When word gets out that J. Harwood Cochrane is coming to visit UPS Freight headquarters, employees pack the lobby half an hour beforehand to greet the man who in 1935 founded the business long known as Overnite Transportation. Cochrane sold Overnite to Union Pacific in 1986 and left the company in 1989, but his portrait still looks down on the UPS Freight lobby in Richmond, Va., and his influence and role in the freight carrier’s eight-decade history still looms large.
Born in 1912, Cochrane is one of the few surviving members of trucking’s founding generation, a group that transformed the distribution landscape of industrial America and ending the dominance of freight rail, which had been the backbone of intercity freight transportation since the 19th Century. “Obviously, he was one of the pioneers of LTL trucking,” said James Welch, CEO of YRC Worldwide, another trucking operator with long roots. Cochrane “really set the culture of his company and that lasted a long time,” Welch said. Cochrane ranks with early trucking leaders such as Galen and Carroll Roush, founders of Roadway Express, Leland James of Consolidated Freightways and George E. Powell, Sr. and Jr., who in the early 1950s rescued the carrier then known as Yellow Transit Freight Lines from bankruptcy. From the 1920s through the 1980s, “They really pioneered the trucking network that allowed the movement of goods across multiple states,” said Welch.
Now 100 years old, Cochrane has survived to see the emergence of a new multimodal era of transportation in the 21st century, with his former less-than-truckload company part of $54 billion UPS. For Jack Holmes, since 2005 president of UPS Freight, Cochrane is a friend and advisor with 80 years of freight experience. For many UPS Freight employees, Cochrane is a symbol of continuity. He’s the man, perhaps, who hired their parents, grandparents or possibly even great-grandparents. There are still many employees hired when UPS Freight was Overnite and some who have been there long enough to remember Cochrane.
There’s no doubt the company, like the LTL trucking business, has changed since Cochrane’s heyday. For decades, Cochrane fought to keep the Teamsters union out of Overnite. Today, the LTL carrier is part of the largest Teamster employer in the country and has its own contract with the union. In June, UPS Freight Teamsters rejected a tentative labor pact by a broad margin, and the company and the union returned to the bargaining table this summer under a contract extension.
For Cochrane, who started his career hauling milk from the country to downtown Richmond in a horse wagon and who sold one trucking company for $1.2 billion and started a new one at the age of 79, many of the basics of the business haven’t changed: you need good employees, strong customer relations, an innovative spirit and a certain amount of “hunger” to make it in trucking.
Cochrane and Holmes discussed the past, present and future of LTL trucking in the following interview with The Journal of Commerce at UPS Freight headquarters. This is the full transcript, a condensed version of the interview was published in the print version of the 2013 Guide to Trucking.
William Cassidy: You reached the age of 100 last year, Mr. Cochrane. Your perspective on trucking is a really important one. You’ve seen the industry grow from its earliest days through this increasingly multimodal era of transportation. You were involved in running trucking companies, first LTL carrier Overnite and then truckload carrier Highway Express for, I believe 70 years, altogether?
J. Harwood Cochrane: Just about that, yes.
Cassidy: And you’re still here to advise Jack Holmes at UPS Freight. Why don’t we start with how you got started in trucking.
Cochrane: Well my father died when I was 16 and I came to Richmond and got a job driving a horse and wagon delivering milk. When I was a day over 18 they gave me a truck. So I stayed with the dairy three and a half years. And I got used to driving a truck, and I’d been running a lot of errands with it too, with the truck, for my customers. So it just kind of grew for me to be in trucking at some point. I got an early start in 1933. I did everything wrong. I bought the wrong tractors, the wrong tires, the wrong size … how I survived nobody will know. But the first truck I bought was a new Ford with booster brakes on it. Booster brakes only worked when the motor was running, so it was a little dangerous to operate with that. I had Chevrolet wheels. They wouldn’t work on a Ford and wouldn’t fit on an International, so I had problems with wheels and tire troubles. But I had a lot of friends in the trucking business, and I had a few I think who wanted to put me out of business. They abused me from Day One.
Cassidy: When you started out in 1933 or so, what was the trucking industry like in those days, how would you have defined it looking back on it?
Cochrane: Well there was no difference between LTL and truckload, most people hauled both. I hauled a lot of school tablets (paper) and stuff like that to begin with. But I got into storage, eggs and I got into tobacco and things began to progress. I had a lot of accounts that … I helped build their companies and they helped me build my company. Lowe’s Hardware in North Wilkesboro, N.C., would be a good example. I served the first three stores they opened, and I served them for a long time.
Cassidy: A big company still today.
Cochrane: Yes, Lowe’s is tremendous in size.
From Horse to Truck
Cassidy: And when you began, you were hauling for a dairy operation, am I correct?
Cassidy: And also working at night to haul other freight?
Cochrane: Well I was working in the dairy from five minutes to 2 in the morning to about 11 o’clock. So my brother and I used to move a lot of family furniture and stuff of that kind. And I hauled a lot of fertilizer for a fertilizer company to points with 60 miles of Richmond, so we were working about 18 hours a day, the both of us.
Cassidy: And this was in the early 1930s, so working was good.
Cochrane: Yeah, ’33 and ’34 were tough years. I opened my second terminal in High Point, N.C., in about ’36 and started hauling furniture. I never ran another empty truck after that. I had an 18-foot international with an overhang over the cab, 6-foot tailgate, you can’t believe the furniture we could get on that thing. A load of furniture would pay about $135. So for that one day I always had a return load, and at that point I started buying better equipment. I was the first person in Virginia to buy tubeless tires. It almost bankrupted me. I was the first person in Virginia to buy Mack diesels, and that was a great improvement, even though the diesel weighed so much more, and you could haul about 1,500 pounds less, the diesel truck worked out beautiful.
