USFreightways: An Integration Success

For much of the past decade, shippers’ efforts to channel their freight to a smaller number of carriers as a cost-saving measure has driven consolidation in trucking. Mergers and acquisitions rule the carrier industry.

The forces of change do not stop there. Shippers also want those fewer carriers to provide more services, and that is spurring another important trend — the integration of trucking with a wide variety of other transportation, warehousing and logistics services.

Examples of successful consolidation abound, but integration successes are few. Companies have found it far more difficult to combine an assortment of service offerings, such as less-than-truckload, truckload, logistics and freight forwarding, than to merge two similar trucking operations.

One company that has become a diversified provider with much success is USFreightways Corp.

From a core of regional less-than-truckload carriers assembled in the 1980s, USFreightways has added a panoply of logistics services, all of which are profitable and rapidly growing. It also has expanded the blend with the recent acquisition of two freight forwarders, a regional dry van truckload carrier and a company specializing in reverse logistics.

While attempts at such diversification have tripped up a number of other trucking companies in recent years, the Illinois-based corporation hasn’t skipped a beat. It had a banner year in 1998, with profits jumping 26.3% to $71.4 million and revenue climbing 17.2% to top $1.83 billion. The financial picture for 1999 is expected to be even better.

USFreightways’ integration strategy, as explained by Chairman John Campbell “Cam” Carruth, is to be a one-stop provider of freight services.

I>For the full story, see the August 9 print edition of Transport Topics. Subscribe today.