Truckers move fast to capture lucrative business

As demand for premium time-definite services continues to grow, more carriers are jumping in to serve this lucrative market.

By Karen Thuermer -- Logistics Management, 2/1/1999

Andy Nolan of Chattanooga Tent Co. had a problem. A religious organization had purchased a 60- by 150-foot tent from his Chattanooga, Tenn.-based company to use for a revival in New York City. On the first night of the revival, an organ caught fire and destroyed a 30- by 60-foot section of the tent. With 1,500 people attending and rain threatening, the damaged section needed to be replaced immediately. Nolan had to do something and do it very fast. He contacted Roberts Express, which delivered the replacement section overnight after driving 837 miles from Chattanooga to the Bronx. The new section of the tent was raised in time for the celebration to continue without interruption.

In today's world of production emergencies and just-in-time (JIT) manufacturing, Nolan's story is not unusual. Individuals, companies, and manufacturers need and expect extremely fast service and on-time delivery. And although many shippers might automatically think of air freight when they're in a hurry, more and more are coming to depend on expedited ground service as a viable alternative. That's no surprise to expedited truckers; depending on the distance and delivery requirements, they claim, their services often are faster and less expensive than heavy air freight.

As a result, this relatively new industry segment is booming. Brian Lagana, executive director of the Air and Expedited Motor Carriers Conference of the American Trucking Associations (ATA) in Alexandria, Va., attributes this boom to the growth in JIT manufacturing, sales, and distribution. "A lot of companies are getting away from warehousing and the costs associated with it," says Lagana. "Many have found that it's cheaper to use an expedited service [instead]." He finds this to be the case for local service companies such as florists as well as for large manufacturers like General Motors.

On Time, On Demand

Expedited service essentially means on-demand pickup and delivery of shipments. Trucks--ranging in size from a minivan to a tractor-trailer, depending on the customer's need--pick up and deliver shipments of any size or weight, point to point with no transfers. All expedited trucking companies provide 24-hour, seven-day-a-week service. On-time delivery is guaranteed, and there usually is some kind of refund if the carrier fails to meet its delivery commitment.

Under expedited service, freight is not commingled with that of other customers (although some less-than-truckload carriers also offer guaranteed expedited service within the framework of their standard LTL handling systems). Most expedited carriers also use satellite or some other form of electronic tracking as well as two-way communication to monitor service quality and keep customers informed of potential problems.

Expedited service is not new to the trucking industry. Akron, Ohio-based Roberts Express, the pioneer in the industry, has been in business since 1980. Now a subsidiary of FedEx parent FDX Corp., the carrier started out with just five vehicles and operating authority in six U.S. states. Today, the company's independent contractors operate a fleet of nearly 1,700 vehicles and provide service through a network of 150 "ExpressCenters" in the United States and Canada, plus 30 in Western Europe.

That kind of growth has attracted attention from competitors. Roberts now has a lot of company in this lucrative business.

The competition has indeed become more intense in the last couple of years, says Edward Mortiz, marketing director for Con-Way Transportation Services Inc.'s expedited service, Con-Way NOW. "Three or four years ago, there were only a handful of major companies in the business. Now this type of service has grown immensely ...."

Among the newest players to enter the expedited transportation field is ABF Freight System Inc. of Fort Smith, Ark. ABF now offers a guaranteed service it calls "TimeKeeper." TimeKeeper, an adjunct to ABF's standard LTL service, promises to deliver shipments by the day and hour to which the carrier committed or shipments are free. Another new entrant is Watkins Motor Lines of Lakeland, Fla. The LTL carrier's "Almost Air" guaranteed service specializes in emergency less-than-truckload and trailerload shipments.

Yellow Freight of Overland Park, Kan., began offering its "Exact Express" expedited air and ground delivery in July. Exact Express provides three levels of emergency, expedited, and time-definite service: day-specific, by-noon, and hour-specific deliveries. "Hour-specific" delivery guarantees delivery within one hour of the specified time.

"We spent a year designing the program before introducing it," says representative Kent Politsch. The LTL carrier, he explains, decided to offer Exact Express, which replaces a less-sophisticated service the carrier had previously offered, after receiving some 10,000 requests from customers.

Similarly, Emery Worldwide's "Emery Expedite!," which began in 1995, was launched after scores of customers asked for same-day expedited trucking service, says David Quin, vice president and managing director. Today, the company offers door-to-door, non-stop, dedicated ground transportation as well as next-flight-out and North American and international air-charter service.

