More than Price

More than Price

Copyright 2002, Traffic World Magazine

Shippers are enjoying a buyer's market today when it comes to their transportation purchases, but that means that very soon they won't be able to hire a truck at any price. That was the message that Jon Shevell, vice chairman and executive vice president of New England Motor Freight, told the National Small Shipments Traffic Conference meeting in Fort Myers, Fla., early this month.

Jon, the outspoken son of NEMF Chairman and Chief Executive Officer Myron P. "Mike" Shevell, doesn't wear his heart on his sleeve. He wears it on both sleeves, both lapels, his tie and his shirt. Jon Shevell made an impassioned plea to shippers, third-party logistics companies and fellow trucking executives to change the way their industries work.

There will be a huge capacity crunch crisis in two years or less if shippers keep beating up trucking companies over rates, he said. Shevell is an A-type New Yorker who is tall and trim and dresses like an ad from GQ. He took to the podium at the Registry Resort with no prepared text and no notes and spoke "from the heart."

"I am the little guy on the block and I am the last guy to go," he said a bit self-consciously as he took his turn following the top executives from four larger companies. But once he had the audience's attention, he didn't hold back.

"I love my country. I love my customers. I love my city ... and I love the trucking industry. I love trucks," he said, earning an ovation from the audience.

"What is happening to this trucking industry makes me feel real sad, ladies and gentlemen, because thousands of trucking companies are going broke every year. This cannot continue," Shevell said. "Remember what it was like at the end of 1999 when nobody could get a truck? That situation will come again. Maybe not today, maybe not tomorrow, maybe six months from now, maybe a year, maybe two years."

The list of the industry's problems is a long one, he said. First there is the shipper who demands that the trucking company cut its rate, even if the company is paying for substantial investment in technology. The shipper, Shevell said, often refuses to pay for increased expenses caused by fuel increases, security costs and higher pay to retain drivers. Then there is the trucking company that can't say no to the shipper's demand, as well as the trucking company sales representative who has become an order taker instead of a skilled negotiator.

Highway and bridge infrastructure "stinks" and then there is the traffic congestion and zoning that doesn't allow terminals and the rising costs of tolls, real estate and insurance. "Insurance companies don't want to give us insurance regardless of the price, regardless if you want to pay 100, 200, 300 percent more."

Next are the personnel problems. No one wants to be a truck driver anymore and there's also a shortage of skilled managers, the kind of employees who used to sign on as a driver or dockworker but had the capability to rise to chief executive officer.

"That was an impassioned plea and I was genuinely moved by it," said one audience member who compared his description of the industry to "a scenario played out in baseball where the owners decry the rise in salaries and then turn around and continue to pay out more salaries." Shevell responded that what he is looking for will require "a total cultural change that might take years."

Panel moderator Theodore R. Scherck of The Colography Group summed up the presentation by saying that the Shevell's predictions make for " a very very likely scenario." But there is a growing acceptance on the part of many shippers to follow more than price, although "I would agree with Jon however that the rate at which that is occurring is nowhere near fast enough," Scherck said.