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January 08 www.bus-ex.com 83 everything else, from taxidermy animals to light poles to pallets of food. If it can fit inside a trailer, Oak Harbor will carry it. The key is the scheduling and the arrangement or configuration of the goods; how they’re consolidated and loaded in a distribution center. “LTL shipments have to be handled correctly,” says Kieswether. “We can’t use conveyors or other machines, we do it all with people, trained and encouraged to make decisions, often quickly.” Eighty percent of Oak Harbor’s shipments are delivered within 24 hours, and on-time performance is over 98 percent, which takes a lot of coordination. Some employees are constantly juggling a number of decisions, with back-up plans at the ready, and the key is which choice to make, depending on the circumstances. “We’re counting on our people to make the right decisions, throughout the company. You can’t centralize that kind of decision-making. At a busy terminal, for example, you have to rely on a dock worker or a driver or a supervisor to make a decision based on the situation. When you’re picking up a shipment for next-day delivery and the run time is ten hours, it doesn’t leave much room for error. So you need people and systems in place that allow the flexibility to make appropriate decisions.” Oak Harbor is currently testing a route optimization system by ORTEC, which maps the simple decisions made daily in building routes, the kinds of shipments a driver typically makes, and puts them into a template that enables the person planning the routes to easily do the routine actions, as well as deal with exceptions, to allow time for more critical decision-making. Managers use another system to measure aspects of the operation and calculate costing of certain situations to help employees determine the actual cost of their decisions, so they can examine various solutions in terms of costs and see their effects on customers. “You might decide, for example, that the most expensive solution is what’s necessary to meet a customer’s requirements, but perhaps OakHarborFreightLines “We’re counting on our people to make the right decisions, throughout the company. You can’t centralize that kind of decision-making” In 1936, brothers John & Gus Vander Pol bought a small cartage carrier called Oak Harbor Transfer, founded in 1916 by Ben Koetje in Oak Harbor, Washington. Their younger brother Henry joined them in 1937, and in 1942 they added another small carrier called Oak Harbor Freight Lines. They kept that name, and moved the operation to Auburn. Gradually the brothers developed the carrier into a small LTL operation (less than truck load), with consolidated freight going to different destinations to save costs, serving western Washington. In 1974 Henry bought out his brothers, and brought in his two sons Edward and David, who now run the company as co-presidents. Today Oak Harbor Freight Lines is a regional LTL carrier with 1,400 employees, including drivers, salespeople, administrative employees and terminal managers, hauling 4,500 to 5,000 shipments daily, serving five states with 33 terminals (the latest in Fontana, California. “We serve all points direct in Oregon,” says operations vice president Ron Kieswether, “and we’re direct to about 97 percent of the population in Washington, Idaho, and Nevada, and working on our infrastructure in California to make it 99 percent direct for all service areas in two or three years.” The three percent difference is in rural areas which are difficult to reach in terms of being worthwhile to do business, so the company partners with smaller, local truckers for those remote areas. “We have nationwide partnerships which mean that we can deliver a shipment anywhere within the US, and in these five western states we deliver it ourselves.” Major customer categories are agricultural wholesalers, big retailers, and medical suppliers. With an average annual growth of 15 percent, current revenue is about $150 million. LTL is the largest of the three categories of trucking. ‘Truck load’ fills a trailer driven from points A to B; ‘small package’ is mainly the domain of courier companies using conveyor belts and vans to go anywhere; LTL carries

reducing the number of breakdowns. It also uses a kynedyne trailer with load bars that drop down inside the trailer, allowing goods to be safely stacked on top, reducing the possibility of damage to freight. Its claims ratio of what’s paid out for damaged goods compared to revenue is less than one percent—“an indication of how well we handle freight.” “What distinguishes us from our LTL competitors,” adds Kieswether, “is that we’re family owned. We haven’t been absorbed by a large corporation. Those types of companies tend to use a more mechanistic, centralized approach to customer service, so customers have to fi t within the defi ned categories set by the carrier. But we’ve given employees the ability to develop customer relationships and offer fl exibility in dealing with customers’ needs, tailoring our service to those needs.” something less expensive, with modifications, will accomplish the same goal. The result is better decisions. We believe in designing systems, including training modules, that offer people sufficient information and the consequences of their decisions.” Drivers are trained in the company’s way of operating. “Their experience is a strong selling point. Drivers wear a uniform and are well groomed, they’re the core of our business and our point of connection with customers, and we get a lot of referrals from those relationships. We’re respected by drivers; we tend to be their first choice of a company to work for in this region, and our compensation package offers a decent wage and benefits, including full medical.” Oak Harbor replaces older trucks after four or fi ve years, more often than most competitors, OakHarborFreightLines FedEX 84 www.bus-ex.com January 08