Old Dominion Freight Line, Inc.
Old Dominion Freight Line, Inc.
Sales: $556.5 million (2002)
Stock Exchanges: NASDAQ
Ticker Symbol: ODFL
NAIC: 484122 General Freight Trucking, Long Distance, Less Than Truckload; 484121 General Freight Trucking, Long Distance, Truckload; 481112 Scheduled Freight Air Transportation
Old Dominion Freight Line, Inc. provides less-than-load trucking (LTL) services for general commodities, such as textiles and consumer goods, and serves more than 20,000 points across North America. The company operates more than 115 local, regional, and interregional service centers in 38 states, where partial shipments are consolidated for forward transportation or are re-sorted for local distribution. Old Dominion provides full-state coverage in 24 states from New Hampshire west to Illinois and south to Florida, and including Texas and Oklahoma. Special services include Speed Service, for expedited next-day and second-day shipments, and Air Express, for airfreight forwarding. Through partnerships in Mexico and Canada, the international division provides freight transportation to several locations in those countries. Container drayage service is offered through port facilities on the Atlantic Ocean in Virginia, North and South Carolina, Georgia, and Florida; on the Gulf of Mexico at New Orleans; and on the Pacific Ocean at Long Beach, California.
Founding the Company in Virginia, the Old Dominion State
As the name suggests, Old Dominion Freight Line originated in the state of Virginia. Earl and Lillian Congdon founded the company in Richmond in 1934 and, with one truck, Earl transported general commodities between and around Norfolk and Newport News. After Congress regulated the trucking industry in 1935, Old Dominion received approval from the Interstate Commerce Commission to continue operating along that route, allowing the company to expand its fleet and driving staff.
During World War II, activities at military bases in Norfolk and Newport News increased freight traffic and Old Dominion accessed this new business for trucking service. After the war, however, traffic declined. The Teamsters Union, which had organized the truck drivers and warehouse workers during the war, led a strike at Old Dominion. The Congdons decided to close business operations, but opened 11 weeks later with nonunion labor.
Earl Congdon died in 1950, leaving Lillian and sons Earl, Jr., and Jack to manage Old Dominion Freight Line. Lillian’s first action as president was to incorporate the company.
Old Dominion expanded in the late 1950s and early 1960s, adding new routes outside the state of Virginia for the first time. The acquisition of Bottoms-Fiske Truck Line, a furniture mover based in High Point, North Carolina, expanded company operations to southern Virginia and throughout North Carolina. In 1962 Old Dominion relocated to High Point to be near major furniture and textile manufacturers, but the company retained its Virginia name. Earl took the helm as president at this time, and Lillian became chairwoman.
The company continued to expand during the late 1960s and 1970s, initiating drayage service on the Atlantic coast and entering new markets through acquisition. Old Dominion acquired Barnes Truck Line, Nilson Motor Express, and White Transport in 1969, and Star Transport in 1972, extending operations to markets in the Northeast and the South. With the acquisition of New Jersey-based Deaton Trucking in 1979, Old Dominion entered the market for full-load and flat-bed trucking.
Industry Deregulation Sparking Challenges and Changes During the 1980s
Federal reform of trucking industry regulations through the Motor Carrier Act of 1980 prompted many changes at Old Dominion. The legislation allowed Old Dominion to add service, without regulatory approval, to points in Florida, Tennessee, and California, as well as to Dallas and Chicago. Specialization in LTL freight transportation provided an opportunity to provide trucking services to more markets. Rather than shipping directly to the customer, LTL service was based on a network of terminals where freight was sorted for local distribution. Industry deregulation allowed the company to develop rapidly for flexible commodities transportation, opening service centers where freight could be resorted en route to its final destination, combining different shipments more readily for greater efficiency. Old Dominion began to build service centers for geographic concentration, opening 27 centers during the early 1980s.
Deregulation created an extremely competitive environment in the trucking industry and Old Dominion targeted customers of unionized carriers, which could not provide the flexible service of a nonunion carrier because unions limited workers to specific jobs. For instance, the new flexible scheduling of transportation services meant that a shipment could arrive at any time; without a union, anyone could handle receiving a shipment regardless of their job description if a regular worker was not available. Old Dominion workers frequently voted against unionization; the company attributed much of its success to employing nonunion workers.
