LTL carriers have experienced trouble getting local governments to approve zoning permits for terminal facilities, a persistent and widespread problem that could blunt plans to expand their networks, said Greg C. Gantt, president and CEO of LTL carrier Old Dominion Freight Line Inc.
Speaking at the SMC3 annual winter meeting in Atlanta on Monday, Gantt said that local officials appear to have a degree of animus toward trucking firms, for reasons he could not explain or rationalize. At the same time, warehouse applications are routinely approved in the spirit of economic growth, even though thousands of commercial motor vehicles pass through warehouse dock doors each year, he said.
Gantt did not quantify the extent of the zoning problem. But the pushback from regulators makes it “next to impossible to build what you need to build,” he said. Thomasville, North Carolina-based Old Dominion (NASDAQ: ODFL) operates 251 terminals. It is expected to update its terminal expansion plans when it announces its fourth-quarter results on Feb. 2.
Suitable land is readily available, and Old Dominion would have no trouble funding any transactions, Gantt said. The zoning issue “is a huge challenge for our industry,” he said.
Gantt was bullish on Old Dominion’s prospects for 2022, saying industrial demand — the bread and butter of LTL carriers — will be spurred by strong demand and the need for manufacturers and retailers to boost low inventory levels. Demand is expected to stay strong for electrical equipment and appliances, computer equipment and auto parts.
Staffing up Old Dominion to accommodate its projected growth has proved more of a challenge than in the past, according to Gantt. Although Old Dominion’s driver turnover rate hovers at or around 10%, a minuscule sum compared to truckload carrier turnover rates, that still means that hundreds of drivers cycle out of the company in any given year. In today’s white-hot macro climate, a shortage of 200 to 300 drivers presents a problem, he said.
Old Dominion has resorted to advertising and job fairs to recruit drivers and dock personnel, steps that it has rarely resorted to in the past, Gantt said. Available and qualified workers are “out there,” he said. “You just have to work harder to get them.”
The carrier expects to manage through any cross-border bottlenecks resulting from decisions by the U.S. and Canada to require drivers to prove they are fully vaccinated before entering each other’s country, Gantt said. The percentage of Old Dominion’s drivers serving the Canadian market who are fully vaccinated is sufficient to “keep the flow going,” Gantt said.