Con-way Restructure Promises Improvements

In announcing a major re-engineering of its operating network, Con-way Freight suggests it will reduce service exceptions, improve on-time delivery and provide faster transit times in many lanes.

Terming the re-engineering a strategy-led initiative, John Labrie, CEO of Con-way Freight, said the re-engineering would not have been possible without the organizational changes the company made roughly a year ago. At that time, Con-way moved from being three operating companies and a holding company to become a single operating company. “We have a real advantage to offer customers in that regardless of what their needs are, or where they are in North America, they are supported in dealing with Con-way Freight through a single network and a single pick-up and delivery driver,” said Labrie, contrasting that structure with competitors who provide “the same set of capabilities to customers through multiple networks.

“We didn't have a single company strategy and didn't run a single network,” he said of the previous structure. “We ran three networks. We had a common approach to running those three networks, but we ran three networks nonetheless.”

Reiterating the language that dominated the announcement, Labrie said, “We will improve our exception-free handling, our on-time performance and our industry-leading fast transit times as a result of this.”

In addition to the customer focus Labrie stresses, Con-way benefits from improved efficiency and reduced waste. The re-engineering will help Con-way eliminate more than 124,000 miles per day from its system allowing it to reduce fuel consumption by 4.6 million gallons in 2009.

Con-way remains committed to its long-haul less-than-truckload (LTL) business and sees the same benefits extending to that segment. Though 80% of the shipments it handles are overnight or second day and the company has always been regionally focused, Labrie says its use of one system to handle LTL freight means consistent performance regardless of where in North America the freight originates or where it is delivered.

Asked what impact the changes have on the OceanGuaranteed service Con-way operates in partnership with APL Logistics, Labrie said, “This does nothing but enhance the capability of that product.”

Actual changes resulting from the effort include closing 40 service centers. The freight from those facilities will be redistributed and balanced among more than 100 nearby service centers, said the Con-way announcement. The company says it will continue to provide service to all markets. “Consolidating volumes more strategically among fewer locations increases network density and enables improvements in both service performance and operational efficiency,” Con-way's announcement stated.

Nightly inter-city line haul operations will also experience some changes as new load planning and routing and scheduling programs enable the company to eliminate miles and increase the amount of freight that is direct-loaded from origin to destination.

The re-engineering is expected to reduce Con-way's cost base by $30 million to $40 million per year. It calls for a number of smaller locations to be consolidated into larger nearby facilities. Con-way estimates that 75% of the affected employees will have an opportunity to consider transfer to another Con-way Freight location.
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