For many years, Wall Street transportation analysts have viewed the major longhaul less-than-truckload (LTL) carriers with skepticism. The nation's shipping patterns were shifting toward regional distribution, and the analysts dismissed the carriers as dinosaurs.

But the carriers themselves are not quite so ready to declare themselves extinct. Each of the Big Four national LTLs has adopted strategies aimed at meeting shippers' demands for more responsive, more reliable, and faster service. Granted, those adaptations have not always come easily or swiftly to carriers operating huge networks and working under limitations placed on them by their national labor agreement with the International Brotherhood of Teamsters . In addition, they've faced competition in recent years from all sides: parcel carriers, truckload carriers, plus LTL multiregional carriers and large regional carrier groups that have gone after some of their longhaul traffic. And the current economic slowdown challenges the national LTLs as it does all transportation providers.

Even so, the big national carriers have rationalized their networks and improved their services over the last few years. At the same time, they have developed new services in response to growing shipper demands for regional, expedited, time-specific, international, and other offerings. Says James Welch, president and chief operating officer of Yellow Freight System , "We're working hard to grow those businesses in a hurry."

And the changes won't stop there. Bill Michael, vice president of marketing for Roadway Express , says that the pressure to control inventories that has spurred many supply chain management initiatives in manufacturing and warehousing is coming to transportation. "[Customers] want the freight to move quickly, they want it to be there on time, and they need less volatility on when it gets there," he says.

Pat Blake, chief executive officer of Consolidated Freightways , concurs. After taking the helm of the carrier, Blake conducted several focus groups with CF's customers, where three issues repeatedly came up. "Number one, and foremost," he says, "[was the need for] consistent service." Speed, he notes, was subsidiary to that. "Number two was invoice accuracy, and [customers] said none of us had good invoices. Third, they expect us to get it there damage-free and without shortages. Those are the basics of the LTL industry."

The Big Four traditionally longhaul carriers—Roadway Express, ABF Freight System, Yellow Freight, and Consolidated Freightways—should not be viewed as a monolithic segment of the trucking industry. Their leadership and strategies, while similar in some ways, diverge in important ways as well. Roadway Express and Yellow Freight, for instance, have more active international transportation businesses than the others, operated through alliances with global specialists. Consolidated Freightways operates a third-party contract logistics company, Redwood Systems , and an airfreight forwarder in addition to its LTL business. ABF Freight has emphasized its core LTL competency perhaps more than the others do, but its parent also operates regional and intermodal carrier businesses.

Nonetheless, all of these carriers have been continuously refining their networks over the last several years, becoming increasingly focused on where they will compete and where they will not. And they all appear to have set their sights on the regional carriers' business.

The regionals first made their mark with overnight service over lanes of up to several hundred miles, business for which the longhaul carriers are not organized to compete. David Stubblefield, president and chief executive officer of ABF Freight System Inc., for example, reports that his company attempted to compete in the next-day market after ABF acquired Carolina Freight System. "It would not work," he says. "Next-day service does not make sense for us." Consolidated Freightways had a similar experience. "We had been selling into the next-day market," says Blake, "and we were not real good at it."

Though they have conceded much of the next-day business to regional carriers, the longhaul LTLs have demonstrated a sharp interest in the medium–length-of-haul markets long dominated by the regionals. They have been actively developing systems and processes aimed directly at making themselves competitive in two-day lanes. The national LTLs see this segment as critical to their survival. "Where the test comes is in the two-day market," Stubblefield says. "Customers say the best [two-day] price and service package within their core carrier group makes that decision." Blake concurs. If you want to succeed as an LTL carrier, he says, "[y]ou damn well better offer regional two-day service."

And the carriers are backing up their statements with action. ABF Freight has developed a system of nine national distribution centers (DCs) plus a driver relay network aimed at reducing handling and ensuring shorter, more consistent transit times while minimizing its own linehaul costs. The distribution centers are located so that most of the nation's population falls within 500 miles of one of the DCs.

This month, Roadway implements what Bill Michael calls the largest reduction in standard transit times in the carrier's history. Under this initiative, Roadway Express is cutting what were formerly three- to four-day transit times on 20,000 lanes down to two- to three-day transit times. The carrier is also making operational changes to increase speed throughout its network. At the same time, it is introducing what it calls "enhanced regional service" from 18 regional hubs. Later, it will expand the program to satellite locations.

For its part, Yellow has opened four of what it calls "regional advantage hubs" to provide service akin to what a large regional provides. The first such hub opened in Cincinnati and was quickly followed by regional hubs in Buffalo, N.Y.; Nashville, Tenn.; and Charlotte, N.C. Yellow will open five more of these hubs this month. Though the carrier has opened new facilities, the key changes in its service are operational. For instance, longhaul drivers who had been based at distribution centers are now based at end-of-the-line terminals, which can process both regional and longhaul freight at the same time. "Having the longhaul drivers at the end-of-the-line terminals means we're quicker getting into the hubs," says Welch. "It's worked well." Consolidated Freightways, which of the Big Four national LTL carriers has faced the greatest market threats over the last couple of years, has focused hard on its core product. Blake says the company is bidding aggressively for shipments of between 300 and 15,000 pounds and in lanes from 500 to 1,500 miles long. And it's competing for freight on multiple-day lanes. "If people want to use us for next-day, under-500-mile movements, we'll take it," he says, "but we know it's not our strength." Instead, the carrier has, in Blake's words, "been working diligently" on intermediate–length-of-haul lanes.

CF has also invested heavily in new trailers with racking systems, a key to its 23-percent reduction in cargo claims. It has beefed up security efforts to reduce cargo theft as well. In addition, the carrier has a program under way to improve processes and cut costs in loading, pickup and delivery, and cross-docking operations. The program started at three locations and is being rolled out in stages to other sections of the country. The carrier also has instituted procedures to improve invoice accuracy.

Despite these new initiatives, the longhaul LTL carriers still have their work cut out for them. Successful regional carrier groups like those operated by Con-Way Transportation Services and USFreightways are attacking some of their core longhaul business. United Parcel Service has a long record of success with its Hundredweight program, which skims off some of the most profitable LTL freight.

On the labor front, the carriers still have nearly two years left on their contract with the Teamsters. It's likely that talks on a new pact will begin well in advance of the current contract's expiration date, but even those early talks are still months away.

For national LTL carriers, the real test for the operational, technical, and service changes implemented over the last several years is now upon them: The softening economy means falling freight volumes ... which could well translate into downward pressure on rates.