BAC Panel Summary - Managing in an Uncertain Environment

Justin F. Zubrod, BAC Chairman and Panel Moderator

This BAC meeting closed with a panel on "Managing in an Uncertain Environment.”  The topic was an outgrowth of the many concerns about the dramatic declines in the economy overall and its impact on the transportation sector now and going forward. On the panel were: 

  • John Bowe , President of the Americas for APL/NOL Group
  • Charley Eisele, Senior Vice President - Strategic Planning for the Union Pacific Railroad
  • Regg Jones, Managing Partner of the Greenbriar Equity Group
  • Craig Philip, President & CEO of the Ingram Barge Company.

Justin Zubrod, BAC Chairman, moderated the panel.

After a brief background on the recent economic declines, each panelist provided a perspective on how the decline impacted their companies and activities in the transportation sector. A couple of clear takeaways :

  • All of their companies have suffered double-digit declines year-over-year
  • Staff reductions and  hiring freezes have been imposed -- but they have also used salary/benefit reductions and redeployments to retain experienced staff
  • There has been reorganization for sure -- but less so on moving the boxes with more emphasis on rethinking how companies carry out certain processes and if they need them at all
  • For the  most part Capex has been reduced -- but strategic projects, not core maintenance, repair and renewal
  • In fact, several carriers have used the additional capacity to improve service and get ahead on maintenance
  • Building up cash and liquidity to provide both a cushion and flexibility to seize opportunities is becoming paramount
  • Leading private equity firms are looking within their portfolio companies for operating improvements in this environment, not financial re-engineering
  • For the most part, lending and outside capital that has been ever-present in transportation and other sectors continues to be scarce, costly and with more stringent conditions

Some research shows, however, that CXO's are focusing more on cost cutting than revenue initiatives, with greater attention to near term initiatives than the longer term.

The panelists all agreed that now was the time to stay close to customers -- in fact, to get much closer both in terms of communication and action. They too are struggling in this economy and could use help in adjusting their operations.

While concern for the past and present is quite high, the panelists felt that more uncertainty and difficult times lay ahead, including:

  • Perhaps further erosion in volume or an extended downturn -- we may not have bottomed out yet
  • Tighter regulation and control (safety/environment) coming from Washington
  • Scheduled refinancing coming due -- forcing some difficult  and expensive decisions

At the close of the session, several common themes emerged about how executives should manage in this uncertain environment which is still quite volatile and hard to predict. They were:

  • Increase your contingency planning -- more scenarios, brutal honesty and analytical rigor
  • Think about dusting off the scenario planning tools  of the past
  • Increased monitoring of a broader array of external and internal metrics
  • Paying close attention not only to customers but partners as well -- "hug" them both for it is their greatest time of need too
  • Managing risk more carefully -- and paying attention to what you do if your assumptions are wrong
  • For those with cash, begin to think of attractive acquisition opportunities -- now may be the time to buy
  • Using excess capacity -- people, equipment, right of way -- to refocus, redeploy

Above all , the panelists echoed the need not to get stuck in the present crisis, but to look to the future. At some point in time, we will emerge from this period of difficulty -- and likely with fewer competitors, leaner operations, and grateful customers anxious to get going again.

Summary prepared by Justin Zubrod, BAC Chairman and panel moderator.