Executive Briefings

LTL Service Is Getting Better-But Customers Still Aren't Satisfied

Con-way Freight revamps its organizational structure to take on the challenge of serving LTL shippers, while coping with issues of security and infrastructure.

Con-way Freight has gone through multiple incarnations over the years. Founded in 1929, the carrier shed its nationwide, unionized operation in the 1990s, choosing to focus on the regional less-than-truckload market. The parent company was renamed CNF Inc., then became Con-way Inc. in 2006. In the process, Con-way undertook the rebranding of its three regional LTL carriers into one corporate identity. John G. Labrie, a 17-year veteran of the organization, was named president of Con-way Freight, largest of Con-way Inc.'s three operating units, in July 2007. In late December he spoke to GL&SCS about the carrier's market position and plans for the coming year.

Q: How do you view conditions in the LTL sector right now?

Labrie: We're seeing business levels at historical norms.

Q: There are some dark clouds on the horizon, though, in the form of the housing crisis and fears that it might drag the economy into recession in the coming year.

Labrie: Economists are saying a lot of different things about what's going to happen over the next year or so. We know the business that we operate in is [tied] to gross domestic product, and we're hopeful that we're going to have decent GDP growth over the next year.

Q: So the impact of any potential blip hasn't shown itself at this point?

Labrie: Correct. The latest research that we've seen indicates that as many as 40 percent of economists are predicting some form of recession next year. Most are anticipating somewhere between no growth and two-and-a-half percent growth in GDP. We obviously hope that it looks more like two and a half.

Q: How does your business break down into loads that are purely domestic, and those with an international origin?

Labrie: We don't always have great visibility to that. A lot of product comes in by full container from Asia or other parts of the world, then moves into distribution facilities somewhere near the coast. Then we end up moving it as an LTL shipment somewhere in North America. So it's hard for me to say what percentage of our traffic actually has international origins associated with it. We know that there is a reasonable amount of the business that moves on our trucks, and is manufactured overseas.

Q: What new and innovative service initiatives have you launched recently?

Labrie: The first is that we are in the midst of integrating what used to be three operating companies overseen by a holding company, and reorganizing our company as one single operating unit. In the past we had three regional carriers, one headquartered in Ann Arbor, Michigan, another in Buena Park, California, and the third in Fort Worth, Texas. We have taken steps over the last 60 days to integrate those three operating companies into one single company that will be headquartered here in Michigan. We are already operating that way. Since 1998, we've been providing regional, interregional and long-haul services, although the last two were dependent on two of those three operating companies working together as one. We've had IT systems, policies and procedures in place that enabled us to appear as one [entity] to the customer. But we weren't structured that way as it relates to the organizational model. So we're taking steps to reorganize into the way we've behaved since 1998, going with a model to streamline many of our back-office processes. We believe it will enable us to be easier to do business from a customer perspective.

Q: Will the customer see a major difference?

Labrie: Yes. In the past, the customer might not have had to deal with more than one of the three operating companies. But we had to navigate the back waters of our organizational structure, which added complexity to resolving issues and taking care of the customer. By organizing as one single company, we're going to streamline those processes, become more responsive to customers' needs, have a single operating execution approach and a single strategy, as opposed to three variations. That can make a big difference to customers.

Q: Will it allow you to get more pieces of an interregional move, where a customer might previously have used a non-Con-way trucker for part of the transit?

Labrie: No, that doesn't really change. We've always provided more direct service to second- and third-tier markets than any other carrier in the LTL marketplace. What it will allow us to do is to represent our regional, interregional and long-haul capabilities through this one single company and touchpoint with the customer. One truck can pick up any LTL shipment and move it anywhere throughout North America.

Q: How soon will that difference become evident to your customer base?

Labrie: It's already showing results. The things that were impacted were the back-office functions, like human resources, linehaul and pricing that were previously done in three locations.

Q: You've also been reaching out to partners outside your organization, such as your OceanGuaranteed service in conjunction with APL Logistics. How's that going?

Labrie: It's going great. We have a very neat product, and customers are telling us that as well. We've got a great partnership with APL Logistics. They're very pleased with how this new product has been accepted in the marketplace, as are we.

Q: Are you looking to expand that relationship?

Labrie: We are. We're going to be adding port locations to provide greater capability to our customers. Newark, New Jersey is an example of a location that will be coming on line very soon, and we are exploring other ways to expand that service capability.

Q: Are you giving thought to similar partnerships with other outside entities?

Labrie: No, we're not at this time. We're very pleased with the partnership with APL, and we're looking at ways to expand that. But we're not considering further expansion with other providers.

Q: What do customers want from you today?

Labrie: They tell us that on-time delivery reliability is the most important thing to them. That's followed by transit time and exception-free performance. Those are the three attributes of service that customers most care about. There are others as well, like geographic coverage, pickup time reliability, flexibility and the like.

