LTL's crusader

For the last decade, Mike Wickham has charted the course for Roadway Express and taken a leading rolein working through tough issues with customers, labor, and government.

By Staff -- Logistics Management, 11/1/1999

Michael W. Wickham has spent his entire career in the trucking industry and with the same company, Roadway Express. Now chairman and chief executive officer of the national less-than-truckload carrier, he is an outspoken advocate of the industry and an unapologetic champion of his unionized workforce.

In recognition of his accomplishments as one of the most visible and active executives in the transportation business, the National Industrial Transportation League (NITL) has honored Wickham with the McCullough Logistics Executive of the Year Award. The award, sponsored by NITL and Logistics Management & Distribution Report, recognizes one executive each year who demonstrates a record of achievement, devotion, and leadership to the logistics industry. The award was established in memory of John T. McCullough, former chief editor of Distribution Magazine, one of the predecessors of Logistics Management. The winner is selected each year by the NITL board of directors from nominees suggested by league members.

Ed Emmett, president of the league, says, "By reputation and by personality, Mike has always been viewed by shippers as one of the more forward-thinking motor carrier executives. He tends to look at things and say 'How can we make things work better?' That doesn't mean we always agree: I wish he'd do more to get rid of the classification system. But by and large, he's always been willing to meet with shippers as customers and ask 'What can I do to make my customers' lives easier?' His selection was not for any one thing but for an accumulation of things. Year after year, members have nominated him and said he was the kind of person they liked to do business with."

John Amos, a member of the NITL board of directors and director of development for Danzas Corp., cites Wickham's success at Roadway during a time when the unionized carrier segment of the trucking industry has struggled. "He has shown leadership in the industry and helped draw the road map for where they're going," he says.

Wickham has had particular success in reforging the unionized carrier's relationship with the International Brotherhood of Teamsters. In 1997, he, along with senior executives of other unionized less-than-truckload carriers, restructured Trucking Management Inc., their multi-carrier bargaining arm, into the Motor Freight Carriers Association (MFCA). That organization not only bargains with the Teamsters, but also seeks to find common ground with labor on transportation issues affecting less-than-truckload carriers.

Wickham was chairman of the MFCA during the critical negotiations with Teamsters on a new National Master Freight Agreement in late 1997 and early 1998. He worked with MFCA management and the presidents of other national LTL carriers to arrive at an early settlement of the new five-year contract. That was crucial for both the carriers and the union. A 24-day strike by the Teamsters in 1994 had left shippers angry and wary of using unionized carriers as the contract deadline approached. Failure to reach an early settlement would have caused shippers to divert traffic to non-union carriers--freight that the unionized truckers would have been hard-pressed to win back.

Wickham recently spoke with Logistics Management & Distribution Report's chief editor, Peter Bradley, about the industry and his expectations for the future.

Q The industry has changed; people are thinking differently about their supply chains. Businesses are looking at logistics not just as a cost center but as a contributor to the bottom line. Has that changed the way that you work with your customers?

A It has changed dramatically. [We have to offer] a lot of customization for each customer who truly sees his supply chain as an opportunity for strategic advantage. So we work a lot more closely with our customers and keep our systems flexible enough to be able to make the kinds of changes we have to make to meet varying customer needs. It's a long way from where we were when everyone was trying to commoditize LTL transportation. If, in fact, you believe your supply chain is a strategic advantage, then transportation is no longer a commodity.

Q Judging from the reaction to the recent rate hike, some customers still do look at transportation as a commodity. How do you deal with that?

A The rate hike is simply a matter of the effect of supply and demand in the marketplace right now. There's a lot of demand for service; some of the supply has gone away. We have an opportunity to improve margins to the point that we can at least capitalize our business. That hasn't been the case for several years.

Q During the first half of this year, Roadway's bottom line looked a lot better than last year's. Is that primarily because there were no labor issues this year?

A Last year we were impacted negatively by customer concerns over negotiations with the Teamsters, which were exacerbated by the sales efforts of some non-union carriers. The dynamics were such that the marketplace was very nervous. We had a strike in 1994, UPS had a strike in the summer of 1997, and we were trying to negotiate a contract in the first half of 1998. All that was fresh in the customers' minds. What I think was [overlooked] was that the two sides finished [negotiations] five weeks early and reached a five-year agreement, which offered more stability in the unionized carrier environment than we've ever had.

Q Where do you see relationships with the Teamsters going? Do they understand the marketplace?

A They do understand the marketplace. There are things we can agree on. One is safety. Another is the concept of job security. We think that if our employees' jobs are secure, we have a strong company and that's good. Job security from their point of view is good as well. So we've focused ourselves on the things we can agree on, and it's easier to work around the things that are problematic.

Q We still see some of the analysts criticizing the Teamsters carriers for being Teamsters carriers and saying you don't have the work flexibility and so on. How do you respond to that?

A I always ask, What flexibility do [non-union carriers] have that I don't? Flexibility isn't the issue. The issue is the level of pay and benefits. We have a great product out there being put together by 19,000 hard-working Teamsters. So there has to be some flexibility to be able to generate the breadth of services that we have.

