Diverse Entrepreneurs, Following a Common Vision
Over the last year and a half, the Amplifier
® has reported on how Atlas leadership is facing the future. We looked at forces squeezing the industry: pricing, capacity, and compliance. We wrote about the design of a five-year plan, Vision 2018. Most recently, we trained our sights on value as a key differentiator for the Atlas brand.
In this issue, we bring a “boots on the ground” perspective. How do Atlas Agents view the unfolding strategy? Is it answering the questions of pricing, capacity, and compliance? Where do opportunities still exist?
Atlas Agencies are independently owned and operated. Some employ hundreds of people, some employ a handful. Most offer the entire range of moving and storage services, but some serve niche markets. Some have flown the Atlas flag for generations, others are fairly new to the brand. Such diversity has always been fundamental to the van line’s character.
As well as diversity, cooperation distinguishes the Atlas Agent family. When Agents and executives come together on behalf of the van line, they represent a common vision. They know a rising tide lifts all boats. Now, pursuing a strategic plan, they are moving toward the future with confidence, making bold changes to strengthen the Atlas brand. As one Agent puts it, “We’re no longer looking over our shoulder—we’re leading the industry.”
Cultivating Good Growth
Everyone likes the idea of growth. But there is a fresh awareness across the Atlas enterprise that growth in itself is not a goal. Rather, the essential need is good growth, where new business and added volume do not diminish profitability.
“Our big push used to be volume, volume, volume,” says Chris Niesner, President, Specialty Moving Systems, Inc. (1811). “We were so concerned with the top-line number that we tended to overlook the bottom line. Strategic planning has forced Atlas to look critically at the cost of everything we do.”
“If we want to grow, we have to tweak our models as we go,” says Rick Meyer, President & CEO, DMS Moving Systems (0800). “We are seeing positive changes with how we handle logistics and military moves (see One to Win, p. 14, and Trifecta for Growth, p. 12). These have the potential to complement our core businesses year round.”
“Our PVO's alone cannot handle peak season demands,” says Dan Lammers, Senior VP Operations, Ace Relocation Systems, Inc. (0062). “The addition of logistics is mission-critical. We must use methods that may feel counterintuitive, yet give the customer faster service with less handling.”
Chris agrees, noting that international moves can also help spread demand more evenly. “We must position ourselves to fill our capacity during the off season and make our revenue stream more constant.”
“Growth is a hard thing to measure, so I wouldn’t say we can credit our strategy just yet,” says Don Hill, President, Alexander’s Mobility Services (0207). “In general, the market is trending toward smaller moves, and we are getting more per pound. This is having an impact on everyone’s bottom line—the van line, PVO's, and Agents.”
Bringing Transparency to Pricing
“We view our private client business as a separate corporate account, because much of it is based on lump-sum benefits,” says John Puscheck, President, Prager Moving & Storage Co. (1555). “Because we have the ability to factor in services required, size of shipment, destination, and current capacity, we’re seeing better margins on these moves across the board.”
John’s comment attests to the success of value-based pricing for private client moves. Now, the company is following suit with contract clients. In the first quarter of this year, Atlas Marketing developed a visual presentation that illustrates the typical agency cost structure for household goods moves. Atlas is using the presentation to educate corporate buyers and start a conversation about cost and the value they receive.
“We are bringing new transparency to our pricing model, so our corporate clients better understand all that goes into their moves with Atlas,” says Ryan McConnell, Vice President, Atlas Corporate Marketing. “As we renew contracts with our corporate customers, we want them to know not only our commitment to service, but what we need from them if we are to live up to it.”
“Pricing is a key responsibility for Atlas,” says Jon Schroeder, President & COO, Atlantic Relocation Systems (1037). “We operate in a highly competitive landscape. Adjusting price requires proper balance, timing, and strategy—otherwise we may put pieces of our business at risk.”
Jon points out that most movers do well financially during peak periods, but sustaining profitability year-round is a challenge. Educating customers about costs is vital. However, the customer must be properly engaged.
“We must win by gaining rate increases during the peak season without compromising overall volume during the off season,” says Jon. “I believe a truly collaborative approach with each of our valued clients is critical if we are to achieve the desired outcome.”
“We have to be competitive,” says Chris. “But with finite capacity, we need to price accordingly. The airlines are a perfect example. I recently booked a flight for $400. That same ticket will cost me $700 if I travel at Thanksgiving.”
For Atlas, pricing reflects multiple concerns: A need for capacity to answer demand. A need to reinvest in people and systems. A need to ensure the excellence that customers expect. And the need for a fair return on shareholder equity. Adjusting price is never easy, for any business, and Atlas takes it seriously.
“We have a solid start on the pricing issue, and we have already educated a large part of our customer group,” says Don. “At a customer seminar in April, we talked with several key accounts about this. Many told us they see the problem and want to be part of the solution. They’ve worked with us, and together we are making contract changes that better support our PVO's and service delivery.”