Cassidy: Did that give you extended mileage from what you had before?
Cochrane: That just about doubled the mileage. Gas engines were around 4½ to 5½ per gallon and diesels were up around 9 and 10 miles per gallon.
Cassidy: When you began hauling freight, how long was your typical haul? How far could trucks really go in those days with the roads that you had then and the distribution set up you had?
Cochrane: I went to Kentucky and that was as far as I went for a long time. I was the first carrier to operate coast to coast. I had sleeper cabs with single axle trailers pulling twin trailers. I got a real jump on the coast-to-coast business. When union carriers started coast-to-coast service they had to change drivers at least four times. That slowed down their service, so I had a great advantage.
Cassidy: You put team drivers in doing that, is that right?
Cochrane: Oh yes, they were all teams.
Cassidy: When you began, you were a driver yourself of course, and that’s how most trucking companies started in those days …
Cochrane: I was a driver for two years, and those were a tough two years.
Cassidy: How long were you away on a typical run?
Cochrane: Well, I usually worked about 12 hours a day. I’d stop and sleep on the side of the road where I was.
Cassidy: You didn’t have truck stops or hotels or any of the amenities we look for today at that time.
Cochrane: We were delighted to see truck stops, and we used them mostly for eating and drivers’ rest. When they started building truck stops here in Virginia it was a great help to us.
Cassidy: And that’s still an issue, unfortunately, today, isn’t it Jack, the ability to find adequate parking for trucks when drivers are on the road?
Jack Holmes: Yes, it’s turned into a hot topic in the revenue crunch right now.
Cochrane: I would see trucks 70 miles off a course, they owned their own truck in some cases. To see them 70 miles off course, that cost them a lot of money.
Cassidy: Those must have been really interesting times to operate in — you didn’t have much regulation, at first. You had drivers hauling all kinds of freight, doing all kinds of things to make money. Physically, what was that life like for you?
Cochrane: Well, it was a tough life, particularly when I had a bride at home. I had a 1941 Ford and I traded it in on my first truck. I was engaged at the time and I almost became disengaged. My wife didn’t think much of riding around on the weekend in the (truck) cab, not with a trailer but in the cab. But she tolerated it all and it came out well for her as well as for myself.
Holmes: Bill, Mr. Cochrane and Louise have been married for 79 years now and there’s only one thing she’s looking for from you, right (Cochrane), and that’s a honeymoon, she said she’s still waiting for a honeymoon?
Cochrane: I got married on a Saturday evening and I left on Sunday morning with a load of sugar bags for Arbuckle’s in Brooklyn. And as I left she was in tears and she said, “I’d hoped we could have a little honeymoon.” And I said, “I promise you we’re going to have one and it will be a humdinger.” And I’m still promising her that honeymoon, and it’s going to be a humdinger when we have it.
Holmes: He took the money for the honeymoon, but when he had to deliver those sugar bags to New York he had to have a special license to do it, so he took the money for the honeymoon and got his license to haul the freight up there.
Cochrane: That’s a tough place to be without money, I’ll tell you that.
Early Days at Overnite
Cassidy: When you founded Overnite in 1935, how did you make the jump from being a driver with one or two trucks to running a trucking company, how did you come to do that?
Cochrane: It came fairly easy. I had some good employees. One or two that I trusted, and I went to them for advice all the time. They didn’t get much credit for managing the company, but they helped a whole lot.
Cassidy: And you only had a small number of employees at first. How quickly did you expand?
Cochrane: I found ways to expand. R.J. Reynolds, the tobacco company, were shipping cigarettes coast-to-coast from North Carolina, and they had to interchange three times. Those truckers had all made a deal they wouldn’t expand over each other. I went to see R.J. Reynolds and people warned me, “Don’t dare go up there without a pack of cigarettes in your pocket, because he’s going to ask you for one.” Well I got all set and went up there, and he turned out to be the best friend I ever had. I applied for some intrastate rights, and a company from North Carolina was the first witness against me, he just tore that fellow up, and all the other witnesses against us just left the building. So anytime I wanted to have an extension, I called him and he would help me. But he was a witness for me. The other carriers were not.
Cassidy: And this was back in the time when you wanted to get rights to operate in a certain lane or a certain state you had to go and prove that you were fit to do so, and others had the option to challenge you. And that was true under regulation, which began the same year you founded Overnite, in 1935, right through 1980. What were your thoughts on the introduction of economic regulation in 1935?
Cochrane: Well it was the best thing that ever happened. I hauled freight for a minimum charge of 35 cents, imagine a minimum charge of 35 cents. We started at 55 cents when the regulations came on in and of course it went on up. Today it’s probably $31 or something like that.
I had a lot of experience with equipment. I worked really hard with equipment, and I kind of set a pattern. I was the first person to get twin trailers in Virginia, and I was allowed to run from Richmond to Alexandria for two years on test runs. About that time UPS came into the picture, and the corporate commission wanted to release all carriers so we could all compete with each other. From that day on, the smaller shipments went to UPS and FedEx.
Cassidy: So as you began to add new equipment and the equipment changed, was that a driving factor in your ability to expand and serve a larger territory?