The competitive atmosphere prompted the formation of many new freight transport companies that offered discount rates, frequently undercutting the rates of other carriers. In response to this difficult business environment, the Congdons hired John Ebeling, a veteran of the trucking industry, as president and chief operating officer, the first person outside the family to hold such a high-level position at Old Dominion. Ebeling was instrumental in forming quality management programs and computerizing operations for cost efficiency and improved service.
The competitive atmosphere of the 1980s, along with investment in infrastructure, led to financial losses in 1986 and 1987. Through capital investment and service improvement programs Old Dominion became profitable and entered a period of steady growth and expansion. In 1990 the company reported sales of $134.8 million, representing a 17 percent increase over 1989, and net profit of $4.7 million. A fleet of 673 tractors and 2,461 trailers transported shipments through 47 service centers in 20 states, though primarily in eight southeastern states. With greater emphasis on developing LTL services, Old Dominion discontinued its furniture shipment division and sold the general commodities truckload and flatbed freight division of its Deaton subsidiary in 1991.
1991 Public Offering of Stock Marking Decade of Expansion
Despite a recession and a decade of industry volatility, Old Dominion successfully launched an initial public offering of stock in late 1991. Selling its stock at $12.50 per share, the company grossed $15.6 million and the proceeds were applied to debt repayment and a strategy of aggressive geographic expansion. Old Dominion expanded services by increasing the density of service centers in existing markets as well by entering new markets. This was accomplished through acquisition, expansion of existing facilities, and new facility development. In 1993 the company launched new intra-regional service in the mid-Atlantic states.
In September 1995, Old Dominion acquired certain assets of Denver-based Navajo LTL, Inc., including 82 tractors, 264 trailers, and ten service centers. Six of the service centers provided Old Dominion entry into new markets, in Kansas City, Phoenix, Albuquerque, Denver, Salt Lake City, and Sacramento, while service centers in San Francisco, Los Angeles, Dallas, and Chicago were integrated into existing operations. Old Dominion purchased or opened six additional service centers, entering new markets in Minnesota, Wisconsin, Missouri, and Indiana.
By the end of 1995 the company operated a total of 67 service centers in 35 states and Washington, D.C. The availability of service culminated in a 17 percent increase in LTL tonnage transported in 1996 and an overall 12 percent increase in tonnage transported as full-load or LTL service. Revenues in 1996 reached $293 million, yielding a net profit of $6.1 million.
Although the company expanded into new territory, most expansion activity emphasized building a dense service network in the Southeast. The January 1998 acquisition of assets from Fredrickson Motor Express, based in Charlotte, involved 26 terminals in North and South Carolina, Virginia, and Georgia, though 19 terminals overlapped with Old Dominion facilities. In August Old Dominion purchased assets from Goggin Truck Line of Shelbyville, Tennessee, serving metropolitan and rural areas in the Southeast. The two acquisitions resulted in the addition of nine new service centers in 1998, while another four service centers opened in upstate New York, extending new service to that area. Old Dominion invested an unprecedented $48.7 million in tractors, trailers, and service centers in 1998, compared with an average of $30 million in the late 1990s.
Expansion continued in 1999 with the January acquisition of Skyline Transportation. Assets included 23 terminals in North and South Carolina, Georgia, Tennessee, and Alabama, with only one overlap with Old Dominion facilities. The acquisition provided Old Dominion an opportunity to improve next-day service to and from the Midwest.
Mission: To provide innovative services that satisfy customer needs and result in a reasonable profit that ensures growth and success of our union free employees, company and shareholders. We will maintain a formal and continuous Quality Management process to achieve our mission. Vision: To be the premier transportation company in selected regional, interregional and intrastate markets served.
Other service expansion involved new facilities in Delaware, West Virginia, and Pennsylvania, as well as the relocation and consolidation of facilities. A new $9 million facility in Rialto, California, combined and expanded operations in southern California. In November Old Dominion acquired a service center in Dallas from Nation’s Way Transport Service for $3.65 million in a bankruptcy auction. Old Dominion’s nearby location accommodated 63 doors, while the new facility would accommodate 164 doors within five years. Old Dominion planned to develop the terminal as a hub for Texas, Louisiana, Oklahoma, Arkansas, and New Mexico. A small service center was opened in Laredo, Texas, for introduction of transportation service into Mexico.
