Amplifier Articles

Perfect Storm, or Perfect Opportunity

The perfect Opportunity

Atlas Amplifier PDF (13.1 MB)

Throughout the Atlas organization, three questions are top of mind and constantly under discussion.

  • How do we value services to remain competitive, profitable, and viable?
  • How do we answer growing demand with stretched capacity?
  • How do we ensure safety and compliance in today's hypersensitive regulatory climate?

To uncover the answers to these issues, the Amplifier reached out to Atlas people who wrestle with them every day. You may be surprised by what they had to say.

Pricing

Ebb and flow of supply and demand

As every student of economics knows, supply and demand are prime determinants of price. In the moving industry, demand goes up and down like a yo-yo, peaking in summer. Sometimes it falls off a cliff, as in the wake of the great 2008 mortgage debacle.

"When you staff and equip for peak demand and it suddenly drops, it is disastrous," says Larry Lammers, CEO, Ace Relocation Systems (62). "You can't shed costs fast enough."

"The market is definitely changing," says Kathy Thompson, Atlas Director of Contract Administration/Pricing Services. "Demand has expanded and capacity has shrunk. There has to be a correction for pricing to accurately reflect value."

Atlas has taken some needed steps, says Kathy, by pricing non-contract shipments relative to available capacity during the peak season. And it has made an important modification to the general rate increase formula by replacing it with a new one using producer price index (PPI) factors.

"We have been using a general rate increase formula that includes indices that are not relevant to our costs," says Kathy. "For example, in 2014 the formula provided for a .6 percent increase in our prices – a fraction of the actual 2.8 percent that our costs went up."

Atlas has revised its general rate increase formula to better reflect true costs. The formula now factors in four primary components based on the PPI for corrugated materials, trucks, trailers and labor. The new formula took effect April 1.

"Our tariff had essentially been broken, and it cost us every year," says Kathy. "With the new formula, combined with discounting restrictions, we hope to start down the road of pricing recovery. It is a matter of survival – for our agents, our van operators, and our van lines."

Our market rapidly expands – and rapidly shrinks. Pricing needs to rise and fall in step with supply and demand.

Capacity

Doing more, more, more. With less, less, less.

"The industry keeps demanding more and more from Professional Van Operators (PVOs)," says Dan Imlach, President, Imlach Group (1130). "More paperwork, more expenses, more demanding contract stipulations. Something has to change. We have to find a way to keep the operators and personal service aspect if our pack and haul model is to remain viable."

Atlas PVOs are the backbone of the company's service delivery. But with an average age of 55, their numbers are slowly dwindling. Despite a strong and concerted effort, recruiting new operators is difficult at best.

"The equipment is expensive, the moving business has gotten highly sophisticated, and you have to really pay attention to make the money you should," says Jeff Schimmel, Vice President of Transportation Services for Atlas. "Plus, younger people today have different priorities. They don't want to leave home for weeks on end."

"We've really been feeling it the last few years," says Phil Wahl, Vice President & General Manager, AWG Logistics. "We would like to take more business during the peak season – we are looking for alternative ways to handle it." Phil points to climbing maintenance and operations costs as barriers, such as a new emissions law that demands new equipment or an expensive retrofit to operate in California. "You can only slice a dollar so many ways."

"The reality is our fleet will probably continue to shrink" says Jeff Schimmel. "And labor is another issue. It's getting harder all the time to find quality crew workers."

On the bright side, Atlas has found some success by supplementing capacity. "We set a record last year for use of alternative methods of transportation," says Jeff. "We'll need to do so again this year, and probably every year from now on."

"We need to look at all our options, including rail, forwarding, and others," says Phil.

"Operations makes or breaks an account," says Dan. "We must solve this issue."

Accounts and customers score us, and we have to get a 95 rating. Who has that burden on his shoulders?  The Atlas Van Operator.

Safety and Compliance:

Meeting tough rules with a game-changer.

Rob Smallwood, Director of Safety for Reads Moving Systems (1711), knows what happens "when things go wrong." Rob is a former law enforcement officer and former DOT Inspector assigned to the Motor Carrier Enforcement Unit. He has seen the grief when safety infractions lead to accidents. Fatalities. Law suits. Ruined careers.

And, as a professional van operator and driving instructor, he knows the stresses and distractions van operators have to deal with. He wants to keep them from making career-ending mistakes. So, in addition to his day job, he helps the Atlas safety team educate Atlas operators about CSA – the safety regulations that govern their profession.

"There are two points I try to drive home," says Rob. "One, you must complete a proper pre-trip inspection; the onus isn't just on the company – it's on you. Two, if you run without one, you're putting your entire career – 20, 30, 40 years – on the line and rolling the dice. When things go wrong, you are accountable. You're the one who turned the key."

