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Air Land Transport's John Snead.

Air Land Transport's John Snead

COMBATING OBSTACLES from Mount Redoubt's ash to regulatory anarchy, Air Land Transport's president, John Snead, has successfully propelled his company through snags of nature, economy and industry change to become a formidable competitor in Alaska's over-the-road freight industry.

Snead founded Air Land in 1976 with brother Jim Snead, the firm's secretary/treasurer, and Bruce Reed, who left the company a few years later. Specializing in less than truckload (LTL) transportation, local cartage and air-freight forwarding, the company has steadily grown to 62 employees and 34 freight vehicles at its Anchorage main office and Fairbanks, Soldotna and Kodiak branch offices.

Air Land topped its 1988 growth of nearly 4 percent with a 5.8 percent increase in gross sales revenues last year. That expansion included the addition of a facility in Fairbanks. To help to oversee the growing business, Snead added Gene Juvette, vice president of operations, in December. Although supervisors manage branch offices, John Snead retains a firm reign on his flourishing realm by making quarterly rounds of the offices.

Air Land's largest volume sector is air-freight pickup and delivery, a role it performs for Superior Fast Freight and Yellow Freight Systems Inc. Air Land works as a cartage agent for the larger, national companies, providing delivery service within the state. It performs a similar function for Burlington Air Express.

Don Coates, Yellow Freight's Anchorage/Fairbanks branch manager, represented the transportation firm in its search for an Anchorage-based cartage agent. He says, "I chose Air Land because it had stability. I saw it as an existing professional operation that we could trust our business to, and I was right."

With the sealing of that alliance in October 1987, Yellow Freight entered the Alaskan market. "We're very pleased with the relationship and know we chose the right company," adds Coates.

One contract that has not fared so well is the company's formerly profitable account with Flying Tiger Line. With the Federal Express buy-out of the carrier last year, Air Land's contract changed drastically. The Anchorage agent now handles only packages of 150 pounds or more.

Despite that setback, Air Land continues to grow, and other local cartage accounts compensate for the revised Federal Express contract. Snead sends a "bunny truck" - one that makes multiple stops - around Anchorage daily picking up and delivering freight. Among other accounts, the forwarder regularly delivers flowers to Carrs Quality Centers and Safeway stores.

Gear Shifting. Snead entered the freight industry close to a quarter-century ago as a truck driver for Pacific Air Freight in Portland, Oreg. After moving to the company's sales department, he was transferred to Alaska in 1969 as sales manager of the Anchorage office. Six months later Snead was promoted to office general manager.

He remained with Pacific Air when it was bought out by the Airborne Freight Corp. in the early '70s. But Snead decided he was tired of Alaska and moved to Seattle in 1973, only to return with a changed outlook within 90 days. Snead then helped CF Air Freight open its Anchorage office, joining Nova Air Freight in 1975 as operations manager. When he left a year later to launch his own business, Nova owner Bruce Reed elected to close his operation and join Snead in the new venture.

During his years with Air Freight and Nova, Snead owned and operated Container Air Corp., a company specializing in fish transport. He sold the sideline to Air Land when founding that business.

Snead and his brother worked to mold Air Land to its present prosperous form. He says day-to-day problems are similar to what most businesses confront today, and that he has become adept at controlling those problems that recur regularly. Snead also has successfully conquered major stumbling blocks.

Hazardous Turns. A particularly challenging obstacle was the change from an owner-operator-dominated industry to one with relatively few of the sole-proprietor trucking competitors. In the mid-1980s, owner-operators dwindled to a minority as they found it increasingly difficult to balance costs with revenue during the trucking industry's deregulation.

Explains Snead, "What has happened is that the cost of a business license; the cost of vehicles, fuel and maintenance; the insurance requirements; and the competition forcing the rates down has forced most of them out of business."

Although Snead did not lay off any owner-operators, their number at Air Land fell from 18 to 4 today. Drivers faced a choice of selling their vehicles and becoming hourly wage-earners or leaving the company to seek more promising ground.

