Con-way Freight to revamp operating network, close 40 service centers

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Con-way Freight on Monday, Nov. 3, announced a re-engineering of its operating network designed to help reduce service exceptions, improve on-time delivery and bring faster transit times to thousands of communities, while deploying a lower-cost, more efficient service center network better aligned to customer needs and business volumes.

“In study after study, customers have told us the service attributes most important to their business are exception-free delivery, reliable on-time service and fast transit times,” says John G. Labrie, president of Ann Arbor, Mich.-based Con-way Freight. “The prime objective of this effort was to create improvement opportunities in all three service performance factors, and to identify areas where we could reduce costs and gain efficiencies through better process design and asset deployment.”

Under the re-engineering effort — which utilized multidisciplinary teams, advanced simulation modeling technologies and evaluated many operational areas of the company — Con-way Freight is reducing its nationwide service center network by 40 locations. The freight from closing locations will be redistributed and balanced among more than 100 nearby service centers, with the company continuing 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, according to the company.

Changes also are being made to the nightly inter-city line-haul operation, where the company says new load planning, routing and scheduling programs will enable it to eliminate more than 124,000 miles per day from the system and increase the amount of freight that is direct-loaded from origin to destination. According to the company, reducing miles and eliminating rehandling through increased direct-loading are key factors in safety, on-time performance, faster transit times and exception-free delivery.

When the network changes are complete and fully operational in early December, Con-way Freight will operate 303 “brick and mortar” service centers in the United States and Canada, supported by 70 Freight Assembly Centers (FACs), or strategic re-ship points. In Con-way Freight’s day-definite service model, FACs operate at night and use the same physical facility as daytime pickup-and-delivery operations.

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Labrie says that unlike restructuring efforts at other companies, Con-way Freight is actually improving service while not exiting any markets. “Every customer and every community that receives direct service today from Con-way Freight will continue to receive direct service when our network change is complete,” he says. “We are simply balancing business volumes across a more strategic network footprint. It makes better use of available capacity and improves service with more efficient operations.”

The re-engineering plan, expected to reduce the company’s cost base by $30 million to $40 million annually, calls for a number of generally smaller locations to be consolidated into larger nearby facilities; as a result, more than 75 percent of affected employees at closing locations will have the opportunity to follow work to a new operating location. Affected employees also will have the opportunity to consider a transfer to any other Con-way Freight location where a position is available, according to the company; if an employee moves to a facility that is more than 50 miles from their current location, the company will pay relocation expenses.

Severance packages and career counseling assistance will be provided to those employees who are unable to remain with the company as a result of changes at their decisional business unit. Depending on the choices employees make, the company expects a net work force reduction nationwide of about one percent. In some communities, the effect of the operations change also will create new employment opportunities in addition to local work force growth from transfers, according to the company.

“These types of changes are never easy, but they are necessary for us to advance our mission to provide the best LTL service in the market,” Labrie says. “This is the right decision at the right time for Con-way Freight. It is one that ultimately will help ensure that we continue to provide stable careers for our employees, enhance shareholder value and improve industry-leading service for our customers as one of the most reliable, financially secure and efficient LTL carriers in the business.”