THE SHIPPING STATUS QUO

get a customer, you call him, you go see him once a month. You want them to know you care about their business; you appreciate their business. Over time, you’re asking them questions that show you care: ‘How was that last order? Was the driver courteous? Was the invoice OK?’”

Larsen also counsels his sales team to start small. “If a box buyer’s buying 250 box sizes, you’re the last guy he wants to talk to,” he says. “Do you have any idea how much work that is for him to change vendors for stuff like that?”

Larsen’s approach in this case is to pick two or three items. “Get them on the phone and say, ‘Look, I don’t want to quote you on 85 different things. I want to quote you on two.’ If I’m good on those two, I’ll be good on everything.”

‘Completely Different Companies’

Bill Larsen’s never afraid of a challenge, and the main challenge he’s faced in recent years is melding a stocking distributor culture with a manufacturing one. “I’ll say now that where this company was pre-pandemic and where it is now are two completely different companies. Doing the same thing but completely different ways of operating,” he explains.

His first priority is finding and hiring professional upper managers who understand the converting side of his business. Enter Rob Reece, chief financial officer, who joined Larsen in April. Reece came to Larsen Packaging with more than 30 years of manufacturing, distribution, and financial experience. He has held general manager positions with several Midwest manufacturing and industrial supply distributors. As Larsen explains, Reece’s first job is to create a leadership structure so that all day-to-day decisions don’t end up in the CEO’s lap. “I can’t look for equipment or consider acquisitions or other growth options if people are coming to me saying, ‘Hey, I need a price on this,’” says Larsen.

Reece, for his part, says that educating the workforce on the manufacturing side of the business will also be a critical part of his job. “Distribution is different from manufacturing,” he says. “To remain competitive, customer service and the sales force have to become more acclimated and familiar with estimating and with our machine capabilities.”

While Larsen describes the importance of building his management bench, he also praises the loyalty of his team and the work they’ve done to build the business to where it is today. “Experience is what we’re truly looking for in the upcoming months, but we have really good people who work here,” he says. “They’re loyal. The longest employees have been here 20-plus years. I’ve got good, loyal people.”

Reece agrees. “They’ll bend over backwards for Bill,” he says.

‘100% About Growth’

So, where will Larsen Packaging Products be in, say, five years? “The hard part for us is behind us—starting a plant, building a plant,” Larsen says. “The plant’s built; we’re ready to rock and roll. I will always say we are a brown box company. We are not a POP display house; we are not highend graphics; we’re not litho laminating. We don’t do any of that stuff—yet.”

Larsen envisions this for his company, though: “Now that’s stuff I want to grow into. That’s the direction I want to go.”

Larsen sees new equipment as part of this specialization and growth. The three-color Apstar flexo folder gluer, due next year, is part of that plan. He is also eyeing adding another Vega specialty gluer as well as a five-color Apstar with inside-print capability. Larsen sees growth opportunity in food packaging, and he’s currently working on obtaining Food and Drug Administration and other food-related certifications.

Larsen also plans to move the distribution side of his business out of its current location. “Our current location will be manufacturing exclusively,” he says. “We’re trying to separate manufacturing from distribution; they just don’t work well together.”

Geographic expansion is also in Larsen’s sights, and he sees acquisitions of smaller sheet plants as a way to accomplish that. “I’m looking to make acquisitions up and down Interstate 65,” he says. “I’d like to buy somebody in Indy; I would like to buy somebody in or around Nashville.”

Larsen sees the advantage of further distribution points for his packaging supplies business, and the equipment he acquires in these plants will supplement his growing converting capabilities. “Depending on what equipment people have, I am open to just about anything,” he says.

From his early days in the company, telling his father, “Let’s grow this thing,” Bill Larsen has built a successful company built on speed, service, and customer satisfaction. Now, as he eyes new opportunities in converting corrugated products, he’s bringing the same high-velocity drive: Says Larsen, “Moving forward here is 100% about growth.” 

Steve Young is AICC’s ambassador-at-large. He can be reached at 202-297-0583 or syoung@aiccbox.org.

You can listen to Bill Larsen’s story on AICC’s podcast, Breaking Down Boxes, by scanning the QR code below.

The Driver Dilemma

Oklahoma Interpak relies on a variety of less-than-truckload (LTL) assetbased carriers as well as brokers for its shipping. “We use trucking companies for everything we do,” says owner Eric Elgin. “Even though we work with about 10 diff erent carriers, it’s harder to fi nd a truck in the fi rst place. When you do, it’s a challenge to get it where it needs to go and when you need it to be there.