Since CSA took effect three years ago, Atlas has gone to great lengths to help PVOs learn and adjust. The task has been daunting.

"We understand the system is flawed," says Rick Kirby, Atlas Director of Safety. "But we have to abide by it, and it's serious. For one thing, our national account business demands a satisfactory DOT rating. If we lose that, we're out of business."

"An agent can't log into the Atlas system without seeing its CSA status," says Bret Rauscher, Atlas Director of IT Development, Ancillary Services. "A color indicator appears on the opening screen – green, yellow, or red. From there, the user can drill down into the data to see the details."

Atlas IT and Safety Departments introduced the information tool in the third quarter of 2013. Now they are collaborating on another tool, a direct aid for the one in the cab.

It would be a mistake for anyone to look at fines as the cost of doing business. They are the cost of putting you out of business.

By law, operators must maintain a log at all times, documenting their hours, location, mileage, and activities. Keeping the log current and accurate can be somewhat tedious.

"An electronic log device is essentially a black box that connects the engine and GPS," says Bret. "It saves time for the driver, eliminating the hassle of paperwork."

ELDs may be required by law as early as 2016. But Atlas will have them well in advance of any government mandate. A pilot test of an Omnitracs device is under way now; a test of Rand McNally hardware will take place in the third quarter.

"We plan to approve two devices, so agents and operators have a choice when we roll it out later this year," says Bret. "This technology has the potential to be a game-changer."

Atlas Looks Ahead with Clarity.

As market and regulatory forces buffet the moving industry, Atlas finds itself navigating a sea change. In this climate, planning is tantamount to survival.

"We look at long-range planning every year, and a lot of good things come out of it," says Jack Griffin, AWG President and COO. "But our actions tend to be tactical, with short-term benefits rather than long-term solutions."

Last July, Atlas leaders acted decisively to take a longer view. Following the board meeting in Toronto, Don Hill, President of Alexander's Mobility Services (207), accepted the challenge to lead a strategic planning committee. The task: determine what Atlas should look like in five years and draw the roadmap to get there.

"With all the issues impacting our industry-cost pressures, safety, capacity   the need for strategic thinking is undeniable," says Don.

"It's encouraging to see unanimous agreement among our leaders on the need to become more strategic," says Glen Dunkerson, AWG Chairman & CEO. "The willingness of our board to get involved will really help us work through the process to achieve the results we need."

Glen adds that the process will serve the interests of every Atlas agent as well. "We canvassed 100 of our top bookers and haulers to find out what they think is important. We are working with a broad consensus."

"We're working with solid agreement by stockholders and non-stockholders alike. Donnie Hill deserves special credit for organizing our resources and pulling together the team to make it happen."
– Glen Dunkerson, AWG Chairman & CEO

Choosing the Right Experts

Atlas leaders agreed it was in the company's best interest to engage experts outside the organization for guiding the strategic process. At the stockholders' meeting in September, the committee heard five presentations from planning experts. The last one stood out.

"CSI (Collaborative Strategies Inc.) was an obvious choice," says Jack. "They had a good grasp of our culture, and we could tell they had done their homework."

In January, the committee met with CSI for two days. The work session produced a number of strategic priorities. CSI refined these over the next three months and presented recommendations to the AWG directors in April.

"I am confident we are moving ahead with a solid plan," says Jack. "The key will be execution   staying accountable to the process."

Atlas Vision 2018: Strategic Planning Committee
"We have a well-rounded committee," says Chairman Don Hill. "Our board agents and executives bring strengths in all aspects of Atlas' business."

  • Chair: Donnie Hill, President, Alexander's Mobility Services (207)
  • Chris Niesner, President, Specialty Moving, Inc. (1813)
  • Gary Weleski, President, Weleski Transfer, Inc. (2151)
  • Larry Lammers, CEO, Ace Relocation Systems, Inc. (62)
  • Glen Dunkerson, Chairman & CEO, Atlas World Group
  • Jack Griffin, President & COO, Atlas World Group
  • Don Breivogel, CFO, Atlas World Group
  • Marian Weilert Sauvey, Senior VP, General Counsel, and Corporate Secretary, Atlas World Group

The Atlas Partner: Collaborative Strategies (CSI), established in St. Louis in 1983, is an entrepreneurial firm dedicated to serving entrepreneurial leaders. CSI is recognized for its expertise in the process of planning, whether the focus is strategy, leadership, succession or capacity-building. CSI helps clients effectively address the opportunities of the present and build strong foundations for the future through the decisions and actions of today. ( www.getcollaborative.com)

 

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