Cochrane: Everybody ordered something different. Nobody wanted to accept their competitors’ specifications. So we all wanted something different. I finally, to my surprise, was able to get the four largest carriers’ vice presidents to sit down with me and we worked on standardizing parts. To my surprise, one of the carriers said we want to move the light switch, the light switch in the trailer was in the middle of the trailer, you needed a catwalk to get up there. I want that moved to the left corner. I want to step out of the tractor, I want to hook my fuel lights up, I want to be able to hook my gas line up. We worked on that thing … and of course when they first had twin trailers they had a joy stick you had to drop to keep the trailer from pulling the nose over, we wanted to get rid of that. So this deal we had, we moved the fifth wheel forward, the king pin forward eight inches, and that did away with the tilting, that did away with the joy stick. And we tried to go to standard everything but tires. It was difficult to choose one brand of tire. There were all kind of schemes. I used Goodyear tires that had some burrs in them or some manufacturing problem. They could sell them much cheaper. Eventually I started buying them by the trailerload. Of course, as high as they are today, they were cheaper when you bought them in volume. So I bought all my stuff in volume, and I was paying cash for stuff, to my surprise, after seven or eight years being in business.
Cassidy: Was it really hard to get financing in those days if you were a trucking company?
Cochrane: It was impossible. The railroads had people on every bank board. And it was tough as heck to get in there and borrow anything.
Cassidy: They basically locked the trucking companies out of those financing opportunities?
Cochrane: Oh yes, the railroads made it tough for the truck lines to expand, to get more length, to get more weight, to get more height. Every year we had to fight for some improvement. I remember a 28-foot trailer was as long (a trailer) as you could have at one time. We went a long ways from that to 80-feet (tractor-trailer combined length).
Infrastructure & Expansion
Cassidy: And that’s still a major issue today, size and weight and productivity. Jack, could you take a moment to talk about that and how it affects UPS Freight today?
Holmes: I think it’s the whole idea of infrastructure. We’ve got such a dilemma that has to be solved in how do we reinvest in highways. And there are a whole lot of regulations that are being considered, from hours of service to CSA, things like that, that could hurt the productivity side of the trucking business. With all of the concerns there are in regards to congestion on the highways, it would seem to me one of the ways we would look is towards how do make the trucking industry more productive. More productive means getting more freight on a trailer, more freight for each tractor pull, and at the end of the day that means less wear and tear less vehicles on the highway. That to me would seem to be a good measured approach to how we solve our infrastructure dilemma. We have less of a dilemma if there’s less vehicles on the highways. So if you’re fixing the roads, doing that the right way, and at the same time trying to do things that will allow trucking companies to put less vehicles on there, to me that makes a lot of sense.
Cassidy: I think the first federal highway spending or road act was passed around 1916, and by the 1930s we were seeing the development of a lot of national routes for the first time. What limitations did infrastructure, basically the roads, place on your expansion and on trucking when you were starting out.
Cochrane: In the winter time they would put restrictions on all the roads because they were freezing and breaking up, and that would drive you crazy. We would try to figure out some way to deal with that. But that was hard to do. That’s when we went from heavy-hauling cars back to Chevrolet tractors. I remember there was a woman in Norfolk, at Hampton Roads Transportation, she had these big Autocars that were insulated to haul fish and stuff. She sold all that and brought Chevrolet tractors, just to deal with that restriction every spring.
Cassidy: So the pavement issue was part of it, actually how they were building the roads. As the roads were built out, and especially when we had the Interstate system come along in the ‘50s, how did that help expand Overnite Transportation, was it something you saw coming at the time?
Cochrane: Well, I bought 52 companies trying to get my franchise coast-to-coast. And some of those companies were in places like Hazard, Kentucky. One set of rights I bought had to go through Hazard, Kentucky. And they built the TVA dam the day I was supposed to start running through Hazard. They let me choose my route because they closed off the TVA dam. So I was able to get a short route through there. I had an advantage over Mason Dixon because they had to go through Kingspoint. So I had a few advantages and I tried to take advantage of all of them. But we ran direct from Richmond to Louisville, direct to Charleston (W. Va.) and direct to Columbus, Ohio, to Cincinnati, Ohio, and in many cases we gave next-day service to those points, which was a great coup on our part.
Cassidy: And again, this was in the days of the Interstate Commerce Commission and economic regulation. If you wanted to expand, you couldn’t just say, I want to start service to Des Moines, you had to have a carrier that had that operating authority and those exact routes, am I right?
Cochrane: Yeah, I bought a lot of stuff I didn’t want to get to what I did want. But when the ICC withdrew from support or didn’t require you any more to go to the ICC, I’d gotten as far as Denver on one route and beyond Chicago on another, so I had three routes going to the west coast, and I was headed that way. When they stopped requiring any kind of application, then you could choose any city you want, any route you want, stick to the big cities, stick to the ones that had two-way traffic. West Virginia turned out to be one of my best states. Every city had a big plant. There would be a B.F. Goodrich or General Tire. When I finally got to the point where I could keep records, I was making money where I didn’t think I was making money, and losing money in some places where I thought I was (making money).
Cassidy: And what year did you finally get coast-to-coast, after starting out in 1935?
Cochrane: It must have been somewhere around 1955, somewhere in there.
Cassidy: So trucking and Overnite expanded slowly but surely, as you were able to buy better equipment, had better infrastructure and better roads, and as you were able to buy, as you had to, companies that gave you authority in those territories where you wanted to expand.
