FreightWaves LIVE @HOME: Industry Keynote With The CEO of Werner Enterprises (With Vdeo)

FreightWaves President George Abernathy spent time with Derek Leathers, President and CEO of truckload (TL) carrier and transportation provider Werner Enterprises, Inc. WERN to talk all things freight at FreightWaves LIVE @HOME.

When asked about the current state of the business, Leathers referred to it as "hectic." The outbreak of the COVID-19 pandemic and subsequent shelter-in-place mandates have created volume surges for some of the carrier's customers while others have seen volumes drop. Leathers said that demand for items like consumer staples is up 30% to 50%, while consumer durables and apparel have moved significantly lower.

Leathers said that its network has been disrupted given the drastic changes in inventory needs. Werner, as well as most transportation providers, is seeing an imbalance in freight flows. He said that some of the markets that have seen inbound volumes surge due to increased demand are some of the same markets that provide the fewest outbound load opportunities.

Leathers said that the company's multi-modal – truckload, brokerage, freight management, intermodal, international and final mile – mode-agnostic approach has allowed it to be nimble amid the current chaos. Werner's Truckload Transportation Services Segment (TTS) provides a full suite of TL services – one-way, dedicated, long-haul, regional, Mexico cross-border, expedited dry van and temperature-controlled.

Werner' s brokerage unit has allowed the company to bring in incremental third-party equipment to fill capacity gaps that have arisen from the current imbalance. 

When asked if the company is seeing freight change from mode to mode, Leathers noted that industry-wide there has been some movement of intermodal freight to trucks for time-sensitive loads as supply chains have had to react quickly to catch up with demand.

Talking about a post-COVID-19 recovery, Leathers said "[we] still have some tough times ahead of us," pointing to data that is still moving in the wrong direction. He watches consumption of diesel fuel as a proxy for how much truck freight is actually moving. "If diesel's not flowing, if diesel's not being consumed, then you know that U.S. freight volumes are slowing," he commented when referring to consumption declines in April.

Leathers believes that there is a good amount of pent-up spending that will occur once the mandates are lifted. He's expecting a slow May, a slow rebound in June with economic acceleration occurring in July through the second half of the year. He said he's not sure if the economy will get back to pre-COVID-19 levels by year-end, citing the potential for a second wave of the virus and climbing unemployment as headwinds.

Even through the pandemic, Werner is continuing to invest in technology. The carrier has completed the first phase of investment in its non-asset brokerage unit. That phase included digitizing the process through load automation in an effort to remove friction and serve its customers more seamlessly. While investment in the brokerage arm will continue, the carrier is focused on unifying the platforms of its different businesses as well as driver-related tech like a fleetwide telematics upgrade and geofencing in load routing.

When asked if shippers are treating the company fairly during the outbreak, Leathers said that most shippers are doing so and value their relationship with Werner. The company's drivers have been treated well at most shipper facilities. These facilities have beefed up cleaning and sanitizing efforts, provided personal protective equipment to all that need it and a few are even putting together care packages for the drivers.

He said that most shippers understand that in some instances trucks are coming from locations further away than normal to accept loads and realize that the cost to do so is greater. However, Leathers did say that some shippers have extended payment terms, which he views as "very concerning."

Asked about drivers' reluctance to serve due to fears of coming in contact with the virus, Leathers said that driver uptime is as high during the pandemic as any other period. In addition to thanking the drivers, he commended the mechanics and other workers in the supply chain. "When America [called], we answered."