LTL rising

LTL rising
Con-way Freight rolls through economic recession's bumps.

By Chris Gillis

      The economic recession could have been a lot worse for Con-way Freight, as it was for many U.S. trucking firms during the past year.
      While many companies parked trucks and let drivers go, or shut down operations altogether, Con-way Freight managed to keep much of its fleet rolling through the recession's bumps.
      'We were fortunate that we had rationalized our business before 2009,' said Ed Conaway, executive vice president of sales for Con-way Freight, in a recent interview. 'We eliminated some service centers and overhead and further improved our services.'
      During the fourth quarter of 2008, Con-way Freight completed a study and re-engineering process whereby the company reduced its network by 40 service centers to about 300, but did not diminish the number of cities covered.

Labrie

      'Essentially we took a strategic look at our footprint, and found opportunities to consolidate some smaller service centers into larger ones, while maintaining the same service coverage,' explained John Labrie, president of the less-than-truckload carrier. 'This was an optimization of our network that helped us improve density and load factor, and actually improved transit times in many cities.'
      Con-way's efforts to reshape its LTL business started in 2007 with a shift away from a decentralized regional management structure to a centralized one based in Ann Arbor, Mich. The move coincided with a rebranding of the business under a single Con-way Freight banner, with about 20,000 employees located at about 350 locations, maintaining a fleet of more than 8,400 tractors and 25,100 trailers.
      Prior to that, Con-way, which traces its roots to 1983 with the start of Con-way Western Express, consisted of a handful of regional brands, including Con-way Central Express, Con-way Southern Express, and Con-way Southwest Express.
      In 2009, Con-way Freight continued to analyze its network, with a particular focus on its nightly schedule and fleet allocation for moving freight between cities. The company reviewed customer shipping patterns, freight volumes, locations of consolidation centers and how freight flowed through the system.
      'We re-engineered major north/south segments of our line-haul operation in the eastern and Midwest parts of the U.S.,' Labrie said. 'The net result was an adjusted line-haul network plan that allowed us to increase density, move freight over shorter distances, and curtail overall miles traveled each night. It provided productivity and operating cost savings through less fuel burned and lowered carbon emissions, and again allowed us to improve service for customers, shaving a day or more off of transit times for nearly 500 cities in the Midwest, south and eastern U.S.'
      Despite the recession, the LTL market has remained extremely competitive with the likes of large national carriers such as Con-way Freight, FedEx Freight, UPS Freight, YRC, USF, Old Dominion and ABF, along with a host of regional and inter-regional carriers. 'With more and more competition, you can't afford to have waste in your system,' Conaway said.
      Con-way Freight provides shippers with next-day LTL services, as well as two-day and even three- and four-day services across North America.
      The company's customers break down into two types ' local and national accounts. Con-way Freight identifies local accounts as small to midsized businesses, usually in a single city and with less than five served locations, while national accounts are larger companies with multiple locations in multiple cities spread across the country. In the case of national accounts, Con-way Freight negotiates contracts at the corporate level that then apply to most or all of a company's locations nationwide.
      National accounts may offer an LTL carrier more opportunity for freight volume and revenue, but they often come with pricing margins that are lower than what the carrier enjoys from serving small to midsized customers.
      'We're more dependent on local revenue than national revenue,' Conaway said. 'Local customers ' not big accounts ' have always been our bread and butter.'
      LTL business has picked up during the first half of 2010. Con-way Freight has experienced a 30 percent increase in shipments and tonnage for May, compared to the same month last year. Overall, first quarter volumes were up 37 percent compared to last year.
      'Last year, American business essentially pulled back from capitalizing their businesses and consumers took a year off from retail,' Conaway said. 'Now all segments of business are starting to grow again.'
      Con-way Freight's assessment of the trucking market is backed by the American Trucking Associations' release of its April 2010 advance seasonally adjusted For-Hire Truck Tonnage Index. The index noted a 9.4 percent increase, the fifth consecutive year-over-year gain and the largest since January 2005. Year-to-date, tonnage is up 6 percent in April compared with the same period last year.
      'Truck tonnage volumes continue to improve at a solid, yet sustained rate,' said Bob Costello, ATA's chief economist, in a statement. 'Tonnage is being boosted by robust manufacturing output and stronger retail sales.'
      The average LTL shipment in the Con-way Freight network in May was about 1,280 pounds. That's up about 8 percent from May 2009 and about 9 percent higher than year-end 2008.
      'In 2009, by pushing the national account side of our business, we grew enough tonnage in our system,' Conaway said. 'With an elite system in the industry, we can now become more price-selective.'
