USA Logistics Carriers

Source: Supply Chain Digital

Date :4/11/2008 4:15:02 AM

CFO Robert D. Long tells Exec how USA Logistics Carriers is reaping the rewards of cross-border traffic and a long term focus

Written by James Hurley and Produced by Crias Corrigan

A short while ago, Robert D. Long, CFO of McAllen, Texas-based trucking company USA Logistics Carriers, was flicking through an issue of a leading transport trade magazine when he came across an article that amused him. The article in question gave tips on how carriers could improve their margins and cut costs. Nothing funny about that you might think, except that the main tips it gave were for initiatives that USA Logistics Carriers had already implemented. “We’ve been doing things for over a year now to make ourselves smarter,” Robert tells me. “We want to be one of the top trucking companies in the US and we want everyone to know that.”

Since it was launched seven years ago, the company has enjoyed impressive growth. It began with two trucks in October 2000 and now operates a fleet of over 550 trucks and some 2,000 trailers. Revenues in 2007 were over $96 million, and in 2006, the company was named the number one Hispanic trucking company in the Hispanic Business 500.

A perfect match

Robert met the two founders of the company – Aurelio Aleman and Sergio Lagos – back in 2000 and instinctively spotted potential for a mutually beneficial relationship. “Aurelio had the operations experience. He was born and raised in trucking. At 53, he’s been doing it his whole life. But he lacked the administrative control,” he explains.

Fortunately, Sergio has been doing this for 17 years. “He had worked as a controller for trucking companies with large fleets. He always had the administrative strength and a lot of great ideas and knew what buttons to push. But he could never open his own trucking company by himself because he didn’t have the operations experience. Between the two, it made for a perfect match.”

The firm was founded with the intention of serving a fast growing maquila industry along the border with Mexico. “They were going to start in refrigerator products but the market was so competitive they decided to focus on electronics and dry goods. They started that in October 2000 and it took off with remarkable success, gaining six major accounts (Panasonic being one of them), helping them to grow by about 48 percent per year. Everyone was surprised by the rapid growth due to the newness of the company,” says Robert.

The location of its base in McAllen is of strategic importance, sitting approximately halfway between Laredo, Texas and Brownsville, Texas. While Laredo is already a major port of entry, USA Logistics Carriers is well positioned to help McAllen grab a larger portion of the cross-border traffic. “We’re promoting McAllen as a strategic location. With all of the sales staff that we hire, it’s all we talk about. We want to make sure we let them know. We’ve gone to the McAllen bridge authority and asked them to keep it open longer so we can cross more equipment. They say that we don’t get enough business here to justify it so we tell them how we’re promoting more business through McAllen,” he explains.

China’s recent manufacturing problems and the rising cost of fuel mean that the Mexican maquila industry is likely to experience rapid growth in the coming years.

“One of the benefits for Mexican freight is that we have a special niche. Most of the larger trucking companies will go to California, New York and Washington but they’ll never see the border the way that we do. A big chunk of freight will come through the Mexican borders. If it comes here, we’ll have a shot at getting it out. We’ll go from McAllen to California and from California back down to Mexico. It’s import/export and we’re fortunate because we never sit still.”

The company has founded its success in a few simple principles, chief amongst which is a commitment to customer service. “Putting them first has always been the goal. That’s the reason that we’ve been successful – we focus on strong communications and good relationships with each company we deal with.” Indeed, relationships have always been key at the company. While finance companies are tightening up on credit standards regardless of long standing relationships, Robert says FCC Equipment Financing have “really stepped up” and value all of their customers. “FCC has given their commitment to USA Logistics and shown that they always want to be a partner with us because of the way that we do business.”

Another plus has been the commitment to keep up with the latest technology. Indeed, technology embedded in every truck and trailer allows the company and its clients to track every shipment. Every truck carries PeopleNet technology onboard, which includes an onboard computer, message display, voice handset and keyboard. “Once a truck leaves here with a load, it updates our computer system. It makes it easier for us; we have more up to date information which the customer really appreciates,” says Robert.

“PeopleNet was specialized for trucking companies – the tracking and communicating is really cutting edge. It has really helped us and it’s more effective because it doesn’t cost us an arm and a leg to run – we don’t have to destroy our business just trying to buy the software!” Skybitz technology has also helped the company keep accurate data as to where trailers are.

Great trucks, great drivers

Along with rising fuel costs, recruitment is one of the ‘usual suspects’ when logistics companies are asked to name their stiffest challenges. At USA Logistics Carriers however, they appear to have the recruitment side licked. “We’re fortunate in McAllen because both of the owners have strong relationships here so it’s easier for us to get drivers. They like the style of trucks that we have. We’re always trying to get newer equipment to keep the drivers proud and happy.”

Indeed, another cornerstone of the company’s success has been its ability to keep good drivers. “Our turnover has been minimal because we’re constantly trying to get newer equipment. We only have eleven 2006 trucks left in our fleet. The rest are 2007 or 2008 – we’re actually taking delivery of 200 Freightliner trucks for 2009 at this point.”

This approach exemplifies the firm’s forward thinking approach. “A lot of the larger fleets try to buy a cheaper truck so they can afford more. People say we’re spending too much money up front but in the long run, with the quality of our trucks, it also helps us in the re-sale. It’s an investment,” Robert explains. The company aims to make each truck an ‘RV on wheels’. “We’re paying a little bit more, but in the end we still get a bit more back and we’re keeping a better quality of driver at the same time. Aurelio and Sergio really appreciate all of their employees and they know that without them, the company would not be as strong as it is.”

It’s important to point out that when buying new trucks, USA Logistics Carriers looks for fuel efficiency and aerodynamics as much as swish looks and comfort. “Fuel has been a real challenge. Over a year ago we added auxiliary power Carrier units (APUs) which burn one tenth of what the tractor would burn when idling. In ninth months they will have paid for themselves then we’ll save the payments and then some.”

Also, the Freightliners that the company is getting are almost 1,000 pounds lighter than the Kenworths it’s currently running, representing another saving on fuel. And a safety drive has further improved efficiencies on this front. “We don’t send drivers out with late loads so that they have to go at 100 mph just to get there. We governed all of our trucks at 65 mph last year. That’s been a huge saving on fuel.” Even the engine that’s in the trucks helps out – the fuel efficiency of the Caterpillar C15 is such that USA Logistics Carriers has been happy to be a national spokesperson for their Truck Engine. The company has also set up a National Fleet Fuel Discount Program with Loves Truck Stop, to promote smarter working and close watching of costs.

The company’s commitment to modern, state-of-the-art trucks doesn’t do any harm on this front wither. “Our normal trade cycle used to be about four years. Now we’re trading in after 36 months, trying to get newer, more efficient equipment. It means fewer breakdowns and stronger warranties. We’re trading in more trucks to get stronger purchasing power so we get stronger prices even though we’re upgrading,” Robert explains. Incidentally, the three recommendations he’d seen in the trade magazine were to trade sooner, to install APUs and have lighter trucks. Maybe the author had heard about USA Logistics Carriers.

Click here to view the corporate brochure on USA Logisitics Carriers