Old Dominion Freight Line Inc.
Bryson DeVan, Rachel Lassoff
Old Dominion Freight Line Inc., or ODFL, is a truckload motor carrier that operates in both the United States and North America. It provides regional, inter-regional, and national services across North America and has established itself as leader in the freight industry (Old dominion freight line Inc. Profile, n.d, n.p). ODFL’s success can be seen in its steadily rising stock price over the past five years, as shown in figure 1A. Its financial ratio analyses, “a method of evaluating a company’s performance and financial well-being through ratios of accounting values, including short term solvency, asset utilization, profitability, and market value ratios” shows an overall positive trend of growth (Dess, Lumpkin, Eisner & McNamara, 2004, p. 476). One of the best indicators of ODFL’s success is its revenue growth “which illustrates sales increases/decreases over time. It is used to measure how fast a business is expanding” (Revenue Growth, 2013, n.p). ODFL’s revenue growth has increased from negative .1904 in 2009 to .1896 in 2010, and finally up to .2711 in 2012. This is a strong indication that ODFL is continuing to expand its business, increasing its client base and to create more overall revenue through its continued operations. One of the reasons for ODFL’s success is its dedicated fleet of freight drivers. ODFL drivers pride themselves on being innovative, reliable, courteous, responsive, professional and ethical, for they are they are the heart and soul of the freight industry. “Trucking accounts for how we move 80 percent of cargo in our nation” (Bynum, 2012 para 1). ODFL however, is facing a potentially disastrous problem: as older truck drivers retire there is a growing shortage of new drivers willing to take their place. “The rigors of the job, changing attitudes toward life on the road, and the cost of training and licensing can dissuade people from considering a career as a driver” (Navera & Simon, 2011 n.p). The diminishing number of veteran drivers and lack of new recruits will eventually cause serious issues for not only ODFL, but also for the entire freight industry. As the economy recovers and U.S. production increases, ODFL and other freight companies will need more drivers to meet the high demand for freighting goods. “U.S. companies are expected to create more than 115,000 truck driver jobs per year through 2016, but the number of Americans getting trained to fill those jobs each year is barely 10 percent of the total demand” (Bynum, 2012, n.p). See also figure 4A. The demand for new drivers will cause intense rivalry among competitors in the freight industry to acquire as many drivers as possible. According to the five forces model developed by Michael E. Porter this intense rivalry can cause “the threat that customers will switch their business to the competitors within the industry” (Dess, Lumpkin, Eisner & McNamara, 2004, p. 59). ODFL needs to create more attractive driving positions to potential new drivers. It can achieve this by implementing The Old Dominion Freight Line Driving Program. The program is a firm resource, “firms’ capabilities that are valuable, rare, costly to imitate, and costly to substitute” that is owned and operated by ODFL itself (Dess, Lumpkin, Eisner & McNamara, 2004, p. 95). The program will be used to hire, educate, train and certify new drivers. One of the main deterrents to potential truck drivers today is the cost and time period for training and licensing. “A five-week course to obtain a Class A license costs about $5,700 and includes all training needed to operate a large truck or 18-wheel vehicle including hazmat training, maintenance and defensive driving, as well as 120 hours of behind-the-wheel training” (Navera & Simon, 2011, n.p). To alleviate this deterrent,...