Con-way Truckload, drivers positioned to weather the storm
Freight volumes always slow in the first quarter, propelling drivers to look elsewhere for more miles and better pay. By all accounts, the first quarter of 2009 could be the most difficult period ever for freight carriers, regardless of size.
So finding and keeping drivers will be relatively easy this year, but keeping them and your assets productive and profitable will not. As the recession drags on, management of Con-way Truckload believes it has all the resources and flexibility it needs to stabilize freight supply and driver pay.
In 2007, when the economy showed signs of cooling off, Con-way acquired a large debt-free truckload carrier, Joplin, Mo.-based Contract Freighters Inc. (CFI). The move created a large Con-way Truckload fleet to complement the company’s existing strongholds in less-than-truckload and third-party logistics.
Besides gaining a regular, consistent supply of line-haul shipments from its sister LTL carrier, Con-way Freight, the truckload company gained more visibility to the $800 million of truckload shipments through Menlo Worldwide.
Being affiliated with Menlo Worldwide does not guarantee Con-way Truckload more freight, however. As separate profit centers, decisions made by both Con-way Truckload and Menlo must be mutually beneficial in terms of pricing and service. “The whole idea is not to drive up our sister company’s costs,” says Herb Schmidt, president of Con-way Truckload.
The primary focus for Con-way Truckload is to grow by servicing nonaffiliated customers, Schmidt says. Even so, with freight volumes tapering off from its own customers, it is harvesting more freight from Menlo. It is relatively easy for Con-way Truckload to offer more competitive rates and higher service levels for the portions of Menlo freight that fit specifically within its network to create dedicated runs and minimize empty miles, Schmidt says.
“That is the uniqueness of the synergy between us and our sister companies, Con-way and Menlo,” he says. “If we were not part of Con-way, we wouldn’t have that opportunity.”
Besides stabilizing freight, the acquisition has provided management with the flexibility to offer drivers better pay and more opportunity for advancement. Through soliciting input from more than 750 drivers in a series of driver forums in 2007, Con-way Truckload took the best features from the driver compensation packages offered by CFI and Con-way prior to the acquisition. The final blended pay package was implemented at the beginning of 2008.
In 2008, as part of the new pay package, drivers received a modest increase of $0.01 per mile and weekly pay schedules, among other benefits, at a time when few other carriers could afford to give raises, Schmidt says.Last May, Con-way also announced a driver career choice program for drivers of Con-way Truckload and Con-way Freight. After a period of years, truckload drivers can increase their earning power and home time by moving to an LTL job.
The acquisition and symbiotic relationship among the Con-way affiliates have turned out to be especially beneficial for drivers during the uncertainty of 2009. Even after the precipitous decline in freight volumes last November, “we are able to give drivers enough miles to what they were accustomed to in the past and get them home on a regular basis,” Schmidt says.
Solo drivers want a minimum of 2,500 miles a week, and team drivers want at least 1.7 times that many, he says. Each fleet manager monitors driver miles on a daily basis and makes it a priority to keep drivers moving to meet these standards.
In 2008, many trucking firms reduced fleet size as conditions deteriorated. Con-way Truckload added a net gain of 300 trucks. For 2009, Con-way Truckload does not plan on adding trucks to its fleet of 3,000 – but it does plan to keep them busy. “Freight volume is in good shape relative to our competitors,” Schmidt says. “If our trucks stay busy and productive, we are good to go when we are ready to add trucks again.”