Celadon’s Russell Used Hard Work, Luck To Build Large Cross-Border TL Carrier
By Eric Miller, Staff Reporter
This story appears in the June 23 print edition of Transport Topics.
INDIANAPOLIS — Stephen Russell might not have become the owner of motor-carrier giant Celadon Group Inc., were it not for a chance meeting 29 years ago at a toll booth.
In 1985, Russell was traveling from his office in Manhattan to his home in Greenwich, Connecticut, when he approached a toll booth on New York City’s Hudson River Bridge. He reached in his pocket for two quarters.
It was empty.
Annoyed, Russell pulled over to the left lane headed toward a change booth to break a dollar.
“There was a horn blowing on my right,” he said. “It was a guy who worked for me years ago who wanted my phone number. He told me he’d call me the next day.”
At the time, Russell had recently completed a business venture in Saudi Arabia and was looking for a new challenge.
He was 45, and said that he was financially secure and “did not have to worry about money” but was wondering what he was going to do with the rest of his life.
The ex-employee, Leonard Bennett, called the next day and told Russell he was running a logistics company and desperately needed some trucks to carry automobile components between Mexico and Michigan.
It sounded promising to Russell. In a month, he raised the capital to lease 50 tractors and 100 trailers, calling the new truckload venture “Celadon,” a universal word for green-colored Chinese porcelain.
“If I had 50 cents that day at the toll booth, I wouldn’t be here,” he said in an interview at his office in Indianapolis.
Since then, Russell has taken Celadon from that tiny, single-customer carrier to a major truckload industry player with annual revenue topping $600 million and servicing 1,600 customers in the United States, Mexico, and Canada.
Celadon ranks No. 44 on the Transport Topics list of the 100 largest U.S. and Canadian for-hire carriers. The company has 4,000 employees and owns about 9,000 trailers and 4,100 tractors.
At 74, Russell is winding down a bit, but he remains a guiding force at Celadon. With a solid management team in place, he’s taken on the role of board chairman, a post that spares him some of the daily demands of running a large enterprise.
“He gives guidance and support, but also gives latitude to the people he’s hired,” company CEO Paul Will said. “He’s here more as a figurehead right now, rather than someone who’s in the trenches and into detail.”
Celadon’s story is Russell’s story: a tale of a man with gritty street smarts, pencil-sharp business acumen, unrelenting drive, an eye for hiring skilled managers and good old-fashioned hard work — not to mention a dose of luck.
When he founded Celadon, Russell was a newcomer to the for-hire truckload market, but at the same time, a well-seasoned executive who had been at or near the top of several large corporations.
Unlike many successful trucking executives, Russell did not grow up working on the docks, sitting in a tractor cab or peering under the hood at a diesel engine.
“He’s not a trucker per se,” said Will. “He’s more of a financial guy.”
Russell’s mother died when he was 6, and he was 21 when his father, a New York City cab driver, died — the same year Russell got his MBA in finance and marketing from Cornell University.
He grew up in Brooklyn and said he was a nerdy kid when he attended Stuyvesant High School, a math and science school for accelerated studies located in lower Manhattan.
He said he got his strong work ethic from his father.
“When you’re a cab driver, you only get paid when you work,” Russell said.
He went right to work after finishing his MBA in 1961, landing a job at Ford Motor Co. as a financial analyst. He was ultimately promoted to director of advanced product planning at Ford, where he worked for nine years.
Russell also did stints as vice president of finance for RCA Corp., president of the Hertz Truck and Equipment divisions of RCA, and CEO of Seatrain Lines.
He also owned a logistics company, which participated in the construction of the King Khalid International Airport near Riyadh, Saudi Arabia, from 1979 to 1984 — his last job before founding Celadon.
It might seem odd that a man with a New York sensibility — Russell and his wife still own an apartment in Manhattan in addition to their home in Indianapolis — would choose to locate his business venture in a slow-paced Midwestern city.
It made a lot of sense to Russell.
“I chose it for where it was on the map,” Russell said. “It’s the only city in America with four expressways that cross the center of America.”
That has been a plus for Celadon, which services customers throughout North America. About 43% of the carrier’s revenue in 2013 was from international hauls involving Canada and Mexico.
Celadon went public in 1994. In 1998, the company purchased Gerth Transport, a Canadian motor carrier specializing in transportation to and from Mexico. The purchase was significant for Celadon because it allowed the company to offer its customers transportation from Canada directly to Mexico, Russell said.
The company’s acquisitions strategy, stepped up in 2002, has included purchases of several “distressed” companies intended to expand Celadon’s footprint, add to capacity and increase service offerings, CEO Will said.
“Over the last 25 years, the company has made more than 35 small to midsize acquisitions, and we’ve been able to integrate them relatively successfully,” said Kenneth Core, Celadon’s general counsel. “When Steve sees a good opportunity, he’s not unwilling to take a chance in making it part of Celadon.”
In 2013, the company made six acquisitions.
