signature could be transmitted wirelessly to the office to start the billing process. Balentine wants to be become “totally paperless” within five years by integrating more applications, including driver manuals and logbooks, into the handheld unit.
USA Motor Express also recently invested in a virtual private network (VPN), which will aid the carrier in future growth. As the company continues to open new terminals – Balentine’s goal is to someday reach 20 – VPN technology will save money in remote connections to the company’s system in Florence, Ala., says Jim Cook, director of training and quality.
A VPN is a private network that uses the Internet to connect remote sites or users together. Instead of using a dedicated, real-world connection such as leased line, a VPN uses “virtual” connections routed through the Internet from the company’s private network to the remote site. The information is encrypted and decoded at each end. USA Motor Express gives its satellite offices access to only certain tables in its database. Remote terminals are not set up to enter information.
“[Satellite offices] have access to our operating system to post loads and retrieve loads,” Balentine says. “We set them up with a direct link to all tractors, trailers and customers in our databank.”
Extra savings and revenues
A lucrative partnership for USA Motor Express is with NationaLease, a consortium of nearly 120 independent truck and trailer leasing companies.
USA Motor Express owns and operates a sister company, USA NationaLease, which is a maintenance/service center for its company trucks, leased operators, and other NationaLease customers. Balentine’s USA NationaLease operates three locations in the Southeast.
Through this partnership, Balentine uses NationaLease’s collective buying power of more than $40 million a year to garner substantial discounts on such things as tires, oil and parts. To get discount rates, Balentine leases his trailers from USA NationaLease. He also obtains over-the-road repair work at NationaLease service centers, which have national account pricing.
“There are over 30,000 vehicles we have access to. We continue to take on other customers,” Balentine says. In addition to making a profit as a service center, USA NationaLease leases tractors to its owner-operators, USA Motor Express, and others as well.
Besides making money, Balentine decided to start his own company at the age of 55 so he could bring jobs to the community. Profitable since day one, the company already employs more than 300 people, he says. Getting experienced people to join him in this endeavor doesn’t take twisting arms, either. The company’s solid track record and experienced leadership brews confidence and security that the best is yet to come.
“One of the reasons I went to work here is because Leon creates vision and excitement. I feel like something big is going to happen,” Cook says.