Nowhere to go but up

When Steve Russell was a teenager growing up in Brooklyn, N.Y., he saw an Audie Murphy movie called “To Hell and Back.”

Now, some 50years later, he says that title pretty much sums up the state of  the North American trucking industry… except for the “And Back” part.

Russell is the chairman and CEO of Celadon, an international trucking enterprise with about 2,900 tractors, 8,100 trailers, and 3,600 employees operating in the U.S., Mexico and Canada.  He was the keynote speaker at the Thursday morning VIP Breakfast during Truck World 2008.

And although the business performance stats that Russell presented to the sold-out event seemed bleak, he did offer one bright
note. It appears that the rate-cutting that’s pervaded the trucking industry for the past year or so might be coming to an end.

Founded back in 1985, Celadon (NASDAQ: CLDN) is still growing some 35 years later, but the global economy is not making things very easy. In 2002, Celadon revenues topped $300 million. Five years later, they were over the half-billion-dollar mark. In
2002, about 45 percent of his business was automotive whereas that’s more like five percent now. That, Russell says, is an indication of how much things have changed in a very short time.

Similarly, in 2006 the company reported a dividend of $0.30per share. A year later, that was down to 11 cents.

Rate per loaded mile dropped from $1.546 in ’06 to $1.499 a year later; deadhead miles were up almost half a percent year over year; and annual miles per truck dropped by about 300 between ’07 and ’06.

Fuel prices are soaring, housing starts are weak, and customers are taking longer to pay bills. And that, especially with the sharp price increases that come almost daily, takes a bigger toll than it would have done in the days of consistent fuel prices.

“I’ve seen the world change a lot,” he said. “I’ve been around 68 years, and I’ve never seen it like this.”

The only bright side, he said, is that shrinking truck capacity because of fewer trucks coming off assembly lines and more demand for trucks abroad means some attenuation in rate cutting.

“We’re seeing,” Russell said, “rates stop going down.”

Finally, instead of offering the assembled show-goers a quick solution out of whatever economic quagmires they might be facing, the very engaging Russell served up his six self-conceived business mantras:

6.Don’t get ulcers; give them.

5. L-I-D-S—it stands for Leadership, Intelligence, Dedication and Street Sense.

4.People act in their own self-interest (“As Warren Buffett says, ‘If you want someone to trust in business, get a dog’.”).

3.The true test of a good business person is one who can turn a liability into an asset.

2.“It’s not whether you are making good or bad decisions, it’s what are the priority issues upon which you should be making decisions.”

1. To be happy, one needs to [think] “Can’t wait to get to work in the morning” and “can’t wait to get home at night.” To make that last one possible, he quipped, “it doesn’t hurt to marry your second wife first.”