ArcBest takes diversification route

ArcBest Corp., parent of ABF Freight (No. 7 on the LM Top 25 LTL list), is undertaking the biggest transformation in the company’s 94-year history.

When Judy McReynolds took over as board chairman last year, she began accelerating ArcBest’s move away from its traditional, unionized LTL operation into a new, more diversified approach to transportation.

As recently as 2009, ABF produced as much as 93% of its parent company’s revenue. Last year, that share was 70%. According to ArcBest’s internal projections, the goal is a 50/50 split between asset and non-asset based services within a decade.

Its goal, according to projections given at a recent investor conference, is to become “one fully-integrated logistics enterprise” involving as many as four operating units including managed transportation (ABF, truckload, ocean and warehousing), ground expedited (including its Premier and Panther expedited units), moving (U-Pack) and maintenance and repair (including FleetNet).

ArcBest’s plan would seem to follow the successful diversification strategy of industry leader Old Dominion Freight Line (ODFL), No. 3 on our LTL list. ODFL made a conscious strategic management decision more than 15 years ago to diversify away from being simply a Southeast regional LTL carrier into a multi-regional, multi-modal “solutions oriented” carrier that’s now posting industry-leading operating ratios in the mid-80s.