Truckload Association Keeps On Truckin'
A front-row view of the rise of the truckload industry and the association that represents it.
Editor's Note: Lana Batts worked for the American Trucking Assns. (ATA) from 1973-1992, ending her tenure as senior vice president for government affairs. She was president of the Truckload Carriers Assn. (TCA) from 1994 to 2000 and currently is partner, Larsen, Batts, Welborn & Co., LLC.
It's hard for me to believe that it has been 25 years since deregulation fundamentally changed the trucking industry, and the truckload segment had its real beginnings. I had just begun my career at the American Trucking Assns. in 1973, making $6,800 per year as a junior economic analyst, when the threat of deregulation suddenly appeared on the horizon. I was there to witness the industry's efforts to first stop it and then finally accept the inevitable. And I had a front row seat to see the phenomenal ascendancy of the truckload industry because of it.
ATA was formed in 1933 at the beginning of trucking regulation. It was founded in order to develop codes for the Roosevelt Administration's National Recovery Act of 1934. This act sought to establish good business codes among industries during the depths of the Great Depression. Many of the code's principles on rates found their way into the regulations established by the Interstate Commerce Commission.
As the name implies, ATA was a group of associations (primarily state associations) that came together to form a strong, unified voice. But it also contained associations that represented some of the 17 various segments specified in the regulations - such as the munitions carriers and household goods carriers, who had their own associations, known as "conferences."
These groups were affiliated with ATA, but had their own members; dues, budgets and staff; and boards of directors. With proper disclosure, both state associations and conferences were free to disagree with ATA.
The forerunners of today's Truckload Carriers Assn. were two separate groups. One was made up of truckload general freight carriers and was called the Common Carrier Conference - Irregular Route (CCC-IR). Founded in 1941, it affiliated with ATA one year later. The other group was called the Contract Carriers Conference (CCC). It formed in 1938 and also affiliated with ATA in the early 1940s.
Both organizations were overshadowed by the largest of ATA's conferences, the Regular Common Carrier Conference (RCCC) that represented the less-than-truckload carriers. Its members also belonged to one or more of the ratemaking bureaus that collectively made rates, i.e., they acted as a cartel. The secret to the RCCC's success was that its dues came from a check-off on the rate bureaus' dues. As a result, RCCC never had to search for new members or try to collect dues - unlike the truckload groups, which had to secure each individual member one at a time and collect their dues to stay in business.
So at the time of deregulation, RCCC's staff of 15 enjoyed luxurious offices, while the CCC-IR struggled with a handful of employees and low-grade office furniture. The contract carriers fared even worse, with just one part-time staff member and an office that was no more than a closet. With more members and a bigger budget, the RCCC and the LTL carriers dominated all the policy discussions regarding regulation.
The relative influence of both groups is illustrated by the fact that among the top 100 regulated motor carriers in 1980, only 12 were truckload carriers.
Over time and with the changing needs of domestic and international commerce, many academics started to question whether there was a need for depression-style regulation. By the 1970s, articles were being written, and symposiums and Congressional hearings were regularly held to point out the problems with the 50-year-old system. Critics said regulation kept rates artificially high, created inefficiencies, crushed innovation and thwarted entrepreneurs (including minorities and women) who wanted to enter the trucking industry.
ATA and most of its affiliates fought a valiant battle to keep the industry regulated. The association argued that motor carriers were not making excessive profits, that rates had not kept pace with inflation. They predicted that if deregulation occurred, small towns would disappear because businesses would be forced to pay their full share in transportation costs. And safety would be compromised with a flood of new entrants.
Always under the surface, but never publicly advanced, was the question of what would happen to the operating authorities carriers had received from the ICC. These valuable authorities - or government-sponsored franchises - showed up on the company's balance sheet as "goodwill" and would become worthless after deregulation.
While the LTL and truckload carriers were uniform in their support of regulation, contract carriers and private carriers were not. In the end, ATA lost the battle.