      Cleveland Research Co., an industry analyst, in a May 27 report said LTL pricing in April permitted Con-way Freight to 'either realize fairly aggressive price increases (10 percent to 15 percent) with unprofitable accounts or remove them from their network,' and that 'a larger percentage of CNW's proposed price increases gained traction with shippers as freight that was put out to bid faced higher spot market pricing on competing carrier networks.'
      Con-way Freight plans to increase investments in new transport equipment and information systems technology during 2010.
      By Jan. 1, 2008, Con-way Freight had 8,379 tractors and 25,153 trailers in its fleet. By early 2010, the company had 8,579 tractors and 25,613 trailers. From late 2008 to early 2009, due to the downturn in the economy and its impact on freight volumes, Con-way Freight parked several hundred tractors and an equivalent number of trailers. As volumes recovered during the second half of 2009, those idle assets were put back in service, Labrie said.
      Starting at the end of 2009 and continuing through this year, the company will replenish its fleet with 1,200 new tractors.
      'We're not expanding the fleet. We are 'refreshing' our asset base by cycling out older equipment,' Labrie said. 'This helps us reduce overall fleet age, which improves operating efficiency and decreases maintenance expense.'
      Inside the truck cabs and on the docks, Con-way Freight's drivers are being introduced to new hand-held computers. The technology is being rolled out to all service centers and training for the company's 15,000 drivers will be completed by summer's end.
      'As handheld technology has become more compact, powerful and easy to use, that's made these devices more effective with more capabilities,' Conaway said. 'These technology tools will help us in areas of customer service, responsiveness and operations planning, since we'll be receiving more complete and accurate data faster, and have that more complete data earlier in the day to plan our nightly operations.
      'Lastly, from a sustainability perspective, handhelds should help us reduce the amount of paper documents which accompany a shipment,' he said.
      Yet, Con-way Freight still promotes direct contact between its drivers ' the company calls them 'driver sales representatives' ' and customers to cultivate relations and generate more business. Incentive programs reward drivers for putting more freight on their trucks.
      The carrier has also significantly expanded its business overseas in recent years without its trucks ever leaving the confines of North America.
      In 2006, Con-way Freight joined forces with APL Logistics to create the OceanGuaranteed service, which offers a day-definite service to points in the United States and Canada for less-than-containerload shipments from Asia.
      OceanGuaranteed freight moves on APL's transpacific service to the containership operator's Port of Los Angeles terminal, where it is deconsolidated and fed into Con-way Freight's network as LTL shipments for one to four-day deliveries. The service has continued to expand to origin points across Asia. OceanGuaranteed recently added Vietnam as an Asian departure port, and expanded its delivery footprint in North America to include points in Mexico.
      Under the service, shipments that fail to meet the delivery day commitment receive a 20 percent discount, subject to terms and conditions.
      In April 2007, Tropical Shipping enlisted Con-way Freight in an export cargo service, called TropicalDirect, to provide shippers a single point of contact to arrange their inland and ocean transport to the Bahamas and the Caribbean, rather than having to separately engage a trucking company and ocean carrier. Under through-routing, Tropical books cargo pickup with Con-way Freight and provides all-inclusive pricing and a single invoice. Customers can track shipments on either company's Web site.
      This year Con-way Freight has strengthened its commercial alliance with TNT by offering a new U.S. export service for heavier freight shipments of more than 70 kilograms/150 pounds to points throughout Europe. 'U.S. customers looking for a reliable solution to handle their export business to Europe now have a faster and more cost-effective option for their freight shipments,' said Matt McDonough, president of North America for TNT, when the expansion was announced earlier this year.
      As part of the service, Con-way Freight manages the pickup of U.S. shipments, followed by consolidation and loading to direct air cargo service from New York's JFK International Airport to Europe. Upon arrival in Europe, TNT takes care of customs clearance and deconsolidation at Belgium's Li'ge Airport. The shipments then enter TNT's integrated air and road network for delivery to their final destinations in Europe. Transit times from JFK to final destinations in Europe range from three to six days. TNT operates one of Europe's largest road express networks, with service through 414 depots across 39 countries.
      The export service with TNT complements the intercontinental import service the two companies launched as part of
their commercial alliance back in April 2009. The combination creates opportunities for both companies to drive more freight into their systems, while leveraging the advantages of unique strengths and
assets each has to offer in their respective markets.
      'With this expansion of our Global LTL suite of services, shippers will again benefit from a dependable solution that will enable them to reduce costs, shorten lead times and speed product to market,' Labrie said.