Because Emery is best known for its airfreight service, Quin is quick to point out that Emery Expedite! is a separate company. "When we fly shipments, [they] are not necessarily flown on Emery planes," he says. Whichever air carrier can provide the best service and rates, he adds, will get Emery Expedite!'s business.

Con-Way NOW was launched in 1996 and now operates in 48 states plus Canada. Con-Way NOW uses contract drivers positioned in strategic points in the Central States, Northeast, and Southeast to make time-definite deliveries to any place in the continental United States and Canada.

Through its "Time-Critical" service, LTL carrier Roadway Express offers its customers the choices of next-day, second-day, and third-day delivery. Within that framework, customers can choose from two levels of service: exclusive use of a vehicle with time-specific delivery, or priority service, which moves shipments quickly through the carrier's LTL network, says Kim Butler, Roadway's marketing manager for expedited services.

In 1997, Consolidated Freightways, which had been offering time-definite ground transportation under its PrimeTime label since 1992, launched CF PrimeTime Air. The service provides time-definite domestic and international airfreight forwarding services as well as expedited ground transportation. PrimeTime Air also offers special services, such as next-flight-out and emergency charters.

"Many of our customers ... live and die [by] having deliveries by production time," says Steve Redmond, director of CF PrimeTime Air. As a result, the company has focused its efforts on consistent, predictable, tailor-made service. "We let the customer pick the service level [that meets] its need," Redmond says. Only after that decision has been made, he says, does his company determine the mode of transportation.

In response to increased demand for just-in-time solutions in Mexico, CF recently introduced PrimeTime Air to that market. Customers now can choose from one- to seven-day, door-to-door delivery, next-flight-out, and emergency charter service. "CF is the first and only LTL carrier to guarantee premium air and ground service in and out of Mexico," says Brian Hickert, manager of CF's Mexico/Border Division.

Satisfaction Guaranteed

Perhaps the greatest attractions expedited services hold for shippers are their service guarantees that cover both pickup and delivery. Roberts Express, for example, guarantees that it will pick up shipments in less than 90 minutes if they are located within 25 miles of an ExpressCenter, and in less than two hours within a 26- to 50-mile radius of an ExpressCenter, says Joel Childs, vice president of marketing.

According to Childs, Roberts delivers more than 96 percent of its shipments within 15 minutes of the promised time. And the remaining 4 percent? "If a shipment is more than two hours late, the consignee receives a 25-percent refund. If it is more than four hours late, the consignee receives a 50-percent refund," he says.

A number of other expedited carriers also offer full or partial refunds, but some are going even further. Roadway Express, for example, won't even issue an invoice if a Time-Critical shipment is late. "If you request that your shipment be somewhere at 11 a.m. and it arrives at 11:02 a.m., the shipment is free," says Butler. That rarely happens, she says. To date, Roadway has maintained a 99.6-percent success rate. Roadway offers the same guarantee for its new "Precision Delivery" product, which provides guaranteed delivery by a specific time but is not an expedited service.

Yellow Freight's Exact Express also offers a 100-percent satisfaction guarantee and no invoice, rather than a money-back guarantee. "In doing interviews and holding focus groups we found that money-back guarantees were not satisfying. Customers want us to be proactive," says Politsch.

Future Growth Prospects

Some industry analysts expect that this industry segment will continue to grow at an impressive rate. Pittsburgh-based SJ Consulting Group, for example, conservatively estimates that the expedited, time-definite trucking business currently is worth some $2 billion a year. The Colography Group, a Marietta, Ga.-based consulting and research firm, values the business at $20 billion and projects that growth of up to 10 percent a year will continue through the year 2000.

ATA's Lagana, however, places the growth rate in the 3- to 5-percent range. "Given demand for the service, I predict it will continue to grow, but probably not as greatly as in past years," he says. He believes that the greatest growth potential for expedited service will be in Western Europe, as that continent comes out of its recession and business begins to boom.

Carriers also believe demand for expedited service will continue to grow because it is so flexible. "[This] is a needs-based solution in transportation," says Childs of Roberts Express.

Another factor fueling expedited transportation's growth is that it meets needs that have grown out of permanent changes in the way U.S. manufacturers operate, such as just-in-time manufacturing. Says Con-Way's Mortiz: "The use of JIT by manufacturers is greater than we ever expected." Thanks to JIT and other competitive manufacturing strategies, in fact, demand has become so strong that major motor carriers are finding that expedited transportation is a segment they can't afford to ignore.

Karen Thuermer writes frequently on transportation services.