Because most of the owner-operators opted to leave, Snead faced the challenge of replacing tried-and-true truckdrivers with equally competent employees. "Some of those guys were really good," he says. "It's hard to replace a person who has four or five years of experience and knows his route and his customers. Then you try to hire somebody that wants to do the same job, but he can't get around as fast."

Snead also had to convert vehicles, formerly assets of the owner-operators, to company property. Air Land initiated that process four years ago.

Nature also has added potholes to the rocky road of freight competition. Alaska's varying weather creates all sorts of problems for a trucking firm. For example, last winter's record-breaking cold spell caused a continual battle against frozen equipment.

Mount Redoubt's eruptions, beginning late last year, could have been catastrophic for Snead if it weren't for his combat maintenance procedures. He kept destruction at bay with an upkeep program that required constant changing of Air Land's equipment filters, fluids and oils. A particularly effective measure was the use of panty-hose on vehicle air cleaners.

"You don't know how long ash is in the air. It's so fine and abrasive that a lot of times you can't even tell that it's still floating around. It goes through everything and can be extremely costly," says Snead.

Alaska's recession had a major impact on Air Land, particularly because the economic downturn coincided with the demise of owner-operators. At one time, those factors together slashed the company's employee count to 25. "We were like everybody during the recession - we had some major cutbacks," notes Snead. Changed Course. More encumbering, according to Snead, has been the deregulation of the transportation industry. Not so much a hindrance for Air Land as a ticket to profit for more recent companies, elimination of industry restrictions has helped to open Alaska to fierce freight competition. But as in any battle, only some can win.

In November 1984, the Alaska Transportation Commission - an independent commission of the Alaska Department of Commerce and Economic Development charged with economic regulation of the transportation industry - was voted out of existence by Alaskans. Alaska's freight industry players had been kept in check by the commission's limited-entry requirements. Businesses were required to apply for authority to operate and to pay high sums for the necessary permits.

Under the former regulation, Snead paid $150,000 for two operating permits: one for air freight and local cartage and one for interstate freight, regulated by the Interstate Commerce Commission. Requirements such as those became defunct with the commission's closure.

With fewer financial limitations, came lower rates, even price wars. Drastically lower rates created a financial struggle for companies still fulfilling permit obligations. "We're operating on some rates right now that were in effect in the mid-'70s. And I don't really understand why, because costs have gone way up," says Snead.

Among costs steadily rising: salaries, insurance rates, employee benefits and workmen's compensation fees, and fuel and tire prices. Quality tires for a typical freight vehicle run $400 a piece. A 40-foot trailer has 18 tires that must be replaced, on an average, every two years.

According to Aves Thompson, chief of the Department of Commerce and Economic Development's Division of Measurement Standards in Anchorage, this financial conflict has lead some trucking companies to neglect trucking safety recommendations and insurance requirements. He says some businesses choose to forego timely equipment maintenance to combat low revenues caused by plummeting rates, thereby creating safety hazards.

Air Land has been replacing equipment since 1987. Snead says, "When the economy got really slow, we tried to stretch our trucks, and then it became a maintenance nightmare." One business goal is to get the company on a five-year cycle of replacement.

Snead notes in his business he constantly must second-guess future needs. Equipment purchases must be planned six months in advance. "It's not like you can just drive around the corner and buy a new truck, finance it and take off," he adds.

But Snead doesn't dwell on the headaches inherent in running a competitive freight operation. Rather, the business owner exudes a vitality that belies his average 75-hour workweek. His exuberance seems to infect those around him with a feeling that freight forwarding is an exciting occupation.

Chow Roundup. This attitude is particularly apparent in Snead's relationship with the Iditarod Trail Committee. For nearly a decade, Air Land has shipped musher and dog food for the Iditarod via bypass mail - fourth class bulk mail handled under special provisions - to the four essential drop points along the route: McGrath, Galena, Unakleet and Nome.