Cochrane: We were glad to see restrictions (on bridges), particularly on height, because you could have a trailer high enough to clear 99 bridges but it wouldn’t clear the 100th. We saw so many trailers torn up. Today they can’t blacktop under a bridge, they have to keep it the same height they had. But it all seemed to work itself out eventually. Richmond has one of the worst things I’ve ever seen. Your own company has parking land and the city won’t let you use it. Our mayor should help but he hasn’t done much …
Trucking Grows in Richmond
Cassidy: What made Richmond in particular a hub for trucking in the early days? You had a number of companies that you’re very familiar with, ODFL, Estes Express Lines, which also have their roots in Richmond.
Cochrane: Well Estes started out hauling milk, and they ran seven days a week from Chase City. Old Dominion started running Richmond to Norfolk. I started running principally from Richmond to High Point, N.C. I sold my company to Great Southern but they wouldn’t take delivery because it said “Return Route” from High Point, it didn’t say all route, but return route. We had to come back through Danville. We dragged that through the courts for about seven months, and they came and said, “If you pay our lawyers, we’ll forget the whole thing.”
Cassidy: A lucky day for you wasn’t it?
Cochrane: That was a lucky day for me. But Richmond had a huge big manufacturer of school tablets, a huge manufacturer of cotton sugar bags for all kinds of manufacturer. All kinds of tobacco, but they wouldn’t use trucks for that originally. We finally got to the point where they’d let us handle Washington, Baltimore, but New York, the theft there was so bad. Heck, I had about seven loads of cigarettes stolen … actually I had 12 loads stolen and got about seven back. So it wasn’t a question of whether you could haul or them or not, it was a question of whether you could afford to haul them.
Cassidy: You built an extremely profitable business at Overnite. Before you sold the company in 1986, the operating ratio was typically in the 80s, which is very low. There are very few — only one public LTL company that I know — LTL carriers with operating ratios in the 80s today. Could you tell us how you managed that profitability?
Cochrane: Young people were a part of it. I hired a bunch of young people who would work seven days a week. My dispatchers, some of them were making $110 a week, but they were on a 40-hour week. So Saturday all my dispatchers came in and checked tires for two hours, that being exempt.
Cassidy: You also standardized a lot of the equipment, as you mentioned.
Cochrane: I was slow to do that. I standardized early on, but not with the right equipment. I didn’t take the tubeless tire and the diesel engine. A lot of those things were coming on and I tried to be smart and choose the right things. I bought all the equipment. I volunteered to be a guinea pig on the tubeless tires, and B.F. Goodrich installed them throughout the system. It almost broke me. The tubeless tire was a big pain for the first five years. And the diesel engine, they had trouble with the diesel engine. I bought Mack diesels when they were not popular, because they doubled your mileage. By modernizing you could save a lot of money. What I said earlier about changing equipment. The landing gear used to be on the right-hand side, but you get out on the left side of your truck. We learned how to make it much easier for a driver to get going.
Cassidy: When you come to the UPS Freight lobby today, there’s a truck downstairs, I believe it’s a Ford Model T. If that’s not the original truck, is it the same kind of truck you began with?
Cochrane: No, that thing sat at a furniture company garage for years. One of my employees bought it, fixed it up and sold it to me. But the company never used it — only in parades.
Holmes: Bill, if I could comment on two points about the success of the company and how Mr. Cochrane built it up. One is Mr. Cochrane’s devotion to his employees and in return his employees’ devotion to him. Mr. Cochrane always treated the employees of his company like his family, and was a pioneer I believe in giving his employees a piece of the company. One of the things you did that really gained a lot of loyalty from your workforce was to give a piece of the company in stock. I know that was a big deal.
Cochrane: At one time, 81 percent of our employees owned stock. That didn’t last long because they’d need some money and they’d sell it off. But twice a year we’d have a payroll reduction purchase, and we always sold it about 75 percent below the market. So we were guaranteeing a profit just about. So they bought big, but they didn’t keep it that long.
Holmes: If you looked, you’d see generations of workers where Mr. Cochrane had originally hired the father or mother and the kids would come to work. It was all throughout the company, and it might be in multiple cities, but the family string that runs through (the company) is pretty incredible. And then the other thing I would mention is on the customer side of the business. We’ve had a couple of functions here where we’ve honored Mr. Cochrane, and we’ve had some of the shippers who were very young in their jobs when Mr. Cochrane owned the company and who are now senior in their jobs, but the loyalty has extended from Overnite to UPS Freight, and we’ve been very fortunate in that. But the opportunity for those customers to come meet with Mr. Cochrane again was pretty incredible. The lesson there is the loyalty and the trust between the carrier and the customer is huge. I think Mr. Cochrane was the one who really taught this business how important customer relationships are and what they can mean to the business.
Cochrane: When we would hire a new employee and we would give him 25 shares of stock at the end of six months. But he couldn’t get the stock until the end of the year. Because he couldn’t take the stock and go look for another job. One of the best things we ever did was give our employees 3 percent of their salary in retirement, and that turned out to be one of the things that kept us free from the unions. They didn’t want to talk to anybody as long as they were stockholders. And that made a big difference for the company.
Cassidy: Did that give your employees a different view of the company and their role?
Cochrane: Thank goodness the company was very profitable and that didn’t affect us a whole lot.
Battling Railroads & the Origins of LTL
Cassidy: I wanted to ask about competition, not necessarily with other truckers but with another mode of transportation, the railroads. When you began in the 1930s, the railroads still carried a lot of what was then called less-than-carload freight. Within 30 or 40 years, that had become less-than-truckload. How did the competition with the rails evolve, how did LTL originate?
