Xpressly for the industry

As incoming chairman of the American Trucking Associations, U.S. Xpress Co-Chairman Patrick Quinn encounters longstanding industry challenges in costs and productivity – and a few relatively new ones.

Considering what Patrick Quinn has achieved, you probably wouldn’t guess that he literally attended a one-room country schoolhouse that lacked indoor plumbing. Life certainly wasn’t cushy, but this adopted son of a Nebraska tenant farmer enjoyed his classic prairie childhood. He even believes that he benefited from an accelerated education because he could overhear lessons presented to older school kids.

“It was a happy time,” says Quinn, co-chairman of Chattanooga, Tenn.-based U.S. Xpress and incoming chairman of the American Trucking Associations.

In many ways, these are happy times as well. Quinn and his business partner Max Fuller have grown U.S. Xpress to the point where it surpassed $1 billion in operating revenues for the first time in 2004, up from $215.4 million when the company went public in 1994. The company ranks sixth among truckload general freight carriers in CCJs The Top 100 and 17th overall.

And in terms of revenues and profits, these are happy times, too, for the trucking industry as a whole. But the industry faces some daunting near- and long-term challenges, and Quinn will dedicate himself during the next year to making progress on these challenges as ATA’s top member leader.

The importance of image
On the whole, the trucking industry is benefiting financially from an all-too-rare occurrence: Freight demand continues to outpace capacity. But while many carriers are enjoying healthy profits, good times don’t last forever, and everyone knows it. On the other hand, the factors that exert financial pressure on trucking companies do seem to last forever – and just get worse over time. These include fuel and labor costs, productivity, taxes, regulations, litigation and infrastructure, among others.

There are no quick fixes, but Quinn believes that substantial progress on many of these issues will require changes in the public perception of the trucking industry.

“The image of the industry is very important,” Quinn says. And it starts with the very building blocks of the industry – drivers. “Who says they want their child to be a truck driver?”

Quinn has chaired ATA’s image committee and believes that a poor image is the foundation for a host of problems, including the inability to win any sympathy when it comes to dollars-and-cents items like taxes and tolls. Quinn doesn’t have a particular plan or program at this stage, but he does plan for the image committee to become more aggressive.

Another area in which image clearly plays a role is regulation, and that’s especially true of the hours-of-service rules. Although the trucking industry is pleased that the Federal Motor Carrier Safety Administration preserved aspects of the hours rules, such as the 34-hour restart and the additional hour of driving, the elimination of split rest in sleeper berths poses concerns.

Quinn believes that this change could have a greater impact on productivity than the previous change in the rules, even with the progress made to reduce dwell times at shipper and receiver docks. “My contention is that it’s a lot bigger deal in the real world than FMCSA officials realize.”

Regulations requiring fingerprint-based background checks for drivers with hazardous materials endorsements are another issue for ATA, which is trying to limit the scope of the rules to areas that make sense. While we should worry about terrorists’ access to weapons-grade plutonium or explosives, things like nail polish remover, household cleaning products or AA batteries need not be included, Quinn says.

Another concern is the escalation and volatility of fuel prices. Here, Quinn recognizes that the issues and dynamics transcend the power of even the mighty trucking industry. “Unfortunately, we don’t own any refineries.” The best industry leaders can do is keep the awareness high and help fleet owners and drivers manage the consumption side. ATA and the Truckload Carriers Association recently formed a joint task force to explore best practices in fuel consumption and disseminate that information.

Quinn plans to continue of current Chairman Steve Williams’ focus on the future. Although a highway bill was just enacted, another one is coming in four years. “We have to figure out what we want to change, because it must change,” Quinn says.

The national stage
Being chairman of a national trucking association isn’t new for Quinn. In 2000-2002 – another especially challenging time for the industry – he served as chairman of the Truckload Carriers Association. Although Quinn has worked in the trucking industry for almost 30 years and was a transportation lawyer before that, he always has been interested in public service and politics – both of which come into play for an ATA chairman. Quinn majored in political science at the University of Nebraska and had toyed with the idea of a career in the Foreign Service prior to entering law school.