Q: Some companies think they can save money by consolidating more product into truckloads. Does that present a new competitive challenge to LTL?

Labrie: No. Currently there are only two forms of legitimate options for our customers-truckload on the one end, and parcel on the other. But that's been the case for some time.

Q: Isn't there a certain amount of business overlap between LTL and truckload?

Labrie: Sure, but not in any way different than it has been historically.

Q: How is intermodal affecting your business?

Labrie: Transit time is so important to our customers that intermodal to this day does not offer a viable option to the type of transit times that we can provide over the road for our customers. It is not a threat to Con-way at this point.

Q: Is the driver shortage still a major issue for Con-way?

Labrie: It's not an issue for us, in the sense that relative to all truck driving jobs in the marketplace, Con-way jobs are some of the best available. We have been in the relatively luxurious position of not having to face some of the issues that other carriers in our industry, [such as] the truckload sector, have faced, with regard to driver availability.

Q: How do congestion and inadequate infrastructure affect your ability to get product to market in a timely manner?

Labrie: Infrastructure continues to be a concern. We believe that the country is under-investing in infrastructure, and the mechanics of how we invest are not as efficient as they should be. It's a challenge today in just about every major market that we operate in. And it's going to continue to be an issue for some time. There seems to be more discussion taking place, not just in the trucking industry, but across all industries. And there's a lot more awareness in Washington about this issue. I'm hopeful that as a country we're going to begin, not only to increase our investment in infrastructure, but also to attack the way that we allocate investment resources toward those areas that require the greatest investment. And we will reap the greatest return for it.

Q: Public concern about infrastructure often focuses on passenger traffic instead of freight. Do you see that as a problem?

Labrie: Certainly the infrastructure in this country serves both constituencies. As the biggest contributor from a tax standpoint, it's important for the trucking industry to have access to infrastructure. We can't help facilitate commerce if we don't have sufficient infrastructure to do it. More and more people are realizing that, and that's why I'm hopeful that we're going to see that situation improve in the coming years.

Q: What are your concerns about the security issue?

Labrie: My biggest concern is that we keep everything in perspective, and balance the need to protect the security needs of the country with the need to facilitate efficient commerce. To the extent that we optimize exclusively around security, we could do so at the expense of efficient commerce.

Q: What do you think the LTL industry is going to look like, five or 10 years from now?

Labrie: Customers are going to continue to expect more in the way of performance against the things that are important to them. The industry will continue to provide higher and higher service levels. It's sort of the table stakes for continuing to participate in this industry.

Con-way Freight has gone through multiple incarnations over the years. Founded in 1929, the carrier shed its nationwide, unionized operation in the 1990s, choosing to focus on the regional less-than-truckload market. The parent company was renamed CNF Inc., then became Con-way Inc. in 2006. In the process, Con-way undertook the rebranding of its three regional LTL carriers into one corporate identity. John G. Labrie, a 17-year veteran of the organization, was named president of Con-way Freight, largest of Con-way Inc.'s three operating units, in July 2007. In late December he spoke to GL&SCS about the carrier's market position and plans for the coming year.

Q: How do you view conditions in the LTL sector right now?

Labrie: We're seeing business levels at historical norms.

Q: There are some dark clouds on the horizon, though, in the form of the housing crisis and fears that it might drag the economy into recession in the coming year.

Labrie: Economists are saying a lot of different things about what's going to happen over the next year or so. We know the business that we operate in is [tied] to gross domestic product, and we're hopeful that we're going to have decent GDP growth over the next year.

Q: So the impact of any potential blip hasn't shown itself at this point?

Labrie: Correct. The latest research that we've seen indicates that as many as 40 percent of economists are predicting some form of recession next year. Most are anticipating somewhere between no growth and two-and-a-half percent growth in GDP. We obviously hope that it looks more like two and a half.

Q: How does your business break down into loads that are purely domestic, and those with an international origin?

Labrie: We don't always have great visibility to that. A lot of product comes in by full container from Asia or other parts of the world, then moves into distribution facilities somewhere near the coast. Then we end up moving it as an LTL shipment somewhere in North America. So it's hard for me to say what percentage of our traffic actually has international origins associated with it. We know that there is a reasonable amount of the business that moves on our trucks, and is manufactured overseas.

Q: What new and innovative service initiatives have you launched recently?

Labrie: The first is that we are in the midst of integrating what used to be three operating companies overseen by a holding company, and reorganizing our company as one single operating unit. In the past we had three regional carriers, one headquartered in Ann Arbor, Michigan, another in Buena Park, California, and the third in Fort Worth, Texas. We have taken steps over the last 60 days to integrate those three operating companies into one single company that will be headquartered here in Michigan. We are already operating that way. Since 1998, we've been providing regional, interregional and long-haul services, although the last two were dependent on two of those three operating companies working together as one. We've had IT systems, policies and procedures in place that enabled us to appear as one [entity] to the customer. But we weren't structured that way as it relates to the organizational model. So we're taking steps to reorganize into the way we've behaved since 1998, going with a model to streamline many of our back-office processes. We believe it will enable us to be easier to do business from a customer perspective.