Cochrane: At Burkeville, Va., there was a sanitorium. They used to send a lot of people in there, people who were picked up off the street were sent there a lot. They got, they bought a lot of freight, paper towels and stuff like that. The railroads would pick up a shipment of carrots in Spencer, N.C., and they would ... that shipment rode into Spencer, N.C., and came back and took about four days. I went up and talked to those people and told them I could unload that at 2 a.m. or 3 a.m. So I started handling their service. Some days I’d have a load going to that particular place. I remember toilet paper and paper towels were the big things. But the railroad service, it was so poor, you’d take a place like Winston-Salem to around Pulaski, Virginia, through there from Pulaski to Bristol, Va., by rail it was about 185 miles but by truck it was 27 miles.
Cassidy: So they (the railroads) would take the freight by rail to the depot, unload it, put it on a truck or wagon and drive it to another depot or the destination? And were they holding the freight in railcars all that time?
Cochrane: Well, the railroads were losing money on LTL. And I think they were glad to get rid of it. When they restricted their pickups to carload, I think it was a good day for them. It sure was a good day for me.
Holmes: Mr. Cochrane, when Railway Express Agency, when that went out of business (in 1975), that was a huge jump in the freight you were carrying, am I right?
Cochrane: We were competing with each other for refrigerators that were distributed from Richmond. I’d get about six or seven a day, and REA would that many or more. So I just kept fighting to get more and more loads of refrigerators. Some days I’d get 10 and I couldn’t get 10 on one truck, so I’d call the receiver and tell him I had the refrigerators and I’d ask is there any particular one you need? And he’d give me the couple he needed. He didn’t care if the rest of them took a week or not. We worked out a lot of things like that that improved his service. But I delivered a lot of freight at 2 a.m., 3 a.m., 4 a.m.
Cassidy: And these were things the railroads just couldn’t do at that time with their service network?
Cochrane: They couldn’t do it. With LTL (freight) they were in terrible shape.
Cassidy: After that period, how did LTL evolve to become what it has become, as you got into the 1940s, ’50s and ’60s?
Cochrane: Well today UPS and other companies handle a lot of the smaller shipments. We used to handle envelopes — it would cost $27 to deliver an envelope and, well, UPS would deliver that for I think about $10. So we got out of the small package business when UPS came along.
Cassidy: You focused more than on the palletized freight, or were you looking at other things at the time?
Cochrane: Procter and Gamble was the greatest place in Cincinnati. The return load had a lot to do with it ... the return load had a lot to do with where you put your terminals.
Cassidy: Was there a distinction between truckload and LTL at that time?
Cochrane: There wasn’t a truckload carrier. The LTL carrier handled it all — truckload and everything. So we didn’t have any distinction between truckload and LTL.
Cassidy: So up until deregulation in 1980, companies like Overnite, ODFL, what was then Yellow and Roadway, those were the trucking industry?
Cochrane: They were, yeah. Some of them set the pattern. Texas carriers, they set the pattern a lot down there. Most of them are gone now, but Central (Freight Lines) was a big one. They set the pattern.
An Early Attempt to Go Intermodal
Cassidy: To move forward from those early days of rail competition to the 1980s, at which point the LTL industry had evolved and that former LCL business was all within the trucking industry, you sold your trucking company to a railroad, Union Pacific …
Cassidy: … for I believe $1.2 billion, which was largest amount ever paid for a trucking company to that point, and still one of the largest trucking acquisitions in history.
Cochrane: Yeah, I think so.
Cassidy: That was a good deal for you.
Cochrane: Turned out that way, yeah.
Cassidy: Union Pacific, however, had problems with their initial vision. Can you talk about what you think they wanted to accomplish at that time and why it did not work out? They wanted to have an intermodal venture, but was the idea premature, or was it not the right idea?
Cochrane: We think it didn’t shape up exactly like we wanted it to. The railroads were losing money on LTL traffic, and the trucking industry was picking routes, they’d pick a route and they’d build an LTL lane on it. A place like New Bern, N.C., no one wanted to go there. Somebody gave me New Bern and I ran it for two years and then gave it back to somebody else. But the LTL carriers, they kind of built their own businesses. All of them did it differently. All of them bought different equipment. All of them thought they were a little bit smarter than the other fellow, and it didn’t work out that way always.
Cassidy: And when intermodal really took off, it was more truckload on trailer rather than LTL on trailer, with J.B. Hunt and what’s now BNSF …
Cochrane: I put a lot of trucks on rail, but it didn’t turn out to be a great thing. I had four loads of spent ammunition from the Savannah, Ga., area one time, and when it got to the inspection station the guy ran it wrong. Hell, they parked all the trailers, locked them up, took the drivers to a hotel, took the clothes off and burned them, and raised hell and then they figured they ran the damn thing wrong. So we had our ups and downs. The railroad watched all the time, they were always looking for a weak spot in us. And not having much luck. They had their own problems. I think the fact the UP in the case of bad weather could put a lot of trucks on the rail, they have a big advantage there.
Holmes: Mr. Cochrane, you and I have spent a lot of time talking about the Union Pacific acquisition. Could you share with us what their vision was for Overnite being part of the UP. And more importantly, and you know I have selfish reasons, because I don’t want history to repeat itself, what mistakes they made when they came into the trucking business?
Cochrane: Well, the employees (of Union Pacific) over the years had been taught the trucking industry was their worst enemy in the world. They just hated our people. We didn’t have any fist fights but we were right on the verge of one two or three times. Around Denver and through there. We were soliciting LTL and they were soliciting the same freight. I really don’t know why the UP particularly wanted Overnite. I understood they watched us for two years before they made an offer. But it was a great day for Overnite, because the stock was selling for $33, and they offered us $41 and we got them up to $43.50. The company increased its value by several billion dollars that day. I’m sorry I didn’t have more stock.
