Trucking firm CEO: ‘The banks were at my throat’

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When the safer options fail to resolve a major issue, you’ve got to take a calculated risk.

That's what Rick O'Dell did to steer the Saia trucking firm through the Great Recession at a time when its survival was at stake. O'Dell, who's been in the trucking industry for nearly three decades, is CEO of the now profitable Atlanta-based firm with $1.1 billion in annual revenue and 8,500 workers.

But it was touch-and-go during the recession for the publicly traded firm, formerly part of Yellow Corp., when falling prices and reduced customer demand kept the red ink flowing. At the same time, O’Dell, 52, had to improve Saia’s customer service to match the top competitors or the situation would have gotten worse. He discusses what he did, as well as other career lessons.

Q: What influenced you early in life?

A: My father passed away from a heart attack when I was 19. It was hard on my mother. I had to grow up faster than I would have.

I had to pay for college. During the last three years of school, I went to my uncle’s farm in western Kansas and worked there all summer long. We worked 6 a.m to 6 p.m, six days a week and two hours on Sunday. I fed cattle, drove a tractor, built fencing and cleaned the barn.

I didn’t think that my uncle and cousins were as sophisticated businesspeople as they were. They were playing the futures market, deciding whether to sell their grain or store it in a grain elevator. They measured rainfall and the productivity of their seeds.

When I graduated with an accounting degree from the University of Kansas, I could have gone out there to the farm. But I couldn’t bring myself to go to a little, rural environment where everyone knew everyone’s business. Sometimes people were very judgmental. That bothered me.

Q: What did you do?

A: I went to work for a regional accounting firm in Kansas City as an auditor. But I did not get an accounting degree to necessarily be an accountant. I thought it would be a good background for business.

Two years later, I went to Yellow Freight as a treasury analyst and I’ve worked in trucking ever since 1985.

Q: How did you rise up the ranks at Yellow?

A: You have to broaden your experience beyond your current role if you want to be a leader. You have to put effort into seeking opportunities on cross-departmental teams so you get exposure to different areas of the company.

Don’t get yourself in a tunnel. It may be outside of your comfort zone, but you have to work on cross-functional projects. You get involved in developing innovative ideas and working with senior management and a lot of smart people.

Q: You got noticed by doing that. You were transferred in 1995 to a west coast subsidiary of Yellow Corp. as its chief financial officer. What happened then?

A: We were growing fast, expanding into California and Nevada from Arizona and New Mexico. It was managed chaos.

Also, the financial forecasting was not accurate and our expenses were well above our revenue.

Q: What did you learn from that?

A: The biggest mistake was sticking with people who were working very hard but were over their heads. We were growing too fast for them to step up their game. They didn't have the capacity to manage that type of growth. We had to hire better people.

I also learned that you need to put the framework and the people in place to manage the growth before you start delivering it and blowing through people.

You’ve got to be good at what you’re doing before you pursue your next growth opportunity.

Bonus questions

Q: After 20 months there, you were promoted in 1997 to a much larger Yellow trucking subsidiary, Atlanta-based Saia. You started as its chief financial officer, becoming president in 1999 and CEO in 2006. What were the issues?

A: There were similar growth challenges, which were overwhelming the people we had. We had to stop the expansion and focus on operational excellence and delivering better service.

The key in the trucking industry is to deliver the product damage-free and on time. But what happens is that the network can get out of cycle. It’s surprisingly simple. If you don’t leave on time you’re not going to get there on time.

We analyzed where the service breakdowns were and we targeted unproductive work. We put in place better processes to limit the problems, and we put in more financial and personal accountability.

Also, we always had a communication plan with our employees on what we were trying to accomplish, why it’s important and how it will benefit the employee.

Q: The past recession put you on the ropes. What did you do?

A: For six quarters in a row we lost money. We did three rounds of layoffs, cutting about 1,800 people. I cut wages 5 percent and senior leadership's 10 percent. We eliminated the 401(k) and bonuses. The banks were at my throat. I was running out of options.

Our major competitors cut prices and we had to. In 2010, we were losing money, my fleet was aging and we hadn’t bought equipment for two years and we were running millions of miles.

We had to figure out what we could do to survive. I already pulled every lever I thought I could.

Q: Then how did you recover?

A: I pulled the leadership team together. We took a significant amount of risk to save the company.

The only solution was to raise prices. But first we had to improve our value proposition for our customers by delivering better quality service. We had more service volatility than some of our competitors with respect to two key measures — on-time arrivals and damaged or lost cargo. We were performing in the middle of the pack and we needed to be in the top tier.

We invested in training and safety. We added staff.

Then we took price risk on an account-by-account basis. I can’t handle business at an operating loss. I took my worst operating accounts and said, “You have to give me an increase. It’s not paying for itself.”

We lost some customers and market share, but became profitable as we raised prices. There’s reward in taking appropriate, measured risk.

Q: Then what happened?

A: Our timing turned out to be good. The economy started improving and our customers became more tolerant of rate increases.

Once we got our pricing corrected and our profit margins improved, then we went to smaller price increases. Now we’re seeing an increase in the shipments we carry.

We’re out of a crisis mode. We restored wages and benefits. We’re back up to 8,500 people and we’ve added to our sales and marketing resources. Our capital spending is up.

Q: What do you have to do now?

A: We have the second best operating profit margin in the business, but there is still a big gap with the No. 1 public company in profitability, Old Dominion.

We’re inspired by that. If you’re not obsessed with the opportunity defined by the No. 1 player then you’re not driven to be the best that you can be.

They’re ahead of us in performing at a very high quality level. They market that, so their perception in the marketplace is higher than ours and they get higher prices. We need to continue to improve.

Q: What’s your best advice for younger workers?

A: You really don't know when your break is going to come.

I was a middle-management person in 1995. By 1999, I was made the president of a company with more than $300 million in annual revenue. That’s pretty crazy.

You can’t always define your career path. But you can do your job, gain experience, sign up for projects and get exposure. That will create opportunities.