David S. Congdon wasn't exactly dealt an ace-high hand when he became CEO in January 2008 of the less-than-truckload (LTL) carrier that his grandparents founded 74 years before.
The company, Old Dominion Freight Line Inc., was doing OK. But the macro environment was crumbling around it. A freight recession had been underway for two years. The financial pillars of the U.S. economy were starting to crack, leading to a full-blown financial crisis and the worst recession in 70 years. The LTL industry, already hammered by the downturn, would face indigenous turmoil during 2009 and 2010 as vicious rate wars broke out over grabs for market share and a concerted effort by other carriers to drive the ailing YRC Worldwide Inc., then the market leader by size, out of business.
Through the maelstrom, Congdon and Old Dominion stood firm. It would not jump into the rate-cutting ditch with others. It kept pricing relatively firm, and when the economy and freight demand improved, it would not raise rates before it saw what others had done, and then would bring up prices to levels below its rivals.
Most important, Congdon and Old Dominion tuned out the noise and focused on the daily blocking and tackling that wins and keeps shipper and third-party logistics provider (3PL) business: reliable, damage-free deliveries at rates that the marketplace deemed fair and reasonable. In the process, a virtuous cycle was created where shippers would seek to associate with the carrier perceived as providing the gold standard of service.
Yesterday, Thomasville, N.C.-based Old Dominion said that Congdon, 60, would step down as CEO May 16 to become executive chairman, a position currently held by his father, Earl, who will then become senior executive chairman. Greg C. Gantt, Old Dominion's president, will add the CEO's title at that time.
Congdon steps away from the CEO role with a track record of success that will be hard to match, especially over a relatively short span. In 2007, Old Dominion posted revenue of $1.4 billion, operating income of $129 million, and net income of $71.8 million. In 2017, the company reported $3.35 billion in revenue, operating income of $575 million and net income of $463 million, the latter a remarkable increase of well over sixfold in just a decade. Old Dominion's operating ratio—the ratio of operating expenses over revenues, a key metric of operating efficiency and profitability—fell more than 800 basis points, to 82.9 percent, during Congdon's tenure, a sterling record given the complexity of synchronizing a national LTL network with dozens of terminals, multiple hand-offs, and so many things that could go wrong.
The company's performance has been reflected in the soaring value of its equity. Old Dominion shares, which on Jan. 1, 2008, traded at $12.96 a share (adjusted for three stock splits), closed Friday at $147.59 a share, a gain in percentage terms normally associated with a high-flying high-tech company instead of a well-established trucker.
Bradley S. Jacobs, chairman and CEO of Greenwich, Conn.-based transport and logistics provider XPO Logistics Inc., which acquired LTL and logistics giant Con-way Inc. in 2015, said in an e-mail that Congdon "created the benchmark (that) we measure our LTL performance against." Jacobs called Congdon's performance as CEO "stupendous."
C. Thomas Barnes, who ran Con-way's multi-modal transport unit earlier in the decade and today is president of project44, a Chicago-based logistics IT concern, said Old Dominion's operations were in good shape when Congdon became CEO. What Congdon brought to the role was "more focused leadership," Barnes said. Today, Old Dominion's yield-management practices are considered second to none, and it is widely regarded as the best among trucking firms when it comes to understanding costs. In yesterday's statement, Earl Congdon praised his son's "relentless execution" as a key factor in elevating the company to its current stature.
The elevation of Gantt to the CEO role marks the second time in less than two years that a big trucking concern with generations of family leadership has gone outside the bloodline. In May 2016, Omaha-based truckload and logistics provider Werner Enterprises, Inc. tapped Derek J. Leathers as CEO, ending a 60-year history of a Werner family member holding the job.
Gantt, who joined Old Dominion in 1994 as a regional vice president, is considered by many a natural fit to fill Congdon's big shoes. Gantt is "the best operator in LTL," said Barnes.