High times

Trucking is fun again. So said David Bradley as he welcomed guests to the gala banquet that finished the Ontario Trucking Association convention last month. President and CEO of the OTA, he later introduced the popular band Blue Rodeo who managed to raise an already upbeat mood. Tangible evidence of the industry’s new outlook on business life resides in attendance figures for the annual dinner — 1200 paying guests this year, just 700 in 2003.

Want more proof? Local trucking luminaries Rick Gaetz and Stan Dunford, heads of publicly traded Vitran and Contrans respectively, succumbed to Cuddy and Keelor and their very Canadian country-tinged rock sound. In black-tie regalia, they danced. Not together, I should make clear, but they were among a sea of folks jiving away on a crowded little dance floor in front of the band.

And as they had all through the convention, they smiled in the process.

Truth be known, in 25 or so years of attending it, I’ve never seen anybody dancing at this dinner that traditionally caps off the OTA get-together. Heck, even this arrhythmic scribe was up and rockin’ with the War Department.

Gaetz, as decent a person as you’ll find, had reason to smile above and beyond a good business year: the 46-year-old had just been named Canada’s top company chief by the Financial Post magazine in its CEO of the Year/CEO Scorecard issue.

Not amongst trucking companies, mind you. He’s top CEO amongst all Canadian companies, period. It’s the first time the head of a trucking outfit has cracked the top spot on this prestigious list of business leaders.
That’s no small feat, and he does the industry proud. He’s also done it a world of good in a public relations sense. This will help to raise trucking’s profile and will make both legislators and the public look at us with just a little more respect than we usually get.

Gaetz is clearly not a household name. “But he should be,” wrote Financial Post editor Brian Banks in the Top CEO issue. As president and CEO of Toronto-based Vitran Corp., which operates coast to coast in Canada and also has a substantial presence in the U.S., Gaetz has led his company to the largest share-price return — 438 per cent — of the 200 largest public companies in Canada over the last three years. In the three months ending with June 2004, net income rose to US$4.39 million, up from US$2.72 million in the equivalent quarter last year. It ranks No. 3 on our current Top 100 list of for-hire carriers.

Gaetz and Dunford joined a couple of other big league players on the day prior to the banquet at a panel session examining the industry’s immediate future. American trucking stars Jim Staley, president and CEO of the Roadway Group, and Russ Gerdin, chairman and CEO of Heartland Express, completed a foursome who spoke for an hour and firmly cemented the notion that things have never been better in this game.

“This is the time to right the ship,” said Gaetz, speaking to a packed room of 500 rapt people. “If a carrier’s operating ratio in the past decade has been ‘X’, in the next decade it should be ‘X’-minus.”

Later he said that no carrier should be satisfied with a 4 or 5 per cent return because it’s not enough to run a company “ethically and well”. Is an OR of 90 per cent good enough? “Some would argue not,” he said.

Amidst all the smiles and bonhomie of this lively session, there was a collective gasp in the room when it was revealed that Gerdin runs Heartland Express, which he founded in 1978 and took public in 1986, with an operating ratio of – wait for it – 76 per cent. Not surprisingly, the company is debt-free.

“A 95 per cent ratio is ridiculous,” Gerdin said. “You’re just working. Why would you want to do it for breaking even? The key is not how many trucks you have, what counts is how much each one makes.”

Are there clouds on the horizon? Yes, the four carrier compadres agreed that drivers will continue to be tough to find and increasingly expensive. Gerdin said he raised driver pay to 50 cents a mile earlier this year, up from 43 cents, and gained only 17 new drivers in the process. It cost him US$3 million, he said, and that just brought Heartland level with the LTL carriers who are moving steadily back into truckload territory and presenting stiff competition on the recruiting front.
Even with that worrying–some would say disastrous– situation facing the industry, the smiles around this year’s OTA convention were broad and the laughter deep. As Dunford said, it hasn’t been this good in 37 years. And from this vantage point I’d say you deserve it. So Merry Christmas, eh?