Despite Teamsters' effort, Overnite bounces back

By Staff -- Logistics Management, 10/1/2000

Overnite Transportation, one of the largest less-than-truckload (LTL) carriers in the nation, has continued to expand, broadening its geographic coverage and increasing business in its established territories. In the second quarter of this year, the trucker, owned by Union Pacific Corp., reported its best quarterly results in the last six years.

The continuing improvement in Overnite's operating results may come as a surprise given that the company has been battling with the Teamsters union for several years. The Teamsters have been attempting to organize Overnite drivers and dock employees, so far with limited success. Outbreaks of violence along the picket lines and off-site assaults against Overnite drivers, which management blames on the Teamsters, have gained attention that obscures the company's financial and business success.

Despite its labor troubles, the company is moving ahead with new services. The latest, which it began offering this month, is a pickup guarantee. Although guaranteed delivery services are common, company managers believe that Overnite is the first LTL carrier to offer a guarantee that freight will move free if it is not picked up on schedule.

Overnite's success has come under the leadership of President and CEO Leo Suggs, who took the beleaguered carrier's reins in April 1996. "I realized it was critical to win back the trust [of employees]," he said in an exclusive interview with Logistics Management. One way he did that was by establishing a strategic vision for the company that focused on employees. "In most corporate visions, you hear about market share or about customers. Here, we talk about the workers," he says. "If the workers do a great job for the customers, you'll be rewarded with more business."

That focus on employees notwithstanding, Overnite's fight with the Teamsters shows no signs of slowing. Although negotiations with the union continue, Suggs is furious with union efforts to shut down terminals and what he calls its efforts "to put us out of business." Suggs also condemns the violence that has erupted around attempts to shut down some terminals. A company spokesman says that the Federal Bureau of Investigation is investigating 54 shootings, some resulting in serious injuries, that are related to the Teamsters' activity.

Suggs says that though talks will continue, he will not yield on several critical issues. "If we give them anything near what they want, it would threaten the future of the company," he says. In particular, he is unwilling to allow work rules that would limit operating flexibility. And he refuses to consider joining the Teamsters' national pension fund. That pension account is underfunded by $5 billion, Suggs contends. If Overnite became a part of it, he believes that employees' contributions would in part be used to fill that gap.

Looking forward, Suggs says that the company will continue to focus on one- and two-day service lanes, where he expects the fastest growth. Overnite now serves 32 states and will continue to expand. It has an alliance with Viking Freight to provide service to Western states and also offers some long-haul services using sleeper teams for four-day transcontinental hauls.

Suggs says his company and other LTL carriers are under competitive attack from truckload, parcel, and airfreight specialists. "We're responding by going into some of their markets and offering competitive advantage," he says.

The company is also taking some steps toward offering third-party logistics (3PL) services, although it does not advertise itself as a third-party provider. It now offers assembly and distribution services to some customers and is likely to increase these service options.