Southern Cal Transport Inc.

Driving changes Few industry sectors have been hit harder than the trucking industry during the recent economic downturn. And if recession wasnÔÇÖt enough, the rising cost of fuel combined with waves of new regulations make 2010 a tough time for road haulers. But Andrew Pelis tells one tale of continued growth, courtesy of Southern Cal Transport out of Birmingham, Alabama. ÔÇ£The industry on the whole has seen a downturn in volume since late 2006 that only began to pick up in the last quarter of 2009. This has led to weak pricing resulting from more capacity than demand, which drives prices down,ÔÇØ states Ken Adams, CEO of Southern Cal Transport Inc.  ÔÇ£As a result, the larger companies have reduced their fleets while others have gone out of business altogether,ÔÇØ says Philip DeSimone, the companyÔÇÖs president. ÔÇ£Tellingly, an industry leader recently said that in 30 years his company had never had so many fronts to fight onÔÇöweÔÇÖve battled them all head-on with a focus on putting our customers first,ÔÇØ he adds. Despite the numerous challenges that US trucking is presently facing, Southern Cal has gone from strength to strength since it was purchased by Adams in 1998. ÔÇ£Back then the business operated 60 tractors and had annual revenues in the region of $12 million; we now run 650 trucks and have a workforce pushing 1,200, while last year revenues reached $127 million,ÔÇØ he says. The secret to AdamsÔÇÖ success comes from a variety of strategic moves, as DeSimone explains. ÔÇ£One of the key indicators of our strength is the growth weÔÇÖve achieved during the downturn; in 2006 our revenue was $102 million, and that has grown to the present-day figure. ItÔÇÖs not just one thingÔÇöweÔÇÖve implemented an aggressive cost reduction and containment approach, while at the same time reinforcing our focus on customer service. As unrelenting as the recession has beenÔÇöand continues to beÔÇöfor our industry, so has been our concentration on driving costs down and revenues up.ÔÇØ The business has also thrived as a result of diversification, and Adams has added three new divisions to Southern Cal, meaning it has been well placed to ride out the current turmoil. ÔÇ£When I purchased the company, it was purely a long-haul team operation between the Southern states and the West Coast. We now operate across the whole country and have gradually added new offerings to what we do, though long-haul remains our core business,ÔÇØ he says. One of the new areas to have flourished has been Southern CalÔÇÖs intermodal service, launched in 2007, by which drivers pick up intermodal containers from a railyard or shipyard and deliver them to a destination within a 250-mile radius and then pick up a return load. While a fair amount of its over-the-road freight is consolidated LTL (less than truckload), the company also delivers retail, building materials and automotive, and again, diversity has helped fend off the effects of the downturn. The addition of a logistics division has a focus on providing greater access to capacity for its customers, and the company remains diverse in terms of what it will transportÔÇöa blessing during the current hardships. ÔÇ£We wanted to spread our risk from doing only one line of business,ÔÇØ Adams comments, ÔÇ£and we thought that if we could spread our offerings, we could do more for our customers.ÔÇØ The introduction of the intermodal and dedicated services has provided additional work-life options for Southern CalÔÇÖs drivers too, as DeSimone explains. ÔÇ£There have been driver shortages in the industry because of the tough nature of the job, though there are more around at the moment given unemployment levels. Even so, what our drivers do is very challenging, and they are away from home a lot of the time. The intermodal and dedicated service offerings minimize drivers having to load or unload trucks, and they can concentrate purely on driving safely. Through a series of work-life options, weÔÇÖre trying to make driving more appealing and to maximize driversÔÇÖ home time while offering consistent earnings. Ken has a saying, ÔÇÿIf itÔÇÖs not good for our drivers, itÔÇÖs not good for the business.ÔÇÖ ÔÇØ At a time of heightened regulatory requirements from the Department of Transportation, particularly with regard to driver hours and safety, Southern CalÔÇÖs commitment to its workforceÔÇöincluding regular training through its fleet management network and a policy of hiring only experienced driversÔÇöhas further strengthened the company through adherence. Rising fuel prices have, of course, had an impact on the industry, and to partly counteract the effects, Southern Cal has a fuel surcharge that is adjusted each week. Of greater impact are the significant changes to the industry this year from the introduction of new engines. ÔÇ£Environmental issues are driving the changes,ÔÇØ admits Adams, ÔÇ£and weÔÇÖre always striving for cleaner engines and cleaner emissions; these changes have been mandated for this year. This will be the third engine change since 2004, and the engine changes require different equipment configurations on items like tires or trailers in order to cut fuel consumption.ÔÇØ Furthermore, Adams says that California has now introduced more stringent rules on trailers, so the company has to keep up on state-level issues too, but as a SmartWay carrier (a collaboration between the freight industry and the Environmental Protection Agency), Southern Cal takes its environmental compliance very seriously. DeSimone suggests that what is really at the heart of the companyÔÇÖs success is its customer focus, achieved with advanced technology. ÔÇ£Our business is driven by our customers, and we transport goods and information across their supply chains. Our mobile communication devices keep customers informed on progress and are essential in todayÔÇÖs environment. ÔÇ£Technology really permeates every function of our business, from emerging safety technology to predictive and preventive maintenance, and weÔÇÖre able to communicate quickly with our drivers through our satellite systems if there are severe weather disruptions on some routes, for example. Similarly, everything thing we do is customer-oriented, and weÔÇÖve built long-term relationships with many of our customers.ÔÇØ That customer focus continues to pay dividends, with further growth predicted to achieve revenues of $150 million this year. ÔÇ£As a mid-size business, weÔÇÖll continue to grow organically with our customers as much as they will allow us, and I see a regional market entry in the next few years,ÔÇØ DeSimone adds. ÔÇ£IÔÇÖve always said that if we serve our customers well, we will grow with them as new opportunities present themselves,ÔÇØ concludes Adams.