Shaving Peaks, Filling Valleys
The difference in seasonal volumes for the moving industry is dramatic, closely correlated to home sales and summer recess for schools. A typical week during the summer may see quadruple the number of moves compared to an average week in the winter.
“Atlas still firmly believes in our traditional model—pack, load and haul,” Don says. “But we know we must use other modes to moderate peaks and valleys in volume. Our new arrangement for handling military moves is one way we are doing this, driving more revenue to our PVO's in the off season to keep them busy year round.”
“We can’t take just any load at any price without regard to where it’s going,” says John. “I think Atlas is working smarter in how we price and schedule shipments, taking into consideration size, destination, and back-haul opportunities.”
Industry dynamics also affect capacity. For example, economic pressures have softened demand in the profitable energy sector. This drop in demand frees capacity in the system, but comes at the expense of revenue.
“The relationship between pricing and capacity is simple economics,” says Dan. “As price goes up, the industry will produce more capacity. We have seen pricing increases in relocation for residential and government markets. With that said, van operators, Agents and van lines have been able to supply more to those markets.”
Taking High Ground for Compliance
An imminent rule by the FMCSA will require PVO's to use electronic logs (commonly referred to as ELDs). The devices automatically record time spent operating the vehicle—information that supports compliance with hours of service (HOS). The rule is praised by many for its potential to improve safety on our nation’s roads. Detractors decry it as regulatory overreach and an added burden on owner operators.
As it always does, Atlas is taking a proactive stance for compliance. Earlier this year, the van line began adopting the technology with a percentage of its fleet. When the ruling takes effect, Atlas intends to be 100 percent compliant. It will take a significant effort to educate Atlas PVO's and help them make the transition.
“Our PVO's do a great job with all of the challenges that face them, but as a group they are slow to adopt technology,” says Dan. “The early adopters are enjoying increased efficiencies with electronic inventories and logs. We need more of them to speak out and validate the investments they’ve made, that Atlas Agents have made, and that Atlas has made.”
“We are certainly doing the right thing with our proactive compliance on electronic logs,” says Jon. “There is no substitute for effective safety controls. We owe that to the public as well as to our contractors, employees and their families. Unfortunately, we are competing against carriers who are not proactive, and that creates both opportunity and challenge for us.”
“We’re making solid progress in our CSA scores,” says Don. “There is a true sense of urgency about compliance. The most important thing now is being nimble, having a system that allows us to implement change more effectively. We’re getting there.”
"Exciting Times for Atlas”
“These are exciting times for Atlas, and our Agents are working together well,” says Rick. “We’re not looking over our shoulder. We’re taking the lead, and it’s working.”
“We are starting to see financial results of our strategy,” says Chris. “Dollars per order have gone up year over year.”
"We’ve made solid changes to take cost out of our business, and more savings are coming,” says Don. “We’re working now to simplify our pricing and distribution models. Everybody is open to ideas, and this is allowing us to make real progress."
“With any strategic initiative, it takes time,” says John. “It takes guts on the part of people to put plans into action and get results. I believe the incremental improvements we’re seeing show we are on the right path.”
Cracking Open Economies of Information
Using information for competitive advantage has long been a priority of the Atlas business model. In the last ten years, the emphasis on information technology has accelerated—with major investments in systems and tools. This commitment to technology is intertwined with the company’s strategic objectives. Is it paying off?
Yes, according to Dan Lammers, Senior VP Operations, Ace Relocation Systems, Inc. (0062). “AtlasNet helps us forecast and plan,” says Dan. “Utilizing Atlas systems to their potential, we can better see when and where to add orders, plan work for our PVO's and crews, and make better use of our equipment.”
Atlantic Relocation Systems (1037) was one of the first Atlas Agents to invest in hand-held technology in the field. “Encouraging full and proper use of available Atlas tools is a daily responsibility of our management team,” says Jon Schroeder, President & COO. “This requirement is ongoing. Atlas provides the means to create positive results for our customers; we must keep pushing the technology piece forward as we progress.”
Rick Meyer, President & CEO, DMS Moving Systems (0800), says technology is a work in progress. “We need to introduce new tools to compete and win, but if only a few Agents use them, it won’t benefit our system.” He points to the new technology standards Atlas is now introducing as an example (see story on page 9). “We don’t want to lose van operators or Agents with this transition, so we are easing it into place over the next three years.
“It’s easy for business people to become creatures of habit,” says Don Hill, President,
Alexander’s Mobility Services (0207). “Atlas Agents are no different. Our tendency is to do things the way we always have. However, more efficiencies are bound to come with our technology. Our Agent family is open to change because we see why we need to change.”
I believe the incremental improvements we’re seeing show we are on the right path.”
- John Puscheck, Prager Moving & Storage Co. (1555)