Werner Enterprises, Inc.

14507 Frontier Road
Omaha, Nebraska 68138
U.S.A.
Telephone: (402) 895-6640
Toll Free: (800) 228-2240
Web site: http://www.werner.com

Public Company
Founded:
1956
Employees: 12,154
Sales: $2.12 billion (2017)
Stock Exchanges: Nasdaq
Ticker Symbol: WERN
NAICS: 484121 General Freight Trucking, Longdistance, Truckload

Werner Enterprises, Inc., headquartered in Omaha, Nebraska, is the sixth-largest trucking company in the United States. Founded by Clarence L. Werner in 1956, it is a publicly traded company led by the Werner family. Werner's fleet of 7,400 trucks and 24,500 trailers serves North America, including the United States, Canada, and Mexico. Through Werner Logistics, the company manages transportation and logistics requirements for domestic and global customers throughout North America and Asia, with additional coverage in Australia, Europe, South America, and Africa. Werner offers a variety of transportation services and transports a range of goods that includes consumer products, retail store merchandise, manufactured products, and grocery products. Werner has been a pioneer in the use of communications technology, including paperless, electronic driver logs and real-time satellite tracking of its fleet to continuously improve delivery, driver safety, and compliance with federal and state industry regulations.

FROM ONE TRUCK TO A FLEET

The vast Werner Enterprises fleet grew from just one truck. In 1956, 19-year-old Clarence Werner sold his car to purchase a truck, which he used to launch his business. Many years later, in 1993, a Fortune magazine write-up on Werner Enterprises noted Clarence Werner's recollections of the early days and hard times of the trucking company he founded. Werner, the president and CEO of Werner Enterprises in 1993, told Fortune's John Labate with a chuckle, “There's a lot of water under the bridge, and I generally was in it.”

In 1959 the company became officially known as Werner Enterprises. In 1964, with a fleet of 12 trucks, Werner began operating from a shop in Council Bluffs, Iowa. With its location near the geographical center of the 48 contiguous states, Werner Enterprises was well suited to become a leader in the long-haul sector of the trucking industry. In 1971 Werner bought 10 Freightliners, and by the end of that decade the company had 100 trucks, sales of more than $6 million annually, and a new headquarters, in Omaha, Nebraska.

COMPANY PERSPECTIVES

We keep America moving.

In April 1986, when it completed its initial public offering, Werner had a fleet of some 630 trucks. By that point the company had begun developing the business philosophy that would propel it to enormous growth in the decade that followed. Its philosophy, as later stated in its 1997 annual report, was “to provide superior ontime service to its customers at a low cost.” To accomplish this objective, the company used premiumclass, state-of-the-art tractors and trailers, which were less likely to break down and which assisted it in attracting and retaining qualified drivers.

Werner operated in the truckload segment of the trucking industry, providing its customers with specialized services including van, flatbed, and temperature-controlled trucks. It serviced regional routes, or medium- to long-haul routes throughout the lower 48 states, and also provided dedicated fleets—that is, fleets in which all the company's trucks were Werneroperated.

INNOVATION AND GROWTH

In 1992 Werner Enterprises greatly broadened its service offerings by expanding into the temperature-controlled, regional short-haul and dedicated-fleet segments of the trucking industry. That same year the company made strides in improving its technology. By year-end 1993 all its trucks had on-board computers that connected truckers to headquarters via satellite, thus providing both the trucker and the home office with real-time information.

This was the result of a $2 million deal in September 1992 with QUALCOMM, a maker of advanced communication systems, which provided its OmniTRACS mobile communications system for Werner's use. According to Jake Wood, Werner's president at the time of the deal, “After completing a comprehensive cost analysis and field evaluation of the systems available, QUALCOMM emerged as a winner. Our operating strategy is simple—everything we do must help ensure [that] our customers receive the highest level of service possible.”