On a global level, deregulation happened because the protectionists' arguments did not make sense to anyone who had taken a 101 economics class. On a more micro level, the industry lost because its coalition fell apart.
First, the newest commissioners appointed to the ICC by Gerald Ford and Jimmy Carter were systematically deregulating the industry through administrative action. As a result, the government agency regulating the trucking industry no longer championed the industry.
Second, the Teamsters, who had supported the industry's position, were under investigation for questionable investments in Las Vegas casinos. Sen. Howard Cannon (D-Nev.), chairman of the Senate Commerce Committee and a champion for the industry's anti-deregulation position, was under investigation for his financial dealings with the Teamsters. Sen. Edward Kennedy, who favored deregulation, ended up controlling the legislative agenda. I vividly recall an ATA-sponsored Congressional dinner at the Hilton Hotel in Washington and witnessing Cannon and Kennedy arrive together, almost hand-in-hand. Everyone knew that the power had shifted, and the debate was over.
Because of these factors, the trucking industry supported the Motor Carrier Act of 1980, believing that while the Act appeared to be economic reform and codified the administrative actions of the ICC, it stopped short of total deregulation.
But careful reading of the background reports for the legislation shows great differences between the House and the Senate in what they hoped to accomplish. The Senate report read like airline deregulation, but without the specific timetables.
The House report contained a more cautious approach, merely codifying what the ICC Commissioners had already done. In the end, the Senate interpretation prevailed because the Senate confirms commissioners to the ICC. The Senate Commerce Committee confirmed only individuals who supported deregulation. ATA was reduced to repeatedly suing the ICC over its actions and repeatedly losing because the courts would defer to the ICC on administrative issues.
During the first several years after deregulation, the CCC-IR, like ATA, worked to keep the full impacts of deregulation at bay. But in 1982, half of the truckload membership felt that the regulation was becoming "less and less important." Facing reality, the CCC-IR and the Contract Carriers Conference merged to form the Interstate Carriers Conference in 1983. ( The name was changed in 1988 to the Interstate Truckload Carriers Conference to avoid confusion with the government agency).
The conference established its own Political Action Committee so that it could better influence the political issues affecting truckload carriers (like single-employer pension plans and independent contractor placards). It also expanded into operational areas, creating programs to help carriers manage in the new environment, including seminars on management of owner-operators, fuel surcharges, train-the-trainer, driver recruitment and retention, and computer and software symposiums. Its "trucking in the round" sessions at the annual meetings were set up so that carriers could exchange management and operational information.
Yet even as the number of truckload carriers grew after deregulation, ITCC still struggled. That's because the first 10 years following deregulation were financially rough on the carriers. Bankruptcies were common - averaging about 100 per every 10,000 carriers, double the average in 1978. Few carriers had the extra money to join or participate actively in the association. Even though the group's membership was 600 in 1980 and grew to 753 in 1984, it only had 501 members by 1988. The truckload association could never get enough members and revenues, staff or PAC money to make a decisive impact.
To understand just how volatile the industry was, think about this: Only eight companies belonging to the past chairmen of TCA and its predecessors between 1980 and 2000 are still in business today. It's hard to grow an association with that type of turnover among the governing elite.
By the mid-1990s, however, actual truckload rates had started to increase. Carriers finally had the money to join an association and membership grew to 967 in 1995. The association, renamed the Truckload Carriers Assn. in 1997, continued to attack issues that were important to truckload carriers, such as taxes, hours of service, image, safety, environment, and labor and training. It also added new and innovative programs, such as the Truckload Academy, the Professional Truck Driver Institute, and the Highway Angels truck driver image campaign.
As their numbers grew, truckload carriers also started to join ATA and demand more say in the policy process. Prior to deregulation in 1980, only one truckload carrier had been ATA's chairman - Stoney Stubbs of Frozen Foods Express (now FFE) in 1972. Ironically, Frank Cochrane of Bray Cos. - a truckload carrier - became chairman of ATA in 1980.