Rarely does a top executive of such a large trucking company serve as ATA chairman. It might seem that the co-chairman of a billion-dollar trucking company would be too busy to spend a year focusing on industry-wide issues. With the exception of current chairman Steve Williams, whose Maverick Transportation operates about 1,000 power units, most recent ATA chairmen are the chief executives of carriers running about 100 power units.

But Quinn believes those leaders probably have a tougher challenge because they likely have been more essential in the day-to-day operation of the business. With Max Fuller as co-chairman and an experienced senior management team, the time commitment won’t be overwhelming, Quinn says, adding that it already is rare that he and Fuller are both in the office at the same time.

Quinn does face a unique frustration. As co-chairman of a large, publicly traded company, Quinn must be particularly careful in choosing his words and making public comments – especially given the intense scrutiny public companies have faced in recent years from investors, the Securities and Exchange Commission and the news media. “I have to be more cautious than someone else,” he says. “I can’t totally separate U.S. Xpress from the ATA chairmanship.”

Still, Quinn is not deterred from his new role. “The industry has done so much for me. I hope to give something back.”

Selling and spending to success
In 1977, the owner of Southwest Motor Freight, the late Clyde Fuller, offered a full-time job to the attorney handling most of his legal work. Fuller figured that hiring Patrick Quinn on a full-time basis wouldn’t cost any more than what the trucking company was paying Quinn’s firm for his services.

Quinn initially resisted, but ultimately the idea of building a business and being part of a management team won him over. So on Aug. 1, 1977, Quinn joined Southwest Motor Freight as vice president and general counsel, moving his family from Lincoln, Neb., to Chattanooga, Tenn. That move set in motion events that led to a billion-dollar trucking enterprise, U.S. Xpress.

At Southwest Motor Freight, the management team included Quinn, Fuller’s son Max and Fuller’s stepson Dave Parker. Clyde sold the business in November 1984, but Max, Dave and Pat stayed with the company, each with a 10 percent stake.

Things didn’t go well with the new owners, and finally Fuller, Parker and Quinn issued an ultimatum: Either things changed or they were walking. At 10 a.m. July 2, 1985, they quit.

As part of their compensation, Clyde had facilitated the financing of power units to Max, Dave and Pat, so each had 25 trucks when they left Southwest Motor Freight. Parker decided to go his own way, so he started Covenant Transport. Fuller and Quinn, however, pooled their equipment – now down to 48 units – and in January 1986, they launched U.S. Xpress.

“We wanted something that would be easy to market and brand,” Quinn says.

Fuller and Quinn worked well together. Fuller loved equipment and technology and handled financing. Quinn had a knack for sales and marketing.

Fuller claims that he and Quinn make for a great partnership because they tend not to duplicate each other’s strengths.

“We like to say that Pat earns the money and I spend it,” Fuller quips.

That’s a bit of an overstatement today, however, as Fuller has become more involved in the marketing and promotion of the business as it has grown. But it’s still fair to say that Quinn is not an equipment guy.

“I couldn’t spec a truck if my life depended on it,” Quinn jokes.

In less than nine years, U.S. Xpress went from 48 trucks to an initial public offering in 1994 when the company generated more than $200 million in revenue. Since U.S. Xpress went public, its history has been quite literally an open book. Today, the carrier operates a truckload fleet of more than 5,000 tractors and about 16,000 trailers as well as 400 tractors dedicated to local and drayage services.

The skill and leadership that Quinn and Fuller possess clearly lie at the heart of U.S. Xpress’ growth and success, but Fuller would have you believe that one external factor played a critical role. In the initial business plan, the pro forma had U.S. Xpress turning a profit in 31/2 years. As it turned out, fuel prices dropped sharply just as the company began operations, so the company was profitable at the outset.

“It was more luck than anything because fuel took such a drop,” Fuller says.