Cassidy: If at that time the intermodal vision UP had didn’t work out, we’ve certainly seen a lot of change in the 30 years since, and we’re seeing a bigger push for intermodal now. Jack, how is intermodal, or multimodal, affecting UPS Freight’s business today?
Holmes: What we’re always trying to do is fulfill our customers needs. At UPS, one of the great offerings we have is regardless of the mode of transport we can do that. Since the recession hit, you’ve seen the shipping community really challenge itself on its supply chain. Some of the bigger companies have changed their entire networks, and they have gone from smaller, infrequent need-it-there-fast type of shipments toward bigger, slower don’t-really-care-what day-it-gets-there shipments. When you think of UPS, the first thing that comes to mind is the parcel business. So our strength was more in that smaller, infrequent shipping business. So you’ve some people move away from what many people considered to be our strength, but they’ve moved toward another strength of ours. The intermodal business has always been a strength (for UPS); we’ve been the largest intermodal customer of the railroads combined for many, many years. We’ve got very good relationships with the railroads. And frankly I think we’re one of the ones who prompted the railroads to improve their service to the point where they satisfy what our customers are looking for. But I think intermodal is an important offering for customers who are looking for a little less time-sensitive option. And I think you’re going to see this move on compliance. Companies are asking us now about carbon footprint, and as those discussions become a key decision point, one of the criteria for choosing a company, being able to offer an intermodal solution is going to be a key to that. Because the carbon footprint for intermodal is vastly different from over-the-road. So at some point, and I think it’s as companies get healthier, they’re going to look for a more environmentally responsible option, and intermodal is going to be part of that. The companies that don’t have the ability to offer that are certainly going to be left on the outside of those bids.
From World War II to Deregulation
Cassidy: If I could skip back a few decades from the 1980s where we left UP and Overnite, I wanted to ask about the Second World War, which was of course a seminal event in the 20th century and which changed the American economy in ways we are still feeling today. What did the Second World War mean to Overnite Transportation? What challenges and opportunities did it provide?
Cochrane: We had built a huge war supply plant in Richmond. At one point we’d load three to five trucks a day there. That went on for years. Finally somebody made a deal to have all of that freight at a reduced rate, so we got out of that. But we hauled a lot of government freight. Charlotte, N.C., there was another depot there. We hauled a lot from there. So we found war freight in many places.
Cassidy: Did that really make a difference for trucking — the ability to get in there and get that freight and move it quickly, as opposed to the railroads, and their slower infrastructure and capacity?
Cochrane: Well, in most cases, the trucks could beat the railroads. Coast to coast there wasn’t much of a difference. It was a five- to seven-day transaction. Five to seven days. But the trucking industry was designed to handle LTL freight, and the railroads were designed to handle box cars, and the two don’t fit together too well, or at least they didn’t in the past.
Cassidy: And LTL freight is still very different from the truckload freight that goes intermodal. How much did you expand during the war years?
Cochrane: I expanded a lot during the war years but I bought very small companies. I bought a company from Durham to Danville, three employees. One out of Lynchburg with five employees. I bought a lot of very small companies, usually to get to one important place. Macon, Ga., was one of the places. They had five shippers, and I bought Atlanta-Macon. And the day I got there, there were five carriers ... each picked one of those carriers and cut the rates 20 percent. I cut the rates 20 cents and they tried to get me to raise them but I stuck with it, and all those carriers went out of business eventually. Well, maybe one of them survived.
Cassidy: You made about 52 acquisitions was it, in the period between World War II and 1980?
Cochrane: Yeah, a lot of them were union companies like Rutherford Freight Lines of Bristow, and Lewis and Hobbes of High Point. Eventually we learned how to deal with those things. You make some mistakes, but you learn how to deal with them.
Cassidy: Well, when 1980 came along and the Motor Carrier Act, deregulation, what were your opinions on that at time? Were you in favor of it or were you opposed to deregulation?
Cochrane: I had mixed emotions about it really, but I thought I could see more good than bad from it. I ran south, and I didn’t have a lot of competition from Richmond going in that direction. Anybody going to Richmond was running north, all the carriers in Carolina were running north. So I was running from Richmond south at a time when there was very little competition. You probably had about 16 carriers running between Richmond and Charlotte at that time. There’s got to be more mergers in the trucking business. You’ve got to put more companies together. You can’t start from scratch and build companies anymore, I think. You’ve got to buy something and make it better. There are plenty of opportunities out there still.
‘A Desperate Need for More Mergers’
Cassidy: That’s a really interesting point, because of course back in 1980 you had many more competitors, as you were saying 16 competitors on one route. Where the consolidation we’ve seen since deregulation has been immense. Today the top 25 LTL carriers make about 90 percent of total LTL industry revenue, about $28 billion out of $32 billion. So, where do you think LTL needs to go now? Do we need to see more consolidation, or do companies, if they want to be more profitable, need to run operations better?
Cochrane: I think there’s a desperate need for more mergers. The middle-class carriers, the AAA (Cooper)s, the Southeasterns, that size carrier, they don’t go to the West Coast, they don’t go to the East Coast, they’re kind of stuck in between. They’re working with each other, and they’re doing a pretty good job, but I think they’ve got to merge eventually.
Cassidy: Do you think we need more national LTL carriers, even if their business is still regionally oriented, as many of them are?
