Innovators: Fueled for success

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Barr-Nunn Director of Recruiting Doug Albrecht (left) and President and COO Rene Beacom, worked with a group of company executives to develop a program that guarantees owner-operators 99-cent diesel fuel. Since the program began late last summer, the company’s owner-operator fleet has increased by 50 contractors and turnover has dropped to 60 percent.

Early last year, carriers began touting pay package increases and unprecedented sign-on bonuses as the competition for drivers and owner-operators heated up. With page after page of recruitment ads filling the major driver publications, Barr-Nunn Transportation – a 48-state general commodities hauler – sought to differentiate itself. The Granger, Iowa-based carrier, which uses both company drivers and owner-operators, specifically wanted to find a way to grow its owner-operator base while improving retention.

Given the complexity of many carriers’ pay programs, “we looked at the difficulty of a prospective owner-operator being able to interpret and trust the ads they were looking at,” says Rene Beacom, Barr-Nunn president and COO. “We wanted to have an ad message that was credible, substantial and broke the mold of just being the best and greatest.”

With that in mind, in the second quarter of last year, Barr-Nunn gathered a group of six to eight executives for a two-day brainstorming session. They agreed that the company’s pay package and fuel surcharge program were strong, but that many owner-operators didn’t understand them. With a gallon of diesel at the time averaging around $1.75 and climbing, the group knew the high price of fuel was their owner-operators’ top concern.

Using a tool developed by the company’s research and development department, Doug Albrecht, Barr-Nunn’s director of recruiting, had a good idea of his owner-operators’ fuel economy and what they were paying for fuel. Under the company’s existing fuel plan, owner-operators already were averaging between $1.15 and $1.25 per gallon, with some fueling out of network in the $1.50 per gallon range. About 84 percent of Barr-Nunn owner-operators were taking advantage of the fuel plan at the time, so the company also wanted to come up with a way to encourage more owner-operators to fuel within the network. “A lot of them were sitting at an intersection of five fuel stops and trying to decide where to fuel instead of fueling in our network,” Albrecht says.

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Armed with this knowledge, “we started trying to think of a theme that would enhance our pay package,” Albrecht says. The company was already offering 99 percent no-touch freight and 99 percent tolls paid. “And then someone said, ‘What about 99-cent fuel?’ and everyone gasped,” Albrecht recalls.

The fuel price guarantee was the type of bold move management was seeking. In late summer, ads guaranteeing 99-cent diesel fuel hit driver publications. At the same time, Barr-Nunn aggressively began marketing the program to its existing owner-operator base through monthly newsletters, training programs at terminals and phone calls with individual owner-operators.
Those participating in the program receive detail sheets monthly that provide a breakdown of fuel stops, discounts received and pump price.

The first month of the program, owner-operator turnover dropped from 90 percent to 20 percent. It currently averages around 60 percent. “We’ve gone from losing 14 to15 owner-operators per month, to losing four to six per month,” Albrecht says. Since the program’s inception, Barr-Nunn’s owner-operator base has grown from 135 to 185. In-network fueling has reached 99.38 percent.

But the improvements have not come easily. “We’ve had to battle owner-operators on the phone telling us it’s too good to be true, you can’t do that,” Albrecht says. To help owner-operators understand the program, Albrecht created two approaches. “When you talk cents per mile you can’t talk cents per gallon. It confuses them,” he says. When it comes to the cost savings, “we can talk about it being 20 cents per mile or $1.40 per gallon. If he’s getting 6 mpg, just with our fuel surcharge, he’ll save $1.08. If it’s $2 at the pump, right there it’s 92 cents.” Savvy owner-operators who understand the program say it’s saving them between $1,500 and $1,800 per month, Albrecht says.

Barr-Nunn guarantees the program in its owner-operator contract. Participating owner-operators must fuel within the company’s network of Flying J, Pilot and TravelCenters of America truck stops. Owner-operators achieve the 99-cent guarantee through a combination of fuel discounts at these chains and a fuel surcharge. For example, owner-operators who average $1.04 per gallon for the month will receive a 5-cent per gallon rebate that brings their cost down to 99 cents. A small group of owner-operators has been able to average around 80 cents per gallon.

“At first it cost us a pretty penny, but now our fuel surcharges have caught up with it,” Albrecht says. Improved network participation also enabled the company to negotiate better discounts to help cover the cost of the program. However, with fuel prices averaging 20 cents to 30 cents higher per gallon than when Barr-Nunn conceived the idea, beginning this month the company will guarantee $1.04 per gallon through June 30.

While the fuel program has proved an unqualified success, Beacom is quick to point out that when it comes to recruiting and retaining owner-operators, there is “no silver bullet. This is only one of part of a bigger program and one we need to continually look at improving,” he says.

Barr-Nunn’s owner-operator pay package starts at 87 cents per mile. For every 60,000 safe miles, owner-operators get a 1/2-cent per mile pay increase, which caps at 90 cpm. Owner-operators pay for only four things – fuel, fuel taxes, mobile communications ($10 per week) and any insurance they get through Barr-Nunn, such as physical damage, bobtail or accident, Albrecht says. In addition, the company offers owner-operators the opportunity to work with American Truck Business Services, which helps them run the day-to-day aspects of their businesses.

“ATBS takes away all of the major concerns and issues about running the business and allows them to do what they do best – drive,” Albrecht says. Regular reports from ATBS show owner-operators their operations’ strengths and weaknesses and highlight areas for improvement. Barr-Nunn currently has 40 owner-operators in the program. “When those guys ask questions, they ask all the right questions, according to our dispatchers,” Albrecht says. “They’re all about the right stuff.”

Beacom credits the improvements to Barr-Nunn’s owner-operator programs to a corporate philosophy that encourages all team members – owner-operators, drivers and office and shop personnel – to participate and share in the company’s success. To that end, Barr-Nunn continually gathers feedback from its owner-operators through in-cab messaging, telephone calls and meetings, and asks them to rank ideas for improvement.

“The industry changes every day,” Albrecht says. “You have to work to stay on top of it and to stay a page ahead of everyone else.”

Innovators profiles carriers and fleets that have found innovative ways to overcome trucking’s challenges.

If you know a carrier that has displayed innovation, contact Avery Vise at [email protected] or (800) 633-5953.