Last year was a disaster for the LTL segment of the freight industry. As business volumes contracted and YRC, one of the industry giants, teetered on the brink of bankruptcy, many LTL carriers sacrificed their pricing discipline in the hopes of gaining market share and driving YRC off the LTL road. Rather than reducing capacity to meet demand, a number of carriers used price as a weapon to increase volumes. Ultimately this strategy failed with the LTL sector posting the largest year/year decline in rate levels.

The North American economy is improving in 2010 but very slowly. YRC, with its debt for equity swap, has a new lease on life. This has driven many LTL carriers back to their board rooms in an effort to revise their strategies and rebuild their tattered financial statements. The broad outlines of these new strategies are now starting to take shape.

Douglas W. Stotlar, president and CEO of LTL carrier Con-way described his company‘s strategy as follows. “Our focus is on driving efficiencies into the network, building volume and improving yield.” This is likely a theme to be repeated by many LTL carriers this year. Here is what Con-way and some other leading LTL carriers are doing.

Matching Supply to the Reduced Demand

Con-way Freight is approaching the task of building network efficiency with a broad re-engineering of its network, slicing transit times between 460 destinations by reducing handling, and, in turn, building the density on its shortest, most direct routes that truckers say is critical to profit.

Faster Service to Expanded Service Areas, including Canada

Cross-border freight between Canada and the United States has long been one of the most profitable segments of the LTL industry. Holland, a YRC regional carrier, announced the availability of its enhanced next-day service reach between Toronto, Canada, and seven markets in the Midwest and reduced transit times on an additional five lanes in and out of Toronto for enhanced two-day service.

Holland is claiming that these service improvements give them the largest next-day footprint between Toronto and the Midwest, including new next-day service with Chicago, Joliet and Wheeling, Ill., Cincinnati; Huntington, W.Va., and Indianapolis. With its expanded next-day service footprint, the company can also deliver enhanced two-day service to Joplin, Springfield and Kansas City, Mo., Memphis, Tenn., and Worthington, Minn., shaving a day off transit times to these markets.

UPS Freight is speeding freight across the Canadian border by stretching its two-day delivery network from Toronto and Montreal as far south as St. Louis, Mo., and Atlanta. The new two-day transit times include Montreal to Milwaukee, Rockford, Ill., and St. Louis. Also, Toronto now provides two-day service to key markets in Georgia and North and South Carolina to include Atlanta, Augusta, Charlotte, Charleston and Savannah.

Pricing Precision

Across the LTL industry, carriers are retreating from rate discounting that slashed profits last year, signalling a truce, at least, in the industry’s rate wars as they try to build a more profitable business. For Con-way, that means pruning unprofitable business from its books, customer by customer.

LTL carriers are also seeking general rate increases (GRI’s) on their non-contracted business. Con-way and FedEx have both signalled that they are seeking rate increases of 5.9 percent while Old Dominion is asking for 4.4 percent. Con-way has indicated that their GRI, implemented on Jan. 4 has held “pretty well.” The GRI applies to about 30 percent of Con-way Freight’s customer base. “We’ve seen volume maintained at 2009 levels for that segment, and we have not been negotiating price with that segment of customer,” stated John Labrie, President of Con-way Freight. For the other 70 percent, “We’re going through the book of business account by account.”

Bolstering Sales Teams

Con-way Freight is starting 2010 by strengthening its sales organization by appointing five sales managers — including three recruited from rival YRC Worldwide — to lead new regions in the South, Mid-Atlantic, and Mid¬west and Great Plains states. UPS Freight named Allan Robison, former president of Canadian carrier YRC Reimer, Vice President of Sales in Canada.

Improving Asset Utilization

One of the unique elements of LTL operations is the requirement to have geographically dispersed freight terminals. Rather than just use these facilities for local cross-dock and distribution, LTL carriers in 2010 are seeking to make better use of their assets. Carriers such as Midwest Motor Express and New England Motor Freight are making their terminals into bonded warehouses and receiving container loads of freight from overseas which they can strip and load into their LTL peddle runs.

Evolution of 3PL Services

Most LTL carriers have seen the 3PL industry become the point of contact with many of their clients. This has caused a number of companies to expand their skill sets, service portfolios and information processing capabilities. These skills and tools are allowing them to provide a more holistic logistics plan for their customers. Some LTL carriers have begun to gain recognition for their enhanced IT capabilities. Con-way Freight, YRC, Old Dominion and Pitt Ohio Express all made the 2009 Information Week 500 list.

Going Global

Con-way has been one of the leaders forming alliances with APL Logistics and TNT Express. The APL partnership focuses on inbound ocean freight from Asia to the United States while the TNT alliance is geared to streamlining combined air and ground logistics between the European Union and the U.S.

Clearly the LTL industry is going back to the basics in an effort to improve profits. Cost decreases, rate increases, improving the sales force, transit time improvements and new service offerings are some of the tools being employed to improve financial performance in 2010.