Editorial: Creative Destruction and Trucking
The once mighty Consolidated Freightways is drifting deeper into history and obscurity with the announcement of the $3 billion merger involving its corporate descendant, Con-way Inc., and new kid on the block XPO Logistics.
That venerable Con-way — No. 4 on the Transport Topics Top 100 list of for-hire carriers in the United States and Canada — would be part of an acquisition is not surprising. The eye-grabbing part is that XPO is doing the buying.
Consolidated Freightways was founded in 1929 by Leland James, a clever man who decided to build his own trucks when the market didn’t offer him what he really wanted. The manufacturing venture created to help his trucking company is Freightliner Trucks.
In contrast, XPO was founded in 1989 as Express-1 Expedited Solutions. It did well as a small transportation provider traded under the symbol XPO.
In 2011, investor Bradley Jacobs purchased a controlling interest in the company so he could enter freight transportation. Revenue has boomed through acquisitions although profits haven’t followed so far, but investment bank Morgan Stanley is backing the deal with $2 billion.
This is an example of what economist Joseph Schumpeter provocatively called “creative destruction.” New and interesting developments in capitalism are born by shredding and demolishing treasured old standards.
Streaming video is pushing aside Blu-rays and DVDs, which buried VCRs, which took a big bite out of network television and movie theaters — and there’s doubtlessly a chain going back to epic poems in ancient Greece.
Not only is this seen in the structuring of financial assets but even more impressively in the technology people use to run their companies.
For example, dedicated short-range communication is seeping into trucking as part of highways that talk to trucks and a method for trucks and other vehicles to communicate with each other. Dedicated short-range communication is also a critical component of truck platooning, which equipment makers say is coming soon.
Freight transportation is an ancient part of the economy, and the industry is still changing profoundly and rapidly.
On Sept. 16, a ttnews.com LiveOnWeb program will look at the world’s 50 largest freight firms and how they’re trying to expand and thrive by invading each other’s product lines and territories. That’s a preview of a special feature in our next issue.
All of these changes involve pain, often lots of it, when old, accomplished firms are forced to change drastically or perish.
