As President Trump maps out a $1 trillion infrastructure plan, it may pay off big for Thomasville-based Old Dominion Freight Line. It’s a bright spot in an industry coping with a driver shortage and changing technology. OD knows about the good news/bad news scenario: The country’s 10th-largest trucking company pulled in more business last year to the tune of nearly $3 billion, but profit slipped 3% partly because of higher fringe-benefit expenses. CEO David Congdon discussed challenges and opportunities facing the company in 2017.
Younger drivers aren’t replacing older workers.
Truck driver has long been North Carolina’s most common job. In 2015, more than 50,000 people drove heavy-duty trucks with another 24,000 behind the wheel of light trucks or delivery vehicles. Nationwide, there are 1.7 million truckers and another 1.7 million drivers of taxis, buses and delivery vehicles. It’s not enough: The American Trucking Association estimates there’s a shortage of about 50,000 drivers.
“The driver shortage, as an industry, is real,” Congdon says. “We’re in a different camp than the larger part of the industry,” which requires drivers to spend more nights away from home. As a less-than-truckload carrier — Old Dominion combines orders from multiple customers on each truck — drivers typically work weekdays and are home every night. Large-truckload carriers have a turnover rate of around 80%. OldDominion, which gave its 17,000 workers raises averaging 3% last year, has annual turnover of about 10%, Congdon says.
Autonomous rigs are coming, but when?
Truck driver was a job long thought to be immune to two major trends affecting U.S. jobs: globalization and automation. But the White House released a report in December predicting that 80% to 100% of these jobs could disappear as automated-driving technology becomes commonplace, though it didn’t specify when that might happen. Otto, Uber’s self-driving truck company, has only delivered beer so far in a pilot project, but “platooning” — technology that allows trucks to save fuel by driving closely together on the highway — is approved for testing in 10 states. Drivers will still be behind the wheel, though their rigs are more dependent on technology.
Trucking has long embraced technology, but Congdon doesn’t see enough conversation between the auto and truck industries. “We need a seat at the table,” he says. “I know from personal experience that driving a truck, there are a lot of variables out there. If we’re going to run [driverless] trucks alongside [driverless] cars, a lot of communication goes on in between.”
One piece of technology that could help Old Dominion is electronic-logging devices drivers will be required to use by the end of the year to track their hours. As smaller LTL carriers or even large full-truckload companies that drive longer distances struggle, Old Dominion could see an uptick in capacity.
Boosts OD, whose shares tripled in the last five years.
“We haul everything from the clothes you wear to the food you eat,” Congdon says. “We haul furniture, carpet, restaurant equipment, you name it.” And more frequently, the company is being hired to haul things directly to homes, particularly furniture and other large-ticket items. “We’re actually working on enhancing the final mile to go beyond delivering to someone’s garage or front porch to that white-glove service into people’s homes. The majority of our business, 99%, is business to business. We’re finding our business-to-business customers are doing business-to-customer now, and that’s going to be growing.”