Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
David S. Congdon, Vice Chairman and CEO of Old Dominion Freight Line (ODFL), interviewed with TWST this year for the Transportation & Logistics report. He told TWST the largest trends affecting the industry are globalization and the rise of intermodal domestic transportation.
You know, if you look over the last 20 years to 25 years, it has to be globalization, where the United States used to produce everything for itself, and there was a much smaller amount of manufacturing that had gone offshore for cheaper labor rates. And the movement of manufacturing just, for example, in the Southeast where furniture and textiles used to dominate manufacturing — furniture has moved to China and other parts of Asia, and the majority of furniture that the U.S. is buying is manufactured there and imported now on ocean containers.
The other thing that I think has changed things a lot is domestic intermodal, where what used to be full-truckload carriers like J.B. Hunt or Werner or Schneider that used to have drivers, tractors and trailers, exclusively shifted their business and invested in intermodal containers and move their customers freight on the rail. They haven’t gone totally by the wayside, but there has been a major shift to intermodal runs, with containers that are double-stacked on these rail cars. So that’s been a pretty big trend over the years as well.
Congdon shared with TWST Old Dominion‘s capital deployment strategy, which he said hasn’t changed much over the last 15 years, and which is focusing on equipment, real estate and now information technology.
Well, our deployment of investment capital and the way that we think about it has not changed that much over the last 10 or 15 years. LTL transportation is a very capital-intensive business, especially when, in our case, we’re focused on building the highest service value in our industry. We have been consistently spending 12% to 15% of revenue for the last decade. Equipment is obviously the largest expenditure because of our consistent replacement cycle plus the equipment that we’ve bought to handle the growth that we’re experiencing.
Then, the second-highest expenditure level is in real estate. In fact, we have spent over $900 million on service centers in the last eight years to keep ahead of the growth that we are experiencing and to be able to have the capacity for future growth. So that’s been really high. And the third major area for us has been information technology. But we expect this general capital-spending trend for our company to continue as we move forward and as we continue to win market share.
Old Dominion Freight Line (ODFL) Deploying 12% to 15% of Revenue
August 07, 2015
Scott Wallace, Founder and CIO of Shorepath Capital Management, Focuses on Unique Opportunities
May 17, 2018
Clean Energy Fuels Corp. (CLNE) Focuses Natural Gas Strategy on High-Fuel-Use Fleet Vehicles
February 22, 2013
Chemtura Corp. (CHMT) Focuses on Higher-Margin Specialty Chemicals
July 22, 2013
