A Less-Than-Truckload Life More Than a Bit Unusual

By Jonathan S. Reiskin, Associate News Editor

This story appears in the Jan. 5 print edition of Transport Topics.

THOMASVILLE, N.C. — But for the vagaries of history, Earl Congdon’s family business could have been Florida motels rather than less-than-truckload transportation.

As Old Dominion Freight Line’s chairman tells it in his office here, personal incidents in the lives of his parents — Lillian and Earl Sr. — generated enormous consequences in what is now a $1.5 billion-a-year corporation. His mother’s determined resolve helped compensate for his father’s personal bad luck that ultimately proved fatal.

Congdon is in his office at 8:30 a.m. and eager to talk about the business his parents founded during the Great Depression and that he joined 60 years ago.

He is 78 and ODFL’s chairman, having turned over the chief executive officer title to his son, David, a year ago. He offers some advice on corporate acquisitions, crows a bit about the good deal he got on the company’s headquarters when the firm moved in 2001 and recounts details of the African safari he joined with his wife, Kathryn.

Congdon’s career with Old Dominion dates to February 1949. He has handled freight on the loading dock and driven and dispatched trucks. He has bought up rival carriers, fought for industry deregulation, taken ODFL public, trained the next generation of his family and led a one-truck company only a few years older than he is into the nation’s sixth-largest less-than-truckload carrier.

The growth has been managed profitably as well: net income in 1996 was $6.1 million, and for the 12 months ended Sept. 30 it was $73.3 million. The company’s high stock close for 2008 was $38.71 a share in August, while as recently as March 2002 the stock traded for less than $4 when adjusted for stock splits.

“He has an entrepreneurial spirit and has always kept an eye to the future,” said David Congdon. “He looks to grow but sticks with what we do well and then adds on. . . . He’s a risk taker — if it’s a measured risk.”

Charles Diehl, president of the North Carolina Trucking Association, said, “Old Dominion has had some unusual successes. People pay attention to what they do.”

And stock analyst Thom Albrecht, who has followed the carrier since 2001, said, “David [Congdon] has been the face of the franchise this decade, but Earl clearly had a vision that the company could not remain as just a Southeastern carrier.

“They’re offering multiple lines in multiple regions. Earl’s vision drove that. Also, people seem to love working there, and that’s a credit to the foundation Earl laid,” said Albrecht, who works for Stephens Inc.

Old Dominion is celebrating its 75th anniversary this year. The company was almost sold after World War II, Congdon said, when his father had an itch to go to Florida and open a motel. Lillian told her husband, though, that she would not part with her half of the company.

Congdon began at the carrier the year before his father died, an event that accelerated his involvement with the company.

“I was driving and going to business college,” Congdon said of his schedule in 1950, the year an accident took his father, Earl Sr., when Earl Jr. was 19.

“I was the night dock foreman and I dispatched. After his death, I was appointed general manager and took my dad’s place,” he said.

Old Dominion Freight Line was started by Lillian and Earl Congdon Sr. in 1934 in Richmond — hence the use of Virginia’s state nickname. Beginning with a single truck, the company moved freight between Richmond and Norfolk.

Earl’s younger brother, John, and his son, John Jr., also are executives at Old Dominion.

Congdon was married in 1951. In addition to their son David, Kathryn and Earl have two daughters, Audrey Congdon Yowell and Karen Congdon Pigman, and eight grandchildren.

Congdon put the company on the path to growth in 1957 when he arranged for the acquisition of Bottoms-Fiske Truck Line of High Point, N.C. B-F was actually the larger of the two companies, with $1.9 million of annual revenue then, compared with ODFL’s $1.2 million.

The companies were operated separately until 1962, when ODFL completed payments on the $600,000 purchase. That’s when the Congdon family moved to High Point and established their corporate headquarters there.

David Congdon said Old Dominion has done about 20 acquisitions over the years, but his father said Bottoms-Fiske was the only time ODFL took over a company that was larger. Since then, the purchases have been smaller “tuck-in” acquisitions, with the second one not completed until 1969.

Congdon wanted his trucking company to grow but said he was hemmed in because of the regulation of the industry by the Interstate Commerce Commission. He started by playing within the ICC’s rules but wound up joining the campaign for deregulation, which finally took effect in 1980.

“Before deregulation, we either had to buy a carrier or prove public convenience and necessity, and that was almost impossible to get. There were hearings in Washington and we brought our witnesses, and [other trucking companies] brought theirs,” he said.