In 1993 Werner Enterprises moved into intermodal transportation, which combined trucking and rail transport. Two years later it created a division to handle logistics for its increasingly complex mix of deliveries. In spite of fast-paced growth in 1994, Werner was cautious about the company's future. Although Werner had topped its revenues and earnings record for eight years running, stock prices were down from $29 in early 1994 to $21.25 the following year. Robert Synowicki, the company vice president and COO, suggested to Matt Kelley in the Omaha World-Herald in May 1995 the downturn could be related to a general slowing in the economy, a nationwide condition that “may be making investors nervous about trucking companies in general.” Nonetheless, Werner's executives expressed optimism about the company's long-term prospects, particularly in light of its low debt, high equity, and modern equipment.

In line with its cautious approach to business, Werner Enterprises built in 1997 a “disaster recovery site” near 72nd and Q Streets in Omaha, preparing a second headquarters to use in the event of fire, tornado, or other forms of emergency. “If there were some sort of disaster,” Synowicki told Chris Olson in the Omaha World-Herald in October 1997, “like a fire or chemical spill on the highway … we could transfer most of the business to the disaster recovery site and continue operating.” That same year it signed an agreement with the Hub Group, then the largest intermodal marketing company in the United States, to market each other's services to customers.

DRIVER SHORTAGES LIMIT SERVICE EXPANSION

Using up-to-date, reliable equipment, Werner focused on shippers that valued the broad geographic coverage, equipment capacity, and customized services that were available from a large, financially stable carrier such as Werner. Among its principal customers were the department stores Sears and Target, and food companies such as Kellogg and Frito-Lay. However, even with such big-name clients, Werner's customer base remained diversified. In 1997, for example, its 25 largest customers made up a mere 40 percent of the company's income, and no one client accounted for more than 7 percent of revenues.

One of Werner's most significant customers during the late 1990s was the retailer Dollar General, for whom it began providing dedicated trucking services in 1996.

In September 1997 Werner began handling a number of services for Dollar General's distribution centers in Georgia, Kentucky, Oklahoma, and Virginia. In February 1998 Werner signed an agreement with Dollar General, whereby it would handle all trucking operations at the four distribution centers. Thus, the Dollar General dedicated fleet soon grew from 150 to 400 trucks.

KEY DATES
1956:
Clarence Werner buys a 1956 Ford and begins hauling freight in Nebraska and other states.
1959:
The company is officially named Werner Enterprises.
1964:
Werner begins operating its 12-truck fleet from a shop in Council Bluffs, Iowa.
1978:
Werner has 100 trucks, sales of more than $6 million, and a new headquarters, in Omaha, Nebraska.
1986:
Werner goes public on the Nasdaq.
1998:
Werner pioneers the use of computerized logs for mandatory driver recordkeeping.
1999:
Werner launches operations in Mexico.
2006:
The company celebrates its 50th anniversary and launches operations in China through Werner Global Logistics.
2015:
Werner acquires the American Institute of Trucking and Roadmasters Drivers School.
2017:
Werner reports revenues of $2.1 billion.

With a goal of growing the business by 15 percent yearly, Werner's facilities expanded in 1997 with a 140,000-square-foot office building that augmented the existing headquarters building of 110,000 square feet, more than doubling its central office space. However, one of the problems faced by both Werner Enterprises and its competitors was finding enough capable drivers. In February 1997 Omaha World-Herald's John Taylor reported that Schneider National, Inc., of Green Bay, Wisconsin, the number-one trucking company in the nation at the time, had come to Werner's backyard to recruit 125 drivers. Officials at Werner refused to comment on the Omaha recruitment effort by its competitor, but they did say the company had been forced to turn down business due to lack of drivers.

“Some trucking industry analysts,” Taylor reported, “have said there is no shortage of people qualified to drive trucks; instead, they say, potential drivers don't seek work because they don't like the wages, hours, working conditions and the fact that they have to be away from home.” Although Taylor did not provide figures for Werner, he reported that at Schneider, new drivers could expect to earn as much as $36,000 a year, while drivers with three years' experience could earn up to $50,000.

