Roadmaster CEO: Fleet shutdowns ‘cleanse’ the trucking industry

John Wilbur also says driver retention, not shortage, is where focus should be.

John Wilbur wants to make one thing perfectly clear. The CEO of Roadmaster Group, headquartered in Glendale, AZ, hates to see companies shut down and people lose their jobs. Having expressed that, however, he is as straight a shooter, figuratively, as most of the American soldiers who train with the ammunition his fleet supplies to military bases all over the country.

In a wide-ranging interview with Fleet Owner, Wilbur was asked about the spate of truck fleet closures the last year, and did not hold his fire.

“I need to be careful, but I see it as healthy,” he said. “We just don’t have enough barrier entry to this industry at the general freight level, and there’s too much capacity at times. So I find it’s a cleansing process. I mean, you hate to see anyone go out of business and people lose their jobs. I’m not trying to make light of that in the slightest. But for the strong players that are in the market, which is what we are all about, I see cleansing. Some companies are in the market when they shouldn’t be, then they tend to mess up, get desperate with pricing, and it messes up the market until they go away. So it’s just a natural part of the industry cycle and how we get healthy again.”

Wilbur was referencing news reports indicating that close to 650 trucking fleets shut down in the first half of the year, compared with 175 during the first six months of 2018 and more than double the 310 total for all of 2018. Broughton Capital LLC, a transportation industry data company, compiled the data.

Some of the larger fleets that went out of business this year include New England Motor Freight, which had more than 1,400 drivers, HVH Transportation, Falcon Transport and LME.

Wilbur formed Roadmaster, which specializes in hazardous waste, time-sensitive and high-security cargo, in 2011, after having been a principal in a private equity firm. It acquired Tri-State Motor Transit Co. in 2016. Then in 2017 Roadmaster itself was acquired by Daseke, a Dallas-based, publicly listed firm that owns a variety of trucking companies. Daseke ranks No. 15 on Fleet Owner’s 2019 For-Hire 500.

Rumblings about the industry facing a downturn going forward are a little overblown to Wilbur.

“2019 would feel a lot better if it wasn’t for 2018,” he said. “2018 was such a barn burner of a year for the entire industry, and everybody has short memories. But if you could theoretically remove 2018 and stack 2019 up against 2017, ‘16, ’15 and ’14, it looks pretty good. So I would start from that perspective. Obviously, manufacturing and industrial volumes are down from 2018, but not horrible when looking over a longer-term perspective.

“I look at 2020 as a little bit more of the same pace that we’re seeing here in 2019. I think the good news from a trucking standpoint is that capacity might tighten up a little bit, which then manifests itself in pricing. And the reason is we’ve seen capacity drop out of the market with company closures and bankruptcies. That’s a normal part of our cycle when things soften up a bit. If you really look at the industry structure, it doesn’t have a lot of barriers to entry. That’s when you’re talking general freight, which is not what Roadmaster is in.

“But talking overall industry, with low barriers entry, the downside of that is that in good times weaker players get into the market and they stay in maybe longer than they should. Well, that all gets flushed out when you have some softening. And that’s what we’re seeing, and we may see some more, in terms of weaker players dropping out of the market, which ultimately is the market healing itself. I look at 2020 from the macro view, and say load volume will probably be flat to up a bit, and capacity may tighten a little bit, so you may have some price support.”

The driver dilemma

Wilbur has a different view of the driver shortage, in that he doesn’t particularly see one. It helps that Roadmaster differs in its approach to recruiting and keeping drivers. Tri-State employs hundreds of two-person driving teams. Each trucker must have hazardous materials hauling experience and get government security clearance. There is guaranteed pay for drivers.

“First of all, nobody really knows how short you are when you have 100% turnover nationally,” he said. “How can you tell how many drivers you’re short when you have that many in movement on any given day? You’re supposed to be able to take a snapshot and say that’s how many we’re short. Well, how do you take that snapshot when you’ve got so many people moving around? We’re short of drivers, but a lot of it’s been self-inflicted.

“As an industry, if you have 90% turnover, and you’re not trying to change the paradigm, then you’re just doing the same thing every day. It’s not just, ‘Okay we’ll give them two cents more a mile.’ We turned that upside down in 2012 and went to a hybrid format. I have 500 trucks and it’s rare that I have 15 empty. We can pay more than the average because of what we do, but we require a lot more credentialed drivers than general carriers, so they deserve to get more. But it’s not how much I pay them, it’s how I pay them that’s the big difference maker.”

Wilbur agrees with those who say drivers must be compensated while they are on the job, regardless of whether problems arise with weather, traffic or other impediments to getting routes completed.

“This industry has always used the mileage pay as a way to shift the risk to the driver,” he noted. “The risk of freight, the risk of weather, the risk of traffic. But that driver’s in the truck in the middle of Kansas ready to work, so why is it on him? Our drivers don’t get penalized for that. It’s been the biggest single thing we’ve done with our company that’s allowed us to grow so fast.

“We can buy trucks. We can seat them and keep them seated. So I’ve got more levers than a lot of other companies do. The focus shouldn’t be on driver shortage but driver retention. If you can take that 90% (turnover) down to under 50%, which is where we operate, then it’s a lot easier animal to manage. But you have to question everything you do and take some risks. Because clearly what the industry is doing today isn’t working.

“You can’t run any department in your company with 50% turnover every year. So why would you accept 90% turnover in your most important department? It’s crazy.”

Wilbur lives in San Diego, not far from Marine Corps Base Camp Pendleton, a base Roadmaster services. He can hear military training maneuvers using the ammo his fleet supplies.

“It’s an honor to support the war fighter,” he said. “And everybody in my company feels that way. That is what we do, and we do it well. We’re the largest carrier in that sector. I know my drivers feel great when they pull into a military base to pick up or deliver. We’ve got a lot of husband and wife (driver) teams that have kids in the service.”

Asked what his days are like as CEO, Wilbur explained that he likes to take a long view of his company and the industry.

“I try to live in tomorrow,” he said. “I spent eight years here trying to build a team that can operate on a high level and let me spend as much time as possible living in tomorrow, and I’ve been blessed to be able to do that the last several years. It means I’m trying to think one step ahead. In trucking that might mean a month ahead, but that’s still better than the competition. Or it can be a year or two ahead.”

In that vein Wilbur is excited but realistic over the potential of autonomous vehicles.

“I think like all great innovations, it will take a little longer to get here, and it will be a bigger impact than we anticipated when it does get here,” he said. “At first I think it will be what we all think — running point A to point B and not handling the final mile. Eventually, it will change the landscape. From my business, what we haul will be the last thing that goes on autonomous trucks.”

This article was originally published by American Trucker.