The company’s stock also has been healthy, at one point jumping from $2 to $26 a share between 2002 and 2006. The stock closed at $22.56 on June 18.
“From a business perspective, I think Steve has really got a fantastic business model in terms of how he purchases companies, which helps him in terms of expanding his customer base and drivers,” said John Smith, chairman of the board at CRST International. Smith is a fellow Cornell graduate who has served with Russell on American Trucking Associations’ audit and executive committees and in helping Cornell’s business school.
Smith said Russell “normally is able to purchase a company at such a price that he can bring the drivers in, maybe sell some of the equipment. The company might be able to bring in 15% more revenue, but he’ll cut it down to say 10%, and then that will give him extra drivers for his equipment.”
With ongoing driver shortages, Celadon — like some other large carriers — has opened its own driver schools and operates its own health clinics that the company hopes will extend drivers’ lives.
“The average driver’s life expectancy is something like 67,” Russell said. “Their lives are very sedentary, and they often eat bad food.”
To help drivers, the company’s main clinic is staffed with two nurse practitioners, a registered nurse, four medical assistants, a physical therapist and a wellness health coach. The company also gives driver and employee pre-employment drug screens and certified driver medical exams, said Joe Weigel, Celadon’s director of marketing and communications.
“We want to make sure we have safe and healthy drivers on the road,” Weigel said.
A separate clinic at the company’s driver school located near the headquarters is staffed with a nurse practitioner and two medical assistants.
The original school, opened in 2010, features a 103-room dormitory, a large cafeteria and student lounge, a huge gymnasium replete with handball courts and a weight room that all company employees can use.
Earlier this month, Celadon and its Quality Drivers subsidiary announced the opening of the second driver training school, located at its Osborn Transportation facility in Gadsden, Alabama.
Celadon does a portion of its business in Mexico, but Russell said he is not concerned that allowing Mexican carriers to travel to the U.S. interior would endanger Celadon’s cross-border operations.
He said that while many U.S. carriers generally are not allowed to travel seamlessly into Mexico, Celadon was grandfathered from a Mexican law banning U.S. trucks.
Also, in 1995, Celadon acquired Servicios de Transportacion Jaguar S.A. de C.V., which currently operates 350 power units, Russell said.
He believes the low participation in the current cross-border pilot project is largely due to the high cost of U.S. insurance.
“I think the lack of interest is because Mexican carriers, if they come to the U.S., need insurance,” Russell said. “In Mexico, a crash is not a lot of money. Whereas, in the U.S., it’s a ton of money.”
Indeed, Federal Motor Carrier Safety Administration officials have noted that some Mexican carriers have applied for the program, but then dropped out because the insurance was too expensive.
Despite driver shortages, greater regulatory scrutiny and tight operating margins, Russell said he’s never been more optimistic about the industry’s future.
Right now, the top 20 fleets control about 10% of the market, he said.
“The big carriers are getting bigger, and many of the small guys are either closing their doors or being acquired by the bigger companies,” Russell said.
Is he concerned about the trucking industry’s image?
Not a bit.
“People will always need trucks,” he said.
Russell’s contract with Celadon calls for him to work only 20 hours a week, but he usually spends more time at work because he can’t wait to get into the office each morning. Security chief Bruce Wishart said Russell arrives around 6:30 a.m. but by late afternoon can’t wait to get home.
Despite a reputation for being focused and driven, Russell also is known for being considerate to business associates.
His employees said Russell and his managers treat people with respect — which might be one of the reasons that in April, The Indianapolis Star newspaper named Celadon one of the best places to work in central Indiana.
Many of Celadon’s top managers have been with the company at least 20 years.
“Steve Russell is a very nice gentleman,” said Max Corum, classroom director of Celadon’s driving school. “He works with everybody, and he has an open-door policy. He’s very easygoing.”
“Mild-mannered” is how Core describes Russell: “He doesn’t yell and scream at people. He doesn’t berate them. He doesn’t humiliate his supervisors. And, when you have a problem, he wants to get the problem out on the table and deal with it.”
CRST’s Smith said Russell is “a delightful person to be around. He’s a very positive person and always has something interesting to say. He has a wide variety of interests.”
Those varied interests include collecting contemporary art, going to theater productions, attending the opera and devoting countless hours and generous donations to help put high school students “on the right path.”
“At this point in time, he’s very much more concerned about how he can give back to the community,” Will said. “He’s dovetailed out of the business more and into being an advocate for Indianapolis and some charities in the area. He’s different than he was five or 10 years ago. Now, he’s splitting his time between the company and the community.”
Russell also spearheaded a campaign to get Indiana switched to the Eastern time zone, an effort that won him the Sagamore of the Wabash award from former Gov. Mitch Daniels, an honor normally reserved for Indiana natives.
Prior to the switch, Indiana did not move each summer to daylight saving time when the rest of the country did.
It was confusing for Celadon’s customers.
“Nobody in the country knew what time it was in Indiana,” Russell said.