ABF Eyes Acquisition, New Services, Incoming President Slagle Says

ATLANTA — ABF Freight System is evaluating the addition of new service offerings and a possible acquisition at the corporate level, the incoming president of the less-than-truckload carrier said here last week.

Roy Slagle, who will become president of ABF on Jan. 1, outlined a corporate process called the Horizon Growth Initiative that includes top officials at parent Arkansas Best Corp. such as CEO Judith Mc-Reynolds. Slagle, who spoke at an industry meeting here, was selected in September to succeed Wes Kemp, who will retire on Dec. 31 after 43 years with the company.

The company’s initiative, which has no publicly announced timetable for completion, reflects a broader set of service offerings that Slagle has said ABF is evaluating as he prepares to take over his new post (10-10, p. 5).

“The idea . . . is to have a systematic approach to creating new initiatives and evaluating some ideas and then make decisions as to which ones to pursue,” he said. “There are several initiatives we are looking at.”

“We now consider ourselves a global supply-chain provider,” said Slagle, who spoke on Nov. 14, shortly after ABF announced its latest diversification of services, called “Ocean LTL,” which targets manufacturers in China, Hong Kong and Taiwan.

“Our people will monitor a customer’s freight from the factory floor in China to the customer’s dock,” he said.

ABF is using multiple ocean carriers in conjunction with its federal authority as a non-vessel-operating common carrier, or NVOCC, to manage the service.

The new service is intended to be faster than competitors and offer customers the capability to reroute shipments and change order fulfillment strategies while the cargo is being moved to the United States.

ABF began to diversify from a national LTL provider in 2006, with the development of regional service. The company now handles more regional shipments than longhaul freight.

“We challenge our sales force to talk with customers about their needs, objectives and problems and our capabilities,” said Slagle. This strategy is working well, he added.

Slagle said new logistics-related services are growing faster than traditional LTL freight.

In addition to NVOCC service and traditional trucking, ABF offers expedited, relocation and brokerage services. Part of its offerings will include an intermodal service focused on the truckload market, Slagle said.

Speaking about capital investment plans for next year, Slagle said, “We have the dry powder to invest.” ABF said it had more than $137 million in cash at the end of the third quarter.

“Right now, business is bumping along pretty flat,” he said. “When it comes back, we will be ready to act.”

He also noted ABF’s progress in the current freight market, with two consecutive quarters of profits. In the third quarter, ABF earned $12.3 million and lowered its operating ratio by 4.5 percentage points to 96.1.

Slagle also was asked about the prospect of new wage talks in light of the 15% wage cut and other concessions, below terms of the National Master Freight Agreement that the Teamsters union gave to LTL rival YRC Worldwide. That labor contract expires in 2013.

He responded by noting that the issue currently is the subject of a federal court case that was filed by ABF last year and remains under review at the U.S. District Court level.

“If anyone were to approach us about a [wage] discussion, we would certainly listen,” he said. “There are no active talks now.”

He spoke during a meeting that included the Intermodal Association of North America, the National Industrial Transportation League and the Transportation Intermediaries Association.