“Most of the time, they don’t have the capacity to do the job,” Elgin continues. “Th ey can do it in a week; they just can’t do it when you need it. So when that happens, you move on to the next option, which could either be a broker or a different carrier. And then you end up just taking the most cost-eff ective option— assuming you can fi nd an option.”

Lawrence Paper Co., a division of American Packaging, manages its own shipping fl eet, which could sound like the best way to guarantee capacity. Yet Shane Old, operations and plant manager, says it has been particularly challenging to fi nd and to keep drivers. “We’ve got enough drivers today,” he says, “but hiring is very hard. Th ere aren’t many applicants when we post a job.”

Th e lack of available drivers suggests a driver shortage. Yet Avery Vise, vice president of trucking for independent forecasting fi rm FTR, believes the situation isn’t as straightforward as that. “Yes, we did lose some drivers during the early stages of the pandemic because, at one point, there was very little freight to haul,” he says. “But we estimate that we were back to the pre-pandemic supply of drivers at least a year ago.”

Now, he notes, it isn’t so much that there aren’t enough drivers; it’s that those drivers have been working in other segments of the market. “Th ey got their own authority, they set up shop as independent carriers, and they hauled freight in the spot market for brokers on a load-by-load basis,” Vise explains.

Th e fi rst year of the COVID-19 pandemic brought a major shift in both volume and capacity away from the contract market—the typical day-to-day relationship between shippers and their carriers—and into the spot market, where brokers place loads with whoever is available to accept them. “Th at was an unprecedented shift,” Vise says, “and it continued for a long time because of all of the disruptions we had in the supply chain and in the labor market.”

In addition, Vise points out that high turnover has been a chronic issue for many larger carriers. “Th ey tend to have high turnover because their business model is built on bringing in new drivers and training them; they don’t necessarily prioritize retention. So those carriers, even in weaker times, can often have a hard time keeping all of their trucks fi lled.”

Th e technicalities of whether there is a driver shortage, or what the situation should be called, are beside the point, though, if you’re a shipper who has to spend valuable time simply trying to fi nd an available truck. “Having to do all of this extra planning with our freight has defi nitely made more work in the offi ce,” Elgin says. “Everybody’s having to work harder.”

Th e good news, according to Vise, is that the capacity lost over the last few years is poised to return. “Th is spring, we’ve seen really astounding growth in the number of payroll employees in trucking, and 60% to 65% of those are going to be drivers,” he says. “So we’ve had a very strong hiring period. And I anticipate that—as long as freight demand stays as strong as it is or at least close to as strong as it has been—that trend will continue, because we’re seeing a shift in volume back into contract.”

Rising Costs, Hidden Rates

Perhaps the biggest current challenge is higher prices, in terms of overall carrier rates as well as fuel costs. “We’re seeing 50% to 70% fuel surcharges from outside carriers,” Old acknowledges, “and we are having diffi culty fi nding carriers to lock in rates for more than a couple of days to some lanes.”

Th e situation is similar for Elgin. “I’m seeing an increase in the price of every movement,” he says. “Just a few years ago, I might have paid the same price for

“I’m seeing an increase in the price of every movement. Just a few years ago, I might have paid the same price for two years straight. Now, it’s different every time.”

—Eric Elgin, owner, Oklahoma Interpak

two years straight. Now, it’s diff erent every time.”

Because Oklahoma Interpak has an unusually large shipping territory, the company is pooling more orders together, “so we can maximize whatever carriers we can fi nd,” Elgin says.

But that solution has led to other issues. “Th ere are a lot of rules that exist in LTL that have never been enforced in the 21 years that I’ve been doing this,” Elgin notes. “Suddenly that’s changed. Th e LTL industry has a thing called a capacity rate or cap. What I didn’t know is that it varies from carrier to carrier, and it may or may not be enforced. It may not even be mentioned when they quote a price.”

Elgin recalls that one well-known carrier’s policy had been that any shipment of more than seven pallets would be considered a capacity load, meaning the manufacturer would be charged for the whole trailer. Th at seemed straightforward enough. “So at one point, I sent eight or nine pallets to Arizona” with this carrier, Elgin says. “I went online and used their quoting template, which gave me a cost of something like $700.”

No additional “capacity rate” was mentioned. However, Elgin learned later that his order had triggered an additional fee. “When I got the invoice, it was over $5,000, which was more than the actual order was worth. Th ere was no indication on the website that the order would trigger the cap or what the real cost would be. In fact, their website still doesn’t give any kind of warning or display the actual price you’ll pay for shipping.”

And then there is the rising cost of fuel. While most larger carriers routinely add a fuel surcharge to every shipment—a fee that helps carriers manage the volatile nature of fuel costs—many smaller carriers do not typically include them. So, when diesel prices rise, either the carrier assumes that cost—shortchanging itself— or the higher price gets passed along to

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