Cochrane: I don’t think you need any more, you need better service from the ones that are running out there now. Take Old Dominion for instance, they’re big on the West Coast, and they’re still in High Point. The prices are going up, but there are still better opportunities for two carriers to get involved and to put companies together.
Holmes: I think Old Dominion is a good example of a company that used for lack of a better word “the old model.” You would buy up companies to expand, or in Mr. Cochrane’s case, to get rights to service certain geos. OD bought companies to fill gaps in their geographic coverage. I think there are probably two types of acquisitions that could take place. One could be some regional companies that have identified a need to be more than a regional company. And the best way to do that for them would be to find another like-minded different regional company. And the other one I think is to look at modes of transport. You have companies like a Con-way that bought a truckload company. They wanted to go in and offer two options, LTL and truckload. You have obviously ourselves and FedEx that can offer multimodal. So it’s about your vision. Do you want to be a player that can go in and say, “I can handle this type of freight. I do a good job and I can give you a good deal on it, but I handle this type of freight.” Or do you want to go to someone who runs a supply chain and say, regardless of what comes out of their mouth, “We can do that.” I think that’s for each company to decide. There’s certainly opportunity with that but there’s also risk. We just talked about the railroads. Every one of the railroads has an ugly acquisition that they made in their past, and those ugly acquisitions were typically some kind of trucking company. And it just did not work out. They were trying to get out of their comfort zone, they were trying to be multimodal, if you will, long before the word was invented, and it wasn’t successful. So it will be interesting, because I’m sure some people will go down this acquisition path, they’re going to try to broaden their portfolio, but there’re risks there as well. You get outside of your comfort zone. Some regional carriers build x number of destinations, let’s say it’s 15 destinations, and they build directs to each destination. That works in a regional network, but it doesn’t work so well when you get beyond that. Then you have to go to a hub-and-spoke system, and it’s an entirely different model with a different cost structure. It’s a whole different ball game. It will be interesting to see. But as Mr. Cochrane said, he’ll come to me once in a while with some ideas about cobbling together three or four companies and want some ideas about whether I think it will work, and he’s usually spot on when he’s talking about it.
Cassidy: Looking back at the 52 acquisitions you made at Overnite, are there any that stand out in your memory as being difficult in the sense we’ve been talking about?
Cochrane: Lewis and Hobbs at High Point gave me all of Georgia. I had five cords of tires going to Georgia every day and I had to interline it all. So the minute I could deliver direct I picked up another 20 percent and was able to get some backhaul out of it too, so that one stood out. Rutherford Freight Line, they gave me Richmond to Petersburg. I didn’t even have Petersburg until I bought them. And then I bought Tidewater to Baltimore, they had four employees, and in a short time we had 175 employees in Baltimore. So there were a lot of opportunities at that time. We struck oil in some of them.
Cassidy: You mentioned the acquisition that gave you access to Georgia — was that the one that opened Atlanta to you?
Cochrane: I bought a carrier from South Carolina that had all of Georgia and a lot of other territory. For Dupont in Richmond I made a living hauling tire cord for years. It paid pretty well, but called for some special equipment. With this purchase, I could serve all of the five tire plants down there. So that was an opportunity. Basically we picked cities rather than routes.
Cochrane: You were looking at city to city? The way rates were calculated.
Cochrane: Right. If I had a lot of freight to Georgia, then I’d find some in Georgia coming back.
Troubles with the Teamsters
Cassidy: Moving into Atlanta to if I remember correctly was an issue for you because of union involvement in the area. This could lead us into a discussion of your long relationship with the Teamsters union and how that developed.
Cochrane: Well, when I went to Atlanta, the union jumped right on me. They were determined not to go through the election stuff; all that stuff could take nine months. So they were just going to shut me down. I carried a bunch of drivers down there with me, and every night we’d pull out at about 5, and the union would follow us up the road. One night I was driving, and a car came at me, and a fellow leaned out of his cab with an iron pipe and hit my mirrors. Scared me to death. I ran off the road but not far. I got back. The next night I was all set for them. The same guy came by and he was leaning way out of the car with his pipe and just as he did I took the middle of the road, I straddled the yellow line. And he ran off the road and turned over twice. I never heard a word about, never got a report of any kind. Somehow I think that guy went to sleep or something.
Cassidy: This is important to mention. At this time you were a non-union company in an industry that was union dominated and largely organized by the Teamsters union. You did mention in another conversation we had that you were under a contract for a very short time but then afterwards decided you didn’t want to be a union carrier.
Cochrane: Well our biggest account out of Richmond had a strike, and I hauled for them all through the strike, and the minute they signed a contract, they barred my trucks from going in there. I didn’t pay much attention to that, I went on and signed a contract, and it was 18 months of hell. They called a strike at my place, put pickets up, because I wouldn’t fire a fellow named Red Hall. It turned out eventually that Red Hall was in Baltimore working for somebody up there. The union said let’s forgive and forget. I said I’ll forgive but I’ll never forget. From now on I’ll have one truck and drive it myself but I’m not going to sign no more union contracts. And I was able to stick to that.
Cassidy: What enabled you to do that over the years? The pressure must have been pretty intense.
Cochrane: Well I came from a family of seven where only one finished high school. My kinfolks were all poor. I just looked for something ... I wasn’t going to get much of an education. I was looking for something I could succeed in, and trucking looked like something I could do.
Cassidy: And as you mentioned, you made an effort to give your employees part ownership in the company. Did that help you keep your status as a non-union carrier?