Q Going back to supply chain issues, there's some speculation that once we get past Year 2000 computer concerns, the industry's focus will shift to supply chains. Do you see that?

A Yes, I do. There hasn't been enough focus on that area, without a doubt. If you look at the reports that come from [Robert] Delaney every year and look at the carrying cost of inventory, for all we've said about logistics and all we've said about what can be accomplished by logistics redesign, not much has been done to reduce inventory carrying cost. I think there's a lot of low-hanging fruit there. I think that positions us well because of the flexibility and the breadth of the network that we have. (Editor's note: Delaney, vice president of Cass Information Systems, produces an annual report on logistics costs.)

Q Part of the change that we're seeing is the whole move toward electronic commerce. Will it have profound effects on distribution?

A I think that one of the things that's been left out of the equation is distribution. Distribution of information, once the programming is in place, is a heck of a lot easier than distribution of goods. That's something that has to be addressed. In the LTL environment, we're more business to business. And in the business-to-business world, e-commerce is going to change the way business is run and a lot of paper will disappear. What we see happening now is just what we saw with EDI. There's a lot more conversation about it than there is activity surrounding it. It will take longer than people think. But it offers tremendous cost savings for all of us.

Q Is this an area that you've invested in?

A Absolutely. We've had our Web site for several years and continue to improve it. And now we even have it to the point where a customer can come in and go into a password-protected database and examine his own information to use in managing his business. And it's real time. If he were to call up his payables and the check cleared at that moment, all the numbers on the screen would change. It's that real time.

Q Do you see traditional transportation companies changing in any radical way?

A [The industry] will change as the customers' needs change. Additional speed, total reliability--we'll continue to build products around that. ... But one of the things we're going to be careful about here is to keep our focus on the core business, too. The core business is what got us here, and the core business will always be there and will always be important. There's a risk in spending too much of your intellectual capital on your new products and not protecting your core business, and we've organized so that doesn't happen.

Q Productivity is a perennial issue in this business. What's your view of where we need to go with productivity, and what are the impediments?

A If you look at the transportation network in this country today and look at the projections of the needed capacity over the next 10 years, you know something must be done to improve productivity. I think we need to improve the productivity of every element of the transportation community. The trucking industry has been precluded by law from improving productivity. There aren't many industries that have been precluded by law from safely improving productivity. The LCVs [longer combination vehicles] have an impeccable record of safety where we run them. No one can make the argument that there's a safety problem there when you look at the statistics. So I think the only responsible thing to do is to approach it as a total transportation community and look for the opportunities that are there to improve that network's productivity safely.

Q I notice your emphasis on safety. What are some of the things we need to do to make the roads safer?

A I think that the broad application of the regulations that are already in place would have a lot to do with the improvement of safety. One of the things that we've done with the Teamsters over the years is come up with safety rules internally that in some cases are more rigorous than federal safety regulations. I think the fruits of that effort are in the statistics that you'll find among large unionized carriers. Another benefit that accrues to the safety line is the lack of turnover among our employees. You hear a lot about driver shortages here and there. We turn over at 3 percent or less in our driver ranks and in our dockworker ranks. The reason is that [we offer] the best pay and the best conditions in the industry [because] we've worked with the labor unions over time and created that environment. That benefits us on the safety line.

Q You've done a lot in Mexico and Canada. Where do you see the North American market evolving?

A That's just going to get smoother and smoother between the countries. The activity is tremendous. There's lots of growth. I think we--the three countries of North America--have to work together to make that North American network as seamless as we possibly can and as responsive as we possibly can.

Q What are some of the key concerns that you have from a regulatory standpoint?

A I think that the [driver] hours of service and the [truck] size and weight issues are teed up now for some public debate. I think we can come to the right answers if we look at those issues soberly, with the needs of the transportation system in mind and if we can get away from [modal disputes].

In the area of freight classification there are some opportunities for us to work together. We're doing it now. We're working together with some shippers. I think we can simplify that process collectively. Each side is going to have to look at the issues and make compromises on some long-standing disagreements. But once that's done, we can simplify the system. And that also will improve the efficiency of the transportation network.

EXECUTIVE PROFILE

Michael W. Wickham, chairman and chief executive officer of Roadway Express. Roadway is one of the three largest less-than-truckload carriers in the United States.

Professional experience

Graduated from the University of Delaware

31 years of experience in the trucking industry, all with Roadway Express

Served as terminal manager, district manager, and division vice president

Promoted to vice president, then executive vice president, finance and administration at corporate headquarters, Akron, Ohio

Elected president of Roadway Express in 1990

Elected president and chief executive officer of Roadway Express after carrier was spun off from Roadway Services, January 1996

Elected chairman and CEO in 1998

Professional and civic affiliations

Serves as chairman of the Motor Freight Carriers Association's negotiating group and chairman of the Senior Strategic Advisory Group for the Commercial Vehicle Safety Alliance

Affiliations include the American Trucking Associations, Network of Employers for Traffic Safety, NASSTRAC, and National Industrial Transportation League

Member of the Board of Directors and Board of Foundation for the Children's Hospital in Akron, Ohio