Shaw Keeping Cool With Kozak at Helm

It sounds like another wacky diet plan: chocolate bars, fruit juice, french fries and chicken.

Those are actually the freight categories that kept Willis Shaw Express Inc. from melting away like 12,000 other trucking companies did during the last four years. Those casualties of an idling economy don’t even include firms with four or fewer tractors, according to the American Trucking Association.

WSE’s own annual revenue froze around $100 million during that time. But new company President Chris Kozak said a revving economy and the start of a five-part plan could bump the refrigerated truckload carrier’s revenue up to $110 million-$120 million by 2004’s end. The initiatives target the tight freight capacity caused by the carriers that went caput.

Kozak, who replaced Don Orr in May, said WSE launched a four-man brokerage and logistics division last year that alone brought in an extra $6 million. The 66-year-old irregular route carrier also this spring made its first foray into intermodal shipping with the Florida East Coast Rail Line Co. and Burlington Northern Santa Fe Railroad Corp.

Kozak, 43, said he hopes to keep WSE a hot commodity for hauling frozen commodities during the next half decade by:

• Converting its 724-tractor fleet to half company-owned, half driver-owned assets.

• Carving out regional niches, where possible, and growing the firm’s short-haul segment from 30 percent to 50 percent of annual revenue.

• Increasing dedicated contract business substantially.

• Growing the recent forays into freight brokerage and intermodal shipping.

• Continuing ingraining safety and regulation compliance into WSE’s corporate culture.

“We started the year with about 130 lease-to-purchase owner operators,” Kozak said. “Now we’re running at about 170, or about 23 percent of our 740 total drivers. The owner operators are responsible for fuel and maintenance, and these days a new tractor is about $90,000 and a new refrigerated trailer is about $50,000.

“So it’s nice for companies to have a group of drivers who have some skin in the game. That way everyone’s motivated, and you’re not having to invest ridiculous amounts of capital into your company.”

Kozak said privately held WSE started an Arkansas regional fleet this year, too. Already 45 drivers work in that group, which makes quick runs to places like Chicago, Memphis, Dallas, Kansas City and St. Louis. WSE runs 25 truckloads per week between Arkansas and Michigan alone, carrying frozen vegetables and meat north and auto parts south.

“Those are quality driving jobs for people who don’t want to be out on the road for three weeks,” Kozak said. “I think people at Shaw are more excited than they have been in the last five years. We’ve got a lot of momentum going.”

Donald Broughton, a senior analyst with A.G. Edwards Inc. in St. Louis, follows publicly traded companies. But he said he wasn’t surprised to hear WSE is making the same moves as some of Wall Street’s hot rods.

“The highest operating margins and return on invested capital being produced by trucking companies today are those that are focused on shorter haul, developing their own brokerage operations and building their dedicated operations,” Broughton said.

Quiet Giant

WSE is tucked away in sleepy Elm Springs, where 30 miles per hour is the maximum speed limit and Stout’s Homestyle Country Store serves as the center of the 1,044-person town. Kozak said since arriving in Benton County last November, he’s found that WSE is often better known nationwide than it is even in Northwest Arkansas.

WSE’s coveted clients include Tyson Foods Inc. of Springdale; Wal-Mart Stores Inc. of Bentonville; Hershey Foods Corp. of Hershey, Penn.; Mars Inc. of Hackettstown, N.J.; General Mills Corp. of Minneapolis; Tropicana Products Inc. of Bradenton, Fla.; Minute Maid Co. of Houston and Simplot Food Group Inc. of Boise, Idaho.

Owned by the 12th largest trucking company in America, Comcar Industries Inc. of Auburndale, Fla., WSE employs 140 people at its corporate office in Elm Springs. It has terminals there plus Atlanta, Auburndale and Boise. WSE has 1,150 trailers, nearly every one of which is capable of shipping products at sub-zero temperatures.

WSE’s nine Comcar sister companies include five diversified truck lines, two storage firms with a combined 1.8 million SF of all-temperature warehousing, a logistics company and a commercial truck and trailer sales operation.

Company founder Willis Shaw and his sons, Bob and Dennis Shaw, sold what was then Willis Shaw Frozen Express Inc. to Comcar Industries in 1987 for an undisclosed sum (see story, p. 14). Clay Hyder Trucking Lines Inc., another Comcar property, was merged into WSE in 1993.

Rough on ‘Reefers’

Bob Costello, chief economist with the ATA, said refrigerated carriers, or “reefers” in the industry parlance, can take discipline to manage. Reefers use more fuel, and their trailers cost about $30,000 per unit more than dry van trailers.

Kozak said because of the expense, WSE operates a 1 to 1.3 tractor-to-trailer ratio, compared with a 1 to 3 ratio for most dry-van haulers.

