Fleet Management News & Business Info | Commercial Carrier Journal
Issue link: http://read.dmtmag.com/i/725427
COMMERCIAL CARRIER JOURNAL | SEPTEMBER 2016 47 INNOVATORS COVENANT TRANSPORTATION GROUP Chattanooga, Tenn. based Star Transportation, which added dedicated and regional operations to complement Covenant's teams. The turning point came in August 2011 when CTG created its fi rst-ever strategic plan — one that called for growth in e-commerce, organic produce and high- value and cross-border loads. The connec- tion? Executives saw all of those markets as ideal opportunities for team operations. In e-commerce and organic produce, CTG competes directly with airfreight for long-distance loads that have time-sensi- tive delivery points. Rates are signifi cantly higher than in freight lanes that compete with rail intermodal, says Richard Cribbs, chief fi nancial offi cer. CTG's brokerage and third-party logistics business, Cov- enant Transport Solutions, also specializes in expedited freight. Team operations are a growing oppor- tunity for regional e-commerce freight customers. Shippers do not like sur- prises, Cribbs says, and driver teams help eliminate hours-of-service delays. Hogan believes that as the speed of e-commerce increases, all shipments of more than 450 miles will be pulled by team drivers. To keep up with demand, CTG has increased its team fl eet by 250 trucks since June 2014. Out of 2,600 total power units CTG now runs across all of its fl eets, it now has 1,000 trucks with driver teams. Keeping teams separate One reason CTG runs three separate motor carriers — Covenant Transport, CTG advances driver teams with tech, e-commerce strategies BY AARON HUFF "A company is founded to do something," says Joey Hogan, president of Covenant Transportation Group (CCJ Top 250, No. 41). "You need to stick to what you do well, especially in our low-margin capital-intensive industry." During a recent meeting with CCJ, Hogan and other company executives were seated in a boardroom on the second fl oor of CTG's offi ce in Chattanooga, Tenn. Facing the boardroom table is a large portrait of David Parker, who founded Covenant Transport in 1986 with 25 trucks and 50 trailers. From day one, the motor carrier has specialized in expedited truckload service using driver teams. CTG executives told CCJ about new technology the company has devel- oped to solve complex problems, automate processes and improve team operations. "The infrastructure, the psyche, the emotion, the process, the system — everything is built on getting, keeping and running a team," Hogan says. A new direction Like many trucking companies, Covenant fl ourished in the 1990s with an expand- ing economy and low fuel prices. Business was growing at 20 percent annually when in 1994 the company made an initial public stock offering. In the latter half of the decade, growth tapered to 15 percent. In response, Covenant formed CTG to diversify. In 1998, the new entity purchased Southern Refrigerated Transport and, with other transactions between 1997 and April 2000, went from 1,600 to 4,000 trucks. Carrying too much debt when a recession hit in 2001, CTG entered a decade-long "chapter of rationalization," Hogan says. "We learned a lot of lessons during that period of time." CTG reduced its overall fl eet, but not all of those years were lean. During a banner year in 2006, CTG started a new brokerage division and acquired Nashville, Tenn.- The expedited truckload company uses analytics and technology to resolve routing and driver management issues. David and Jacquelin Parker founded Chattanooga, Tenn.- based Covenant Transport in 1986 with 25 trucks.