POSITIONED FOR GROWTH AT THE TURN OF THE CENTURY

In January 1998 the company reported record earnings for 1997. Revenues for the fourth quarter had increased to $206 million, marking a 22 percent increase over fourth-quarter revenues in 1996. Furthermore, profits grew 23 percent, to almost $14.2 million for the quarter. In June 1998 Werner Enterprises—which had long emphasized information technology and the use of the latest advancements in communication—got a jump on its competitors when it introduced a paperless log system. Drivers' hours and activities were recorded throughout the day on a computer keyboard unit located in their trucks, which then transferred the information to Werner's computer system in Omaha. It would be another two decades before paperless tracking would become mandatory; by then, Werner's ongoing technological innovations had set high industry standards.

In December 2000 Duane Henn, the vice president of safety, explained to Carol Ludor in Transport Technology Today that two years after the installation of the OmniTRACS system, the company began searching for a similar program to track drivers' hours of service electronically. Without anything suitable already on the market, Werner designed a system of its own, which it began testing in 1995 with a small set of drivers, in conjunction with traditional paper logbooks. The company received approval from the Federal Highway Administration to convert fully to the paperless system in 1998, after studying the company's results between 1995 and 1998. One feature of the system was that it could alert drivers if they were approaching a violation of driving hours. Another was that because they were integrated into the fleet management logistics software, the electronic driver logs could be used to match more efficiently load assignments to drivers who could legally complete assignments by factoring in mileage to delivery point, required breaks, and hours already logged by any given driver.

INDUSTRY CHALLENGES

In 2006 Werner Enterprises celebrated the 50th anniversary of its founding, and its 20th year as a publicly traded company. A major step in growth occurred that year with the launch of operations in China, through Werner Global Logistics. The year was described as challenging in the 2006 annual report, which noted that although revenues increased to $2.1 billion, the 5.5 percent increase was significantly lower than the 18 percent experienced between 2004 and 2005. Furthermore, expenses, including rapidly rising fuel prices, limited profit growth to just 0.1 percent. This was a sign of things to come.

In 2007 the company experienced a 35 percent drop in net income from the previous year. Although its revenues decreased slightly, to $2 billion, its profits, at $75.4 million, took a hit due to conditions including rising fuel costs, over capacity, and softening freight demand. The company responded to the challenges throughout the year in part by reducing its overall fleet of trucks by more than 700. In 2008 it saw yet another drop in net income, to $67.6 million, even as its revenues rose to $2.2 billion. Early in the year, fuel prices were already $1.39 higher than in the previous year at the same time. This represented a significant burden for long-distance carriers; at the time Werner purchased more than 14 million gallons of fuel each month.

During the downturn in the industry, cooperation between Werner Enterprises, a truckload (TL) carrier, and Con-way Freight, a less-than-truckload (LTL) carrier, helped both companies stay competitive and maintain their individual strengths. Such strategic partnerships were traditionally limited to short-term use when demand was weak across the industry, but representatives from both Werner and Con-way told Traffic World's John Gallagher in November 2008 that their relationship had preceded the slowdown, and they expected it would continue. Derek Leathers, the COO of Werner, observed, “We have an obligation to our customers to find the most efficient means to move freight. If we don't somebody else will.” He added, “If it's meant to go LTL, [Con-way] can do it very well. If it's meant to go truckload, we know we can fill that need.”

Between 2008 and 2009 the U.S. and world markets were marred down in a deep recession. As a result, 2009 was not a good year for the trucking industry. Werner sustained a 23 percent drop in revenues, to $1.7 billion, and a 16 percent drop in income, to $56.6 million. However, the company managed to improve its operating margin by 12 percent, and its cash flow from operations exceeded capital expenditures for the year. That same year Werner also expanded its global reach, opening operations in Australia, to better serve its clients in the Pacific Rim region.

STABILIZATION AND GROWTH

Werner's revenues and net income improved over the next few years. In 2012 the company finished the year with revenues of $2 billion and a net income of $103 million. The next year saw more challenges, however, in the form of slower than expected economic recovery, new regulations governing driver on-duty time, and renewed difficulty recruiting and retaining drivers in the truckload industry.

