- 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?
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."
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."
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.
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."