FedEx Freight officially rolls out national LTL service

Jeff Berman, Senior Editor -- Logistics Management, 2/5/2007

MEMPHIS, Tenn.—FedEx today officially launched its new long-haul, less-than-truckload (LTL) service, FedEx National LTL.

This announcement follows the company’s $780 million cash purchase of Watkins Motor Lines and Watkins Canada Express, which was made official in September. Along with the rollout of FedEx National LTL, the company also said it now has direct LTL service in Canada, with FedEx Freight Canada. The corporate headquarters for FedEx National LTL will be in Lakeland, Florida, which is Watkins’ original location.

When FedEx first announced it had made a definitive agreement to acquire the assets of Watkins last May, Frederick W. Smith, FedEx CEO and president, said it would provide its customers with additional reliable long-haul service, which he said customers had been requesting, along with access to reliable, cost-effective, long-haul service.

Douglas G. Duncan, president and CEO of FedEx Freight, told Logistics Management earlier today that shippers can expect to see a very high level of long-haul service reliability as a major result of this acquisition.

“There is a substantial part of the long-haul market that needs absolute reliability,” said Duncan. “With such fast logistics cycles today, variability on the delivery side is unacceptable. Many times in the long-haul market, shippers are more concerned with value than the absolute speed of a product. At FedEx Freight, we have an expedited product already that already crosses the entire country, but it is expedited at a premium price. What customers told us over and over is that we needed long-haul service not just with reliability, but also with more value and speed.”

This customer feedback, said Duncan, is what drove FedEx to make a play for Watkins. Since the acquisition became official in September, Duncan said FedEx has been working feverishly to get the company’s information technology systems integrated, including creating a new company Web site and re-engineering the FedEx National LTL network to deliver on the company’s promise of reliability at the best possible cost.

After the acquisition was completed, FedEx hired approximately 9,000 former Watkins employees, including drivers, freight handlers, terminal managers, and sales and marketing personnel, among others.

In terms of how this acquisition will better serve FedEx against its competition, Duncan said the company is able to present a different value proposition to its customers.

“We are giving them a choice with their long-haul [LTL] networks,” said Duncan. “They can now choose to have freight expedited at a premium cost or get absolute reliability with a better value. This shows that we are not a one-trick pony in this regard. We are letting customers buy only what they need to fit the specific needs of their supply chains."