ODFL often bought truckload carriers rather than LTL carriers, doing so to add territory. This tedious cobbling together process imposed upon ODFL by regulation angered Congdon.

I was almost the only proponent of deregulation in the industry. The trucking in-dustry then was generally opposed to deregulation.

“I was so disgusted with the ICC and the pettiness. The ICC was created to protect the public, but it really protected the trucking companies with the best operating authority,” he said.

Getting what he wanted proved costly. Once the regulatory shackles came off, carriers went on a rate-slashing campaign to earn business. The company lost money every year from 1984 to 1987, for a combined net loss of $7.83 million.

David Congdon called those “the lean times” but credited his father’s tenacity for eventual success.

“We made some tough decisions to cut costs and raise prices. My dad showed some guts — and others did, too — but they made those decisions,” the son said.

By 1988, ODFL established itself as a survivor. It topped the $100 million mark in annual revenue for the first time and had net income of $1.62 million. Every year since then, it has turned a profit.

The company went public in October 1991, but the family still owns about 40% of the shares. Through the first half of 2002, share prices didn’t go anywhere beyond the usual ups and downs.

Then came the big changes. “From 1993 to ’95, we started to experiment with a regional overlay strategy on top of our interregional base. Columbus, Ohio, was our Midwestern hub,” said David.

“The real turning point came in May 1997. We pulled our top management together to ask, ‘Who are we? Where have we come from? And what will we look like in 15 years?’ — which is a pretty hard thing to do.

“We decided to maintain our interregional footprint, but also enter the regional market. We even established next-day service, too. We would do it all together under one company,” David said.

Stock analyst Thom Albrecht  of Stephens Inc. recalled some of Wall Street’s observations.

“In the first few years after the initial public offering, it demonstrated mediocre execution as an interregional carrier. It was second fiddle to American Freightways [now FedEx Freight], and USFreightways and New Penn [now YRC Regional Transportation].

“They started a new story in the late 1990s. From 1997 to 2001, it was an ‘orphan stock’ with no analysts. They became more consistent in their performance, but no one knew about them. Since then, however, they’ve become a favorite among investors.

“They’ve been consistent on earnings and clearly gained market share in all aspects. They built a model that’s been working now for five to 10 years. They started getting recognition in 2002 and ’03, when they demonstrated proficiency in overnight and second-day markets with low-cost but excellent service,” said Albrecht.

The stock split once a year from 2003 to 2005 for a combined ratio increase of 3.375-to-1, and the company currently ranks No. 20 on the Transport Topics 100 list of the largest for-hire carriers in the United States and Canada.

Diehl, the NCTA president, said Old Dominion is the largest trucking company domiciled in the state.

He noted that Earl is a 2005 member of the North Carolina Transportation Hall of Fame, which includes aviation brothers Orville and Wilbur Wright and intermodal pioneer Malcom McLean.

Since 2006, the Hall has given an Earl Congdon Award for Excellence in Highway Freight Transportation, endowed by Old Dominion.

Said American Trucking Associations President Bill Graves: “Having the opportunity to work with, and on behalf of, great people like Earl Congdon is what brought me to ATA. His commitment to his family and his employees, to the safe, professional and courteous performance of his drivers and his appreciation of customer service are characteristics that stand out in the long list of attributes that have made Old Dominion so successful.”

Transportation has become a hobby for Earl Congdon, as well as a profession. He has a commercial driver license, and drove across the country with David as a linehaul team early in David’s career.

He also had a pilot’s license and often flew the company jet, and even got a ship captain’s license.

“That one was really hard to get,” he said.

Congdon also enjoys travel. He and Kathryn have been to Africa, Asia, Australia and South America, among their travels.

Normally, they live in High Point but also have a home in Fort Lauderdale, Fla. In November, Congdon combined a brief vacation there with a trip to the TransComp meetings and logged time at the ODFL booth at the Intermodal Expo.

In spite of his successes, Congdon said he has concerns about the future. Asked in what context the current recession should be viewed, he responded:

“I was alive during the Great Depression, but I wasn’t paying bills. This could be the most severe recession of my business career.

“In 1981-82, the prime rate hit 20%, but this time, it’s now worldwide, and I don’t remember this sort of credit crunch,” he said, adding that 2008 was a very challenging year and he expects that this one will be as well.