February 18, 2011

ABF head: Company benefiting from "confusion"' over new FedEx Freight service

FedEx disputes claims of customer dissatisfaction, calls shipper response "positive."

By Mark B. Solomon

The president and CEO of Arkansas Best Corp., the parent of less-than-truckload (LTL) carrier ABF Freight System, hinted that ABF has been taking market share from FedEx Freight since the FedEx unit rolled out its revamped service last month.

Speaking Wednesday at the Stifel, Nicolaus & Co. transportation and logistics conference in Key Biscayne, Fla., Judy R. McReynolds said ABF is "seeing an increased level of activity coming to us due to confusion" among FedEx Freight customers about the operational changes there. She didn't disclose specifics about market share gains.

On Jan. 31, FedEx Freight, FedEx's LTL unit, introduced an integrated network that combines the unit's regional and national operations. The revamp includes a "priority" service with deliveries in two days or less, and an "economy" service with deliveries in three days.

Ken Van Guilder, a FedEx Freight spokesman, disputed the notion that customers were dissatisfied with the new operation. "Our integration has gone well, and customer response has been positive," he said.

For five years, Fort Smith, Ark.-based ABF has operated a dual-system network for regional and long-haul deliveries. ABF launched its regional network in March 2006 along the Eastern Seaboard and expanded it in September 2008 to the eastern two-thirds of the United States. Next month, ABF plans to launch regional service in the western United States, effectively completing a nationwide build-out of a regional network to augment its national service.

McReynolds said 61 percent of ABF's 2010 tonnage moved in two days or less, with the remaining 39 percent moving in three days or more on its national network. By contrast, in 2005, only 30 percent of ABF's freight was delivered in two days or less, she said.

McReynolds estimated that ABF controls about 3 percent of revenue and 2 percent of tonnage in the $19 billion-a-year regional LTL market.

McReynolds echoed comments made by other LTL executives at the conference that tonnage is increasing, rate increases are sticking, and yields—measured in revenue per hundredweight—are rising. ABF implemented a 5.9-percent general rate increase at the beginning of October, its second rate increase of 2010.

Through mid-February, ABF reported a 12.7-percent year-over-year increase in tonnage, McReynolds said. The increase would have been closer to 15 percent had it not been for the impact of severe winter weather, she said.

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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