November 26, 2011 Trucking for 25 Years

Volume 14 | Issue 3

Covenant Transport recently celebrated its quarter-century anniversary. If this trucking company keeps on the same road, it will easily mark

Mention long-distance trucking to many people and their memories conjure a song: “Trucking,” by the Grateful Dead.

“What a long, strange trip it’s been,” the band sang.

David Parker, co-founder of Covenant Transport (a leading truckload carrier), recently voiced words that echo that sentiment. During an occasion last May that celebrated the major company milestone, Parker said, “It’s been a long, hard, joyful, wonderful, emotional ride for the last 25 years.”

Yes, in 2011, Covenant Transport celebrated its 25th anniversary – and, sure, it has been a long, strange trip, but a hugely successful one. Consider: David Parker was only 28 years old when he co-founded Covenant Transport with wife Jacqueline in 1986. At the time, they only had 25 tractors and 50 trailers. Today, Covenant Transportation Group is a $655-million total revenue enterprise made up of four operating subsidiaries operating a total of 3,000 power units and 7,300 trailers handled by about 4,000 drivers, according to Mark Paré, senior vice president of sales and marketing.

Covenant Transport – headquartered in Chattanooga, Tenn. – offers a variety of transportation services to customers in the retail, freight forwarder, less-than-truckload and 3PL segments. “We do business with many Fortune 500 companies, and they count on us,” says Paré.

THE THREE S’S
Why? That’s the easy question. The company offers the three S’s: security, speed, safety.

Here’s the hard question: Why wouldn’t a business want to attach itself to this transportation provider? Well, that’s for them to answer, but understand this: Security is one of Covenant Transport’s main differentiators, and it provides this through the team driver concept.

Cargo theft is an increasing and major transport industry problem, and a costly one. Even one truckload stolen translates into many dollars lost, the company indicates. Covenant mitigates the risk. “Our team approach, which takes trucking security to the next level, places two individuals in one truck,” says Paré.

Theft generally happens when a single driver operates a truck, he says. “When they have to stop to fuel, or to take a shower, or do laundry, or to take a break – that is when the truck gets stolen.”

But Covenant drivers work in tandem, like a bicycle with two riders. “One person is always with the truck, and that deters the bad guys,” says Paré. “We consider this important, as many of our customers need to transport high-value goods.”

BRINGING IT ALL INTO PLAY
A perfect example of how all this works involves electronic manufacturers, indicates Paré. For them, speed is crucial.

“We service many of the biggest,” Paré says, “and the goods they place on board are very time-sensitive. A new model comes out each week. So speed to market is essential. And we’ve demonstrated great speed capability.”

How fast? “We can a log a thousand miles in 24 hours, because our trucks are operated by two people,” he says.

And security? “A lot of the goods can be easily pilfered, so customers need security in transit,” Paré reveals. So Covenant’s in-place security procedures – along with its team driver approach – make a huge difference. “Goods that we transport don’t get stolen,” he says. “We’ve proven ourselves over the years, and we’re very good at this. We’ve developed a reputation. There’s a lot of buzz throughout our industry about who the good carriers are, and Covenant finds itself among the well spoken.”

Further, goods also arrive safely. Covenant has received numerous awards (e.g., the annual TTA Fleet Safety Award) and the company has always been on the ATA and TCA list as one that has demonstrated outstanding safety standards and practices.

HUMBLE DESPITE HIGH RECOGNITION
These attributes are why Covenant Transport was recently named a 2011 Top 100 Motor Carrier by Inbound Logistics magazine. The list is essentially a qualitative assessment of those service providers best equipped to meet and/or surpass ever-changing motor freight transportation needs.

When asked about this, Paré says he isn’t surprised – but that isn’t arrogance. As he points out, “This isn’t the first year that we’ve received this kind of recognition. We placed ourselves on the top tier of carriers, and that’s where we continue to be.”

So, it’s no brag, just fact – after all, this organization is humble in attitude, in the Christian sense. “We’re a faith-based organization,” reveals Paré.

And that’s another major differentiator. “What it means, from a business perspective, is bringing morality and ethics into the marketplace,” describes Paré. “We won’t lie, cheat or steal. For me, it is gratifying to work for a company where you don’t need to worry about ethics. When senior management gets together, they will do the right thing for the customer, the company and our employees.”

That’s not always the case with other transportation companies. “We don’t even cuss here,” he laughs, “and that’s both unusual and refreshing.”

This might make Covenant Transport appear as a childish naïf waiting to be eaten by the sacrifice-hungry Moloch that rules the 21st Century global business environment. However, the company thrives. It has grown through acquisitions, and it partnered itself with three vibrant transportation organizations.

“We’ve made acquisitions that we’ve morphed into Covenant Transport, and we also have three standalone companies – Southern Refrigerated Transport, which has about 1,000 trucks, Star Transportation, which has about 425 trucks, and Covenant Transport Solutions, our brokerage arm,” says Paré.

Most recently, in August 2011, Covenant acquired the van operations of Factory & Steel Transportation, Inc. (Fastrans) of Tennessee. All of this is why Covenant Transport is ranked as one of the 10-largest truckload carriers in the United States.

Indeed, the Fastrans acquisition carries Covenant into the Canadian transportation market. “We’ve also expanded into the Mexican market,” says Paré, “and we see great potential in those two countries. So, we’ve become a North American company instead of just a 48-state company.”

Covenant – whose services include long-haul delivery, regional delivery and temperature control – also has strategically placed terminals located in Tennessee, Texas, California (three), Indiana, Pennsylvania and Florida.

“We have eight such secured terminals, and additionally we have maintenance facilities and drop yards,” defines Paré.

INDUSTRY CHALLENGES
However, success doesn’t come easy, and Covenant faces its share of challenges. In recent years, a major challenge involves the company’s most valuable resource: the driver.

“Driver acquisition and retention, over the past several years, has been very difficult,” observes Paré. “Previously, and for a long time, we relied on truck driving schools, but now we’ve had to focus more on experience, because of the new government requirements on safety and security. The government has come up with a system that scores individual carriers on things such as accidents and traffic tickets. We applaud the effort, but it has compelled us to look very closely at the driving record and the experience of the drivers we hire. Over the past couple of years, we have had to do a lot more advertising and make our requirements a lot tighter. Unfortunately, everyone in this industry is looking to hire same ‘guy.’ So it has been a battle to get people in here.”

This specific challenge also involves the available pool. “The truck driver market is drying up. Fewer people aspire to drive a truck anymore,” reveals Paré.

That leads into the retainment issue. “Once you acquire a driver, you have to retain them, and we do that by making sure that the pay process works properly, the hours are there, and that we make them feel part of a family,” explains Paré. “A driver’s existence can be pretty solitary, so when they’re here, we try to make them feel like they’re at home.”

And, of course, there is the economy. “It hasn’t been very helpful,” comments Paré. “Trucking has been flat for 2011. We had a very good year in 2010, and everyone in the industry expected the following year to be very uplifting, with inventories opened up a bit more and just a stronger industry in general.”

But 2011 didn’t quite work out that way. Capacity tightens, costs continue to rise and more companies drop out of the industry.

Meanwhile, Covenant Transport endures and, as far as the future, it is focused on maintaining its number of units. “Right now, we don’t feel that adding capacity will do anything for us,” says Paré. “Also, it is getting harder to recruit and retain a driver. But, looking beyond the economic and resource issues, we seek to satisfy current and future customers, in any way possible.”

And that recalls a lyric from another famous truck song: “Show me a sign, and I’ll be willin’ to keep on movin’.”

Covenant Transport has seen the sign, and it’s sure enough “movin’.”

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