Regardless, Werner's ability to secure an edge through technology buoyed its resiliency by helping it avoid some of the financial impacts of natural disasters and other unexpected events. By 2009 it had adopted the Esri ArcGIS system of being able to track, in real time, the location of as many as 9,000 trucks. This allowed the company to be able to immediately identify trucks that would be affected by, for example, a rockslide that occurred on Interstate 40 in North Carolina. Using data that included the real-time longitude and latitude for every vehicle in its system, the company was able to rapidly notify customers of the disruption and redeploy and reroute vehicles, as needed, to reduce the impact on customers as well as on the company's bottom line.

STAYING AHEAD OF THE CURVE

Werner was 20 years ahead of the curve when mandatory electronic logging went into effect in April 2018. Although drivers for other carriers in the industry had to adjust to new habits, new equipment, and, for many, a hit in their take-home pay due to differences in the way paid time was calculated, Werner's drivers were already experienced with electronic tracking and its benefits and challenges. The company planned to continue to invest in cutting-edge technology for its drivers to improve service and safety and to increase its ability to recruit new drivers, which was a challenge that loomed larger than ever.

In July 2018 Jim Schelble, the company executive vice president, discussed with Omaha World-Herald's Steve Jordon a proposal by the U.S. Department of Transportation to create an apprentice program for 18- to 20-year-old National Guard and Reserve truck drivers who would otherwise be too young to pursue a career in truckload driving. Schelble noted that he would be “interested in anything that would add to the supply of professional individuals into this industry,” acknowledging that safety is “paramount” in the pursuit of more drivers. He added that in 2018, as longtime drivers retire and the online economy accelerates consumer demand for rapid delivery of purchases, “The driver challenge is absolutely real, and it continues to become more and more challenging.”

Judson Knight
Updated, Pamela Willwerth Aue

PRINCIPAL SUBSIDIARIES

Drivers Management, LLC; Gra-Gar, LLC; Werner Leasing, Inc.; Werner Management, Inc.; Fleet Truck Sales, Inc.; Werner Global Logistics, Inc.; Werner Transportation, Inc.; Werner de Mexico, S. de R.L. de C.V.; Werner Enterprises Canada Corporation; Werner Cycle Works, Inc.; Werner Leasing de Mexico, S. de R.L. de C.V.; Werner Global Logistics U.S., LLC; Werner Global Logistics (Barbados), SRL; Werner Global Logistics (Shanghai), Co. Ltd.; Werner Global Logistics–Hong Kong Limited; Werner Fleet Truck Sales, Inc.; WECC, Inc.; Werner Global Logistics Mexico, S. de R.L. de C.V.; Werner Global Logistics Australia Pty. Ltd.

PRINCIPAL DIVISIONS

Truckload; Werner Logistics.

PRINCIPAL COMPETITORS

J.B. Hunt Transport Services, Inc.; Knight-Swift Transportation Holdings Inc.; Schneider National, Inc.

FURTHER READING

Gallagher, John. “Trucking's Odd Couple.” Traffic World, November 24, 2008.

———. “Werner's 4th Quarter Profits Fall.” Traffic World, January 24, 2007.

Jordon, Steve. “Study to Allow Younger Interstate Drivers Piques Interest of Werner, Crete Trucking Execs.” Omaha World-Herald, July 15 2018.

Kelley, Matt. “Werner Sees Caution Lights in Economy.” Omaha World-Herald, May 3, 1995.

Labate, John. “Companies to Watch.” Fortune, November 29, 1993, 105.

Ludor, Carol. “Werner Enterprises and Its Paperless Log System: Nebraska Carrier Pioneers Electronic Logbooks. (Fleet Solutions).” Transport Technology Today, December 2000.

Olson, Chris. “Werner's Contingency Plans Geared for Growth, Disaster.” Omaha World-Herald, October 10, 1997.

Richardson, Karen. “Werner Enterprises Keep on Truckin' with GIS.” GEO: connexion, February 2011.

Taylor, John. “Trucking Firms Seeking Drivers.” Omaha World-Herald, February 13, 1997.

“Werner Carries Improved Status into 2006.” Refrigerated Transporter, January 25, 2006.