But the temperature-sensitive cargo also means the trailers typically have to be baby-sat, and that can create logistical logjams. Couple that pressure with the monthly fluctuations of commodities, and heightened “hours of service” regulations by the U.S. Department of Transportation, and Costello said the fleet managers of 400,000 refrigerated trucks running nationwide have had to get smarter.

Previously, drivers could log out upon reaching a dock, Costello said. Now, even if the truck isn’t moving, the driver’s waiting time counts against the log. He and Broughton agreed that’s especially tough when grocery warehouses and food distribution centers are notoriously slow at loading — an asset utilization killer.

“The regulations have forced shippers to get faster or face higher detention charges for holding up the truck,” Broughton said. “Detention chargers aren’t what the truckers are in business for. But, if you’re getting paid $75-$100 per hour for a truck that’s sitting and not burning fuel or experiencing wear and tear, they’re also not an unprofitable event.”

Kozak said shippers embraced the changes this year and helped cut a good 30 percent out of previous loading-dock delays.

Safe Bets

Kozak said a few years ago WSE’s safety record was less than exemplary. He helped introduce two new mantras, “Safety is our driving force,” and “Log it as you drive it. Drive it legal.” The Zanesville, Ohio, native said the slogans have caught on.

“The safety record wasn’t out of control,” Kozak said. “But it needed to be better, and we have now enjoyed a good 24 months of improvement. I tell every single driver we hire there is nothing we do that’s so critical it’s worth risking your life or anyone else’s.”

Kozak also helped launch an ethics and training program that, through mid-June, 90 percent of the firm’s drivers had completed. Re-instituting a “safety culture” is one way Milton Jacobs, chief operating officer and executive vice president of Comcar, said Kozak has already been effective. Kozak joined WSE from Total Logistic Control in Zelland, Mich.

“He’s a good leader who gets a lot of respect from his employees,” Jacobs said. “With his leadership and WSE’s excellent service, I believe the company can be at least half again as big as it is now in five years.”

A 1983 graduate of the U.S. Military Academy at West Point, N.Y., Kozak spent 6.5 years in the Army serving ultimately as a Patriot Missile battery commander. He’s been in the U.S. Army Reserves ever since and expects to retire as a lieutenant colonel at year’s end.

He said the similarities between the military and running a trucking company are uncanny.

“Everything here is measured, and leadership is huge,” Kozak said. “There can be tough work hours and long days, but it’s about being accountable and making sure you look people in the eye. If you’re at a company cookout, you’re the last in line, not the first.”

Kozak said the refrigerated segment will see a traditional slowdown in July, but as the food industry picks up for the holiday season things will start hopping. He hopes to land more local customers with 20 to 30 outbound shipments per day that WSE logistics can manage.

A number of small third-party carriers already hover toward WSE for the extra freight.

“This fall will be unlike anything we’ve ever seen here,” Kozak said.

One of the road warriors who’ll be tackling that freight is John Johnson, a WSE company driver from Tahlequah, Okla.

Johnson was fueling up his truck at 6 a.m. on June 17 for a 1,500-mile trip. He was headed to Springdale to pick up a load of frozen chickens for a two-day’s ride to Compton, Calif., a suburb of Los Angeles.

Johnson used to own his own four-truck company, but he said it doesn’t pay for small operators to run their own lines anymore and he’s better off driving “for the other guy.” Johnson won a $10,000 certificate of deposit in 2003 from Willis Shaw for being the driver with the lowest amount of “idling times,” or times when the truck is burning diesel sitting in one place.

“I hope you’re going to write what a good company this is to work for,” Johnson said. “They sure have been good to me as a driver. If you have something at home, you’re family is sick or there’s some emergency or even just something you really need to attend to, they will work with you.

“A lot of companies can’t say this, but Willis Shaw will get you the freight and get you back.”

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Comcar Companies
Here’s a glance at the Comcar Industries Inc. family of firms:

• Trucking
Subsidiary — Headquarters — Line of Business

Coastal Transport — Savannah, Ga. — flat-bed carrier
Commercial Carrier Corp. — Auburndale, Fla. — short-haul carrier
CTL Distribution Inc. — Mulberry, Fla. — bulk carrier
MD Transport Systems — Auburndale, Fla. — truckload carrier
Midwest Coast Transport — Sioux Falls, S.D. — truckload carrier
Willis Shaw Express Inc. — Elm Springs, Ark. — refrigerated carrier

•?Logistics
Subsidiary — Headquarters — Line of Business

Comcar Logistics, Inc. — Auburndale, Fla. — logistics, brokerage

•?Warehousing
Subsidiary — Headquarters — Line of Business

Commercial Warehousing — Auburndale, Fla. — storage
Super Cool Cold Storage — Winter Haven, Fla. — storage

•?Truck Sales
Subsidiary — Headquarters — Line of Business

Commercial Truck & Trailer Sales — Auburndale, Fla. — equipment sales

Source: Comcar Industries Inc.