"Northern Air Cargo handled the Iditarod years ago before we ever went to bypass mail," says Snead. "A real good friend of ours at that time was the vice president (of Northern Air) and he called me up one day and said, `Boy, have I got a deal for you,' and I said, `Right!'

"At that time it was all just flat air freighted, but they didn't want 50 mushers coming to them, so they hired us to consolidate it," he adds. This year more than 70 mushers will cart between 1,500 and 2,000 pounds of dog food each to Air Land, where race volunteers will help to weigh, meter and mark the bundles for shipment. The process takes several days. Notes Snead, "It's a lot of hard work in a short period of time."

Joanne Potts, a race coordinator at the Iditarod Trail Committee race headquarters, says, "Air Land is wonderful to deal with. Those guys just break their backs to make the whole thing work. They're really wonderful."

Snead similarly respects the race's mushers: "You know it's not the money, because you've got that little tiny handful that even ends up with any. It's got to be just the challenge. I really admire those people. They'd give you the shirt right off their backs - you just know they would. I really enjoy the mushers."

He also appreciates their punctuality. "You've got to be really careful with them, because if you tell them 7:00, then they're here at 7:00. You tell most people that and they're here at 7:30 or 8:00. But with the mushers, at about 6:30 the driveway starts lightning up out there."

Fish On Board. In summer, Air Land tackles the challenge of freighting fish. Snead refers to the fish contracts as a "separate identity" and hires from five to 10 seasonal employees for the specialized cargoes. The company ships three to four million pounds of halibut and chum salmon annually from Alaska to the Lower 48.

Fresh, uncleaned fish is shipped to Anchorage from outlying area in the state in large aluminum containers called totes. Air Land transfers the fish from tote to processor, and following processing freights the fresh fish to the airlines.

Air Land's first freight contract was with Whitney Fidalgo, now Whitney Foods of Anchorage. The business relationship began while Snead was operating Container Air. One of Alaska's largest fish processing plants, Whitney is one of Air Land's most profitable fish-forwarding accounts.

Joe Burt, chief engineer of Whitney, says that Air Land provides services at a price that cannot be found elsewhere. He adds, "John gives outstanding service. He's always available, 24 hours a day. There's no task in the trucking business he can't provide, and yet he still gives you that 24-hour neighborly relationship."

According to Snead, flexibility is mandatory in fish forwarding. Timing is critical, and synchronizing with the fish processors is challenging. "They're never ready to match up with the airlines. It's a time-sensitive arrangement. Plus you don't want to have the fish too many hours in advance because it is such a perishable item," he explains.

In addition to salmon and halibut, Snead is trying to increase winter fish cargoes by obtaining forwarding contracts to ship cod and rockfish, an endeavor cut short last year by the Exxon Valdez oil spill. Air Land's shipments of salmon and halibut also were affected, spoiling what looked to be a record year. "We lost a lot of fresh fish due to the oil spill. Our tonnage was off approximately 40 percent," he notes.

Snead also would like to expand in the international market of roe forwarding and has ventured into the difficult-to-enter trade. "That's a whole different ballgame. It's really competitive, with Nippon Express and Mitsui Air. It's hard to talk their language, and it's a very tight-knit thing. They'll let us haul the freight to the airlines. But to cut the documents and arrange for it to clear customs in Tokyo, that's another ballgame."

For now, though, Snead is concentrating on developing existing operations, such as markets surrounding the firm's branches. He says success of his enterprise hinges on people. "Our edge is good people with a lot of personal involvement in the company. We have the service, and we provide it at a competitive price."

Bullish on Air Land's prospects, Snead adds, "We'll dig harder and deeper to expand on existing operations and find business to gain on what we're presently doing. We'll clean house."
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:Denny, Catherine
Publication:Alaska Business Monthly
Article Type:company profile
Date:Mar 1, 1990
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