Admiral Merchants: Driving Success - American Executive - RedCoat Publishing - American Executive

Admiral Merchants: Driving Success

Construction
Written by Liz Jones
Thursday, 31 January 2008
Brian Short and Brent Layton describe how this transportation company delivers turnkey solutions to the specialty market. You could say that trucking is in Brian Short’s blood. His father, Bob, purchased a 50% interest in Mueller Transportation Company in 1950, the year Brian was born. After acquiring several smaller LTL (less than truckload) companies and changing the company’s name to Admiral Transit, Bob purchased Merchants Motor Freight in 1961 and again changed the company’s name to Admiral Merchants Motor Freight. Six years later, he purchased Jack Cole/Dixie Highway Express company, giving the company a national footprint. Brian Short, CEO Brian’s early years were spent sweeping the floor of his father’s shop, later working as a dispatcher, and eventually climbing up the ladder to CEO (with a brief intermission to attend law school and serve as a US magistrate). He has been with the company for 20 consecutive years now and has witnessed its transition from a regional LTL carrier to a national special commodities solutions provider. Intelligent cost cutting Admiral Merchants enjoys a healthy average annual growth rate of 20%, and Short credits that, at least in part, to the company’s flexible, variable-cost business model. He explained that the company employs 650 independent owner-operators across the country who own their own equipment, which allows Admiral Merchants to avoid the expense of purchasing and maintaining its own fleet. In addition, the company pays the owner-operators a percentage of the net transportation revenue, meaning the company’s expenses are determined by the amount of business it brings in. In addition to cutting overhead expenses, the variable cost business model also allows Admiral Merchants greater flexibility than traditional carriers. “If we owned a fleet, we would have terminals. We would be able to service customers located near that terminal well, but service to customers located elsewhere would suffer. By not being tied down by a terminal and a fleet, we can more easily meet the demands of customers across the country,” said Short. Brent Layton, executive vice president of business development at Admiral Merchants, added that the independent contractors the company partners with are small-business people whose goal is to remain profitable. “We can count on them to deliver quality service because they have a vested interest in the company,” Layton said. According to Short, the variable-cost business model is not unique in the transportation industry, but it is unique in the middle market. “Most companies employing this type of model are either much larger than us or much smaller than us. Many only have a handful of trucks and can’t deliver the technology or services we can.” Nor can they deliver the specialized solutions Admiral Merchants had built its reputation on. “We are the problem solvers. Our product isn’t just the rear 40 feet of a tractor trailer—we offer the expertise of our corporate office, of our sales agents, and of our drivers,” said Layton. Such expertise is needed when transporting heavy, critical, and oversized cargo, such as a 17-foot wide wing assembly for a $20 million corporate jet, 10 automobiles fresh from the manufacturer, or a small turbine part that needs to be delivered within certain security requirements. Layton explained that the company has vast experience hauling equipment for the airline, power generation, and earth-moving industries (bulldozers, etc.), as well as the Department of Defense. “We can haul anything from Army tanks to missile launchers.” Layton added, “People don’t realize how much goes into transportation services. The value we bring to our customers is our industry knowledge and the ability to calculate the shippers’ requests before we make any promises,” he said. Relationship-based business Admiral Merchants considers its relationship with owner-operators to be its winning advantage. Although owner-operators are asked to sign a 30-day exclusive lease agreement with the company, many have stayed on for decades. “Our owner-operators tell us we treat them with respect, and in return, they have chosen to continue doing business with us, and for that we are grateful. We have one of the lowest turnover rates in the industry because we value these relationships,” said Short. Shortly before this past Thanksgiving, Short recalled, one of the company’s owner-operators had been transporting an over-dimensional load from the West Coast to Chicago. He received an over-dimensional permit from each state as he passed through but hit a road block in Iowa. The agency in Illinois that issued such permits had taken over a week to respond to the driver’s request. That’s when the crew at Admiral Merchants stepped in. “One of our office personnel called the agency at least twice a day and often stopped to check in on our driver. Our agent in Davenport, Iowa even took the driver out to dinner one night.” More than a week after submitting the request, the agency issued the permit, and the driver completed his delivery. According to Short, the driver was so touched by Admiral Merchants’ efforts that he recently purchased a Christmas lunch for everyone in the Minneapolis office. “The drivers have made the investment in the truck, they are away from home, and the pressure of fuel and expenses is on them. We go out of our way to make their lives a little easier, to get better paying freight for them to haul, and to be there when they need help.” Cash on delivery And, of course, getting paid on time doesn’t hurt retention rates, either. Short explained that drivers are paid 50% upfront and 50% on delivery, but in the past, the payment on delivery process was quite slow. Previously, the party accepting the delivery needed to sign a legal document confirming that the shipment arrived undamaged, and the driver then mailed that form into Admiral Merchants. Once the form was received, Admiral Merchants issued the driver a check. The company recently converted to an electronic system available at most truck stops across the country. Transflo Express allows drivers to scan delivery documents into an electronic system. Upon receiving the document, Admiral Merchants either issues the driver an electronic check or downloads the balance to the stored value card each driver carries. Some drivers, Layton added, have a scanner and appropriate software in their trucks, meaning they can receive payment before they leave the delivery site. “Truck drivers like to get paid on time because, in this industry, many of them have been burned. I can’t point to a program or initiative—it’s hundreds of little things done every day that show our drivers how much we appreciate them,” Short concluded.

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