Q: Will the customer see a major difference?

Labrie: Yes. In the past, the customer might not have had to deal with more than one of the three operating companies. But we had to navigate the back waters of our organizational structure, which added complexity to resolving issues and taking care of the customer. By organizing as one single company, we're going to streamline those processes, become more responsive to customers' needs, have a single operating execution approach and a single strategy, as opposed to three variations. That can make a big difference to customers.

Q: Will it allow you to get more pieces of an interregional move, where a customer might previously have used a non-Con-way trucker for part of the transit?

Labrie: No, that doesn't really change. We've always provided more direct service to second- and third-tier markets than any other carrier in the LTL marketplace. What it will allow us to do is to represent our regional, interregional and long-haul capabilities through this one single company and touchpoint with the customer. One truck can pick up any LTL shipment and move it anywhere throughout North America.

Q: How soon will that difference become evident to your customer base?

Labrie: It's already showing results. The things that were impacted were the back-office functions, like human resources, linehaul and pricing that were previously done in three locations.

Q: You've also been reaching out to partners outside your organization, such as your OceanGuaranteed service in conjunction with APL Logistics. How's that going?

Labrie: It's going great. We have a very neat product, and customers are telling us that as well. We've got a great partnership with APL Logistics. They're very pleased with how this new product has been accepted in the marketplace, as are we.

Q: Are you looking to expand that relationship?

Labrie: We are. We're going to be adding port locations to provide greater capability to our customers. Newark, New Jersey is an example of a location that will be coming on line very soon, and we are exploring other ways to expand that service capability.

Q: Are you giving thought to similar partnerships with other outside entities?

Labrie: No, we're not at this time. We're very pleased with the partnership with APL, and we're looking at ways to expand that. But we're not considering further expansion with other providers.

Q: What do customers want from you today?

Labrie: They tell us that on-time delivery reliability is the most important thing to them. That's followed by transit time and exception-free performance. Those are the three attributes of service that customers most care about. There are others as well, like geographic coverage, pickup time reliability, flexibility and the like.

Q: Some companies think they can save money by consolidating more product into truckloads. Does that present a new competitive challenge to LTL?

Labrie: No. Currently there are only two forms of legitimate options for our customers-truckload on the one end, and parcel on the other. But that's been the case for some time.

Q: Isn't there a certain amount of business overlap between LTL and truckload?

Labrie: Sure, but not in any way different than it has been historically.

Q: How is intermodal affecting your business?

Labrie: Transit time is so important to our customers that intermodal to this day does not offer a viable option to the type of transit times that we can provide over the road for our customers. It is not a threat to Con-way at this point.

Q: Is the driver shortage still a major issue for Con-way?

Labrie: It's not an issue for us, in the sense that relative to all truck driving jobs in the marketplace, Con-way jobs are some of the best available. We have been in the relatively luxurious position of not having to face some of the issues that other carriers in our industry, [such as] the truckload sector, have faced, with regard to driver availability.

Q: How do congestion and inadequate infrastructure affect your ability to get product to market in a timely manner?

Labrie: Infrastructure continues to be a concern. We believe that the country is under-investing in infrastructure, and the mechanics of how we invest are not as efficient as they should be. It's a challenge today in just about every major market that we operate in. And it's going to continue to be an issue for some time. There seems to be more discussion taking place, not just in the trucking industry, but across all industries. And there's a lot more awareness in Washington about this issue. I'm hopeful that as a country we're going to begin, not only to increase our investment in infrastructure, but also to attack the way that we allocate investment resources toward those areas that require the greatest investment. And we will reap the greatest return for it.

Q: Public concern about infrastructure often focuses on passenger traffic instead of freight. Do you see that as a problem?

Labrie: Certainly the infrastructure in this country serves both constituencies. As the biggest contributor from a tax standpoint, it's important for the trucking industry to have access to infrastructure. We can't help facilitate commerce if we don't have sufficient infrastructure to do it. More and more people are realizing that, and that's why I'm hopeful that we're going to see that situation improve in the coming years.

Q: What are your concerns about the security issue?

Labrie: My biggest concern is that we keep everything in perspective, and balance the need to protect the security needs of the country with the need to facilitate efficient commerce. To the extent that we optimize exclusively around security, we could do so at the expense of efficient commerce.

Q: What do you think the LTL industry is going to look like, five or 10 years from now?

Labrie: Customers are going to continue to expect more in the way of performance against the things that are important to them. The industry will continue to provide higher and higher service levels. It's sort of the table stakes for continuing to participate in this industry.