Cochrane: From the time I had any one of my employees owning stock, the word union wasn’t mentioned in the company. If someone started talking about it the others would close in on him. I think they beat up on a couple who tried to set up a union. But once the employees became stockholders they took a different attitude entirely.
Cassidy: Over the years you had several run-ins with the Teamsters, who made several attempts to organize Overnite in your time and afterward. How important was not being a Teamsters company at that time to your success.
Cochrane: Oh, it meant everything. I had trucks running from Richmond to Greensboro and back. And if I decided it would be better running trucks from Greensboro to Richmond and back I’d move the drivers around. I couldn’t do that with a union. You’d have to put everything up for a bid, and a lot of times you’d end up with no success. I was able to do a lot of things fast.
Cassidy: Without having to worry about changes to work rules?
Cochrane: Yeah. I had to worry about the 40-hour week, because I got caught on that once. Cost me $105,000.
Cassidy: Today, of course, the world’s turned upside down. Trucking is largely non-union, and it’s largely truckload. LTL is about 5 percent of total trucking revenue. In the LTL sector, there are a very small number of large unionized carriers, including UPS Freight, formerly Overnite. How have your views on unions, labor relations changed since you left Overnite? How do you look at it today?
Cochrane: You don’t have to be union anymore. The relationship you have with your employees ... we had ballgames, picnics, we always had something to bring us together. To let them be stockholders was the greatest thing that ever happened. I took a bold move, and it worked.
Cassidy: Jack, UPS is the largest employer of Teamsters, and UPS Freight is part of it, and you have a separate contract with the Teamsters union. Can you speak to labor relations today at UPS?
Holmes: I’ve grown up in a union company, so that’s all I know. I started in 1979, and as typical for a UPSer, I started unloading trailers at 3:30 in the morning while I was going to school. My first month I started paying initiation dues to the union, Local 384. I never thought too much about whether I was union or non-union. All I knew was I was expected to work hard and got a good paycheck and benefits for it. When I went into management, I expected my people to work hard. I think one of the things, if you look at a UPSer versus anyone else out there, and you see the workload and their effort, they’re giving more effort than anybody else out there, and they’re union employees. I think that’s probably different than the typical conception people may have of a union employee. But we think our union employees are the hardest-working people in the business. They’re certainly well paid and well compensated with benefits and pension, but they work hard for it, and that gives us the ability to go out there and compete. Mr. Cochrane and I have had this talk many times, but our people are out there working the competitors, and that gives us the opportunity to have a competitive edge.
Cassidy: And this isn’t the 1970s or the 1930s ... Overnite is known for the family spirit you instilled in it, that spirit still survives here, does it not? How does that affect the company and its performance, its outlook for the future?
Holmes: Well, my personal style has always been to be collaborative. I don’t know every aspect of the job, certainly in freight. I grew up my first 27 years on the parcel side. But I always knew that if I had good lines of communication with people actually doing the job and they were interested in us doing well, my job would be to support their efforts, and we would be successful. When I came over the freight side, I was so fortunate that Leo Suggs was the CEO here. And when I introduce Mr. Cochrane, I introduce him as the founder of our company, and Leo Suggs as the savior of our company, because he came after the UP years and really saved a company that was about to go under. Leo and I had a discussion and talked about Mr. Cochrane, and when I found out he was still in the area, I asked to have lunch. We meet for lunch every month now, and I really have to study, because he works me pretty hard on what the competitors are doing and how we’re responding to it. But it’s good for me. As I’ve come into this business, he’s been helping me stay out of trouble and guiding me on how to look at the freight business. So it’s been wonderful for me.
‘About Ready to Retire Again’
Cassidy: Mr. Cochrane, when you left Overnite Transportation, you didn’t go quietly. You went across town and established a new company, another trucking business, called Highway Express. That was a truckload carrier, so a new model of business and one that was growing rapidly at that time. Why did you do that, and what challenges did that present you?
Cochrane: UP gave me a non-compete clause, then they asked me to forfeit it. I said I’ll forfeit it but I’ll start another company. I made a mistake. My wife said, “You aren’t hungry anymore.” And she said that’s what makes a difference. And it did. I’d put my feet up on the scale and go to sleep. But Highway Express never developed into what I wanted it to. Hauled a lot of cigarettes and a lot of government freight, but it never was very profitable. I thought I lost money, but when I finally sold it I made about $175,000 over about 12 years — nothing to brag about.
Cassidy: But you sold that to Celadon Group, a company that continues to grow through acquisition, and I think at the time you said, “I’m glad they gave me a non-compete clause this time, because it will force me to enjoy my retirement.” How’s that going for you? How do you stay engaged?
Cochrane: I’m unemployed unfortunately, but you can’t imagine how busy I am. When I leave here today, I’ve got another appointment; I’ve got a ball game tonight. Tomorrow I’m going on a trip. You can work yourself to death. I’m living in a building with 900 people. When UPS comes through there I have to be careful they don’t run over me with these packages. I bought a place at the river last week. I’m going to get away from this day-to-day stuff. I think I’m about ready to retire again.
Cassidy: After 80 years’ involvement in trucking, if someone were to ask you today for advice about starting a career in trucking, at whatever level, what would your advice to them be?
Cochrane: I would tell them there are many pitfalls, you’ve got to watch for those. But it would be very difficult to start today. The competition can be merciless at times.
Cassidy: Mr. Cochrane, thank you very much for your time to day. It was an honor to meet you and a pleasure to spend some time talking about trucking.
Cochrane: Thank you, it’s close to my heart, I love to talk about it.