Since then, 11 truckload carriers have served as ATA chairmen: Richard Few (Cooper Motor Lines), Dale Craig (Craig Transportation), Duncan McRae (Melton Truck Lines), Chet Stranczek (Cresco Lines), Roger Roberson (PFT Roberson, now Roberson Transportation Services), Don Bowman (D.M. Bowman), Ed Trout (Cornhusker Motor Lines), Vern Garner (Garner Trucking), Duane Acklie (Crete Carrier Corp.), David McCorkle (McCorkle Truck Lines) and Fred Burns (Burns Motor Freight). Steve Williams (Maverick Transportation) is the current chairman of ATA. And he's also - you guessed it - a truckload carrier.
By the end of the 1990s, TCA had finally come of age and was the largest and fastest-growing of ATA's affiliated conferences. In fact, TCA's annual meetings were starting to rival the size and complexity of ATA's. TCA's success soon led to a change in its relationship with ATA. No longer were truckload carriers standing on a chair at the back of the room trying to get ATA's attention as they had in 1980. TCA's members now owned the room. The majority of ATA's members came from the truckload segment. The majority of ATA's recent chairmen were TCA members. Truckload members dominated most of ATA's policy committees. Even though the majority of TCA's members were not members of ATA, truckload carriers were setting ATA's agenda. It was not surprising that many started to question the relationship between TCA and ATA and the need for both organizations.
In 1999, ATA and the Wren Committee (which included many prominent truckload carriers) attempted to redefine the relationship. Among the original recommendations was a requirement that carriers could not join a state association or conference (like TCA) without first joining ATA. While a conference would retain its own budget and board, its staff would become ATA employees. ATA would take over many of the functions that were seen as a "duplication of effort" - such as meeting planning, public image and government lobbying. On two very close votes - first with TCA's board of directors, and then the general membership - the truckload association voted to reject the recommendations. However, because truckload members were such an integral part of ATA, a compromise was eventually reached. Today TCA remains a separate organization that is affiliated with ATA and pays ATA a lobbying fee.
As I look back on the last 25 years, I am struck by the people I meet who became the leaders of the truckload industry and their can-do attitudes. I vividly remember a pro-regulation carrier executive telling me that he was looking forward to the new environment. He said that he had made money during regulation and he expected to make money after deregulation. When I asked why, he said he refused to believe he made money because of the government.
That confident attitude was exemplified in men like Don Schneider, who opposed deregulation, but adapted so successfully afterwards. Men with grace and dignity, like Duane Acklie and Herald Smith, who fought for deregulation but continued to work with ATA. Innovators like J.B. Hunt, who decided that he would work with the railroads and single-handedly made intermodalism what it is today. Humanitarians like C.E. "Kai" Norris and Tom Welby, who provided untold hours building TCA's scholarship fund. Suppliers like G.D. Madden, who saw an opportunity in truckload and built great companies supporting the truckload carriers. Men like Kevin Knight and Russ Gerdin, who proved that with solid business models, there is a lot of money to be made in trucking. I remember the unique characters of the industry, like Bob Molinaro and Tom Schilli. I'm grateful to men like Roger Roberson who believed in me - a woman in a male-dominated industry - and gave me the breaks when I needed them. I also look back and remember wonderful truckload pioneers who are now truckin' with God: Cy Weller, Jay Trammel, Harold Anderson, Eddie Blair, Stoney Stubbs and Sid Alterman, just to name a few. The industry of today owes each and every one of them a debt of gratitude for their foresight and endurance in a difficult industry.
My father once told me, "Lana Jo, trucking is an easy business. All the rancher wants me to do is pick up his cattle on time, deliver them on time, not bruise them, and not make him pay for it. It's all in the execution." These words were true during regulation, after deregulation, and will remain true well into the future.