From 2000: New Markets, New Services, New Technologies
While Old Dominion continued to pursue geographic expansion in the early 2000s, the company sought internal growth through the implementation of new services and improvements to existing services. One dimension of this concern for service involved providing full-state coverage within existing territories. In the first half of 2000, Old Dominion extended full-state service to 21 states east of the Mississippi River. This service infrastructure allowed the company to introduce the Speed Service Program, providing customized, time-sensitive delivery service.
An opportunity to improve its service network in Texas and Oklahoma came in February 2001 with the acquisition of Carter & Sons Freightways, Inc. of Carrollton, Texas. In addition to trucking and office equipment, the acquisition involved 23 service centers, which provided Old Dominion with complete service coverage of Texas and Oklahoma and complementary service to Old Dominion terminals in Louisiana, Arkansas, and New Mexico. The company merged ten service centers into existing facilities, so the acquisition provided a total of 13 new facilities. The acquisition provided infrastructure to offer next-day and second-day service in the five-state area and contributed approximately $23 million in revenue.
Old Dominion introduced two new services in 2002, OD Air Express and OD Parts Assembly and Distribution. OD Air Express, an air cargo transportation service, provided nightly schedules of service through 51 airport locations. Old Dominion hired eight regional sale managers to promote air service through airfreight brokers, forwarders, and airlines and opened a centralized facility for air transport arrangements. Assembly and Distribution elaborated on existing service that assembled a customer’s product at any Old Dominion service center and loaded it on any company’s equipment for transport to a final destination. The company also received shipments from a customer’s vendors or another carrier for forward distribution anywhere in the Old Dominion system.
Old Dominion supported its program of service improvements with the implementation of several new technologies. Ether wireless service for handheld devices provided mobile data synchronization, proof of delivery, real time pick-up and delivery status, and other information. Fleetwise brand dispatch and route planning software packages facilitated communication between drivers and dispatchers and determined the best delivery routes for new service orders as they were received. The Dock Yard Management System provided the status of a shipment anywhere in the Old Dominion service network using Radio Frequency Identification tags that automatically record shipment arrivals and departure. Old Dominion upgraded its web site with a new look, increased speed, and ease of navigation for customer convenience in tracing shipment status.
Lower demand for transportation services due to a weak economy in 2001 did not stop Old Dominion from continuing its strategy of expansion. Instead, the company sought to offset low demand with cost and service improvements. The company reduced transit time in more than 3,000 of 13,000 service lanes, while the transit time of coast-to-coast service was reduced by one day. Service improvements put Old Dominion in a competitively advantageous situation, attracting accolades from Wall Street, which more than doubled the company’s stock value in 2002.
In 2003 Old Dominion continued to expand and upgrade its service center facilities. The company added a 22-door facility in Baton Rouge and relocated a Shreveport service center to a larger, more central location in Monroe. In May Old Dominion opened a 38-door service center in Des Moines, greatly furthering potential business opportunities in Iowa and the Midwest. In June the company announced plans to open a facility in the Reno area.
Principal Operating Units
OD Domestic; OD Expedited; OD Technology; OD Global.
Arkansas Best Corporation; Con-Way Transportation Services; Roadway Corporation; USF Corporation; Yellow Corporation.
- Old Dominion is founded by Earl and Lilliann Congdon.
- Earl Congdon dies and Lillian becomes president.
- The company expands with the purchase of a High Point, North Carolina-based furniture mover; Earl Congdon, Jr., becomes president.
- New acquisitions expand Old Dominion’s reach into the Northeast and the South.
- The Motor Carrier Act allows the company to add service to far-flung markets.
- An IPO follows two years of double-digit revenue growth.
- Acquisition provides entry into markets in the Southwest.
- The density of service infrastructure improves in the Southeast through acquisition and expansion; David Congdon is named COO.
- Old Dominion initiates international less-than-truckload (LTL) service into Mexico.
- Old Dominion initiates Air Express Service.
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_____, “What Recession Old Dominion Freight Line Bucks Trend, Predicts 16.7 Percent Revenue Rise in ’03,” Traffic World, December 9, 2002, p. 22.
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