Con-way Multimodal Hits its Stride

Portland, Oregon USA Site Visit

June 14, 2010

By

Evan Armstrong

Key Personnel:

Tyler Ellison – President, Con-way Multimodal

Greg Orr – Managing Director, Portland

David Dietrich – Managing Director, Ann Arbor

James Gibson – IT Director

Mark Boyer – Director of Operations

Christine Meade – Manager of Finance and Accounting

Con-way Multimodal Overview

Con-way Multimodal is the non-asset based transportation manager/freight brokerage operation under the Menlo Worldwide Logistics third-party logistics (3PL) operating umbrella. While 2009 U.S. Domestic Transportation Management 3PL market segment gross revenues were off -15.1% versus 2008*, Con-way Multimodal grew its top-line over 30% to $65 million. Its 103 person staff is split almost evenly between its Portland, OR and Ann Arbor, MI operations. Con-way Multimodal managed 46,793 shipments in 2009 and is on track to increase that number to over 60,000 shipments in 2010.

In addition to expanding its freight under management and gross revenue, Con-way Multimodal has been improving its gross and profitability margins year-over-year by expanding its transportation service offering. Its service offering to date has been concentrated on managing spot-market transactional transportation in intermodal rail and dry van, flatbed, and refrigerated truckload modes. Con-way Multimodal has also been rapidly expanding its management of LTL (less than truckload) and airfreight shipments. Its transactional “nuts-and-bolts” spot-market approach allowed Con-way Multimodal to avoid much of the margin pressure experienced by its peers earlier this year as carrier rates increased versus rates charged to shippers under transportation contracts. Now that the economy has bounced back, Con-way it looking to develop some longer-term contractual business and add additional value-added services such as increasing its support of customers’ cost reduction strategies through inbound and outbound transportation planning and mode selection. Con-way Multimodal’s first quarter shipment growth by mode is detailed in the table below.

Con-way Q1 Multimodal Shipment Growth

Con-way Multimodal has a very diverse customer base including well known brands such as: BAE Systems, Sony, and Emerson. However, its main focus continues to serve the mid-market customers. In addition, it supports Con-way Truckload's operations and Menlo Worldwide’s 3PL and 4PL operations as needed to ensure customer service requirements are met. Often this means handling shipments for customers that Con-way Truckload’s operations cannot handle due to network or modal constraints, or when Menlo has a specific transportation need that contract carriers are unable to meet. Con-way supported its group companies using this integrated approach to the tune of just under $10 million in revenue for 2009.

Information Technology Platform

Menlo’s I.T. group supports Con-way Multimodal and has a staff of approximately 150 plus an additional 70 “shared services” staff which it shares with other Con-way companies. Con-way Multimodal runs operations using a customized version on McLeod’s transportation management software (TMS). The customized TMS has significant additional “buy/sell” functionality and reporting to support the brokerage operations. Con-way Multimodal is increasing its systems capability to better support more value-added transportation services and to develop leading transportation market information to better trend customer needs and manage operating margins at the micro level by specific lane, mode, or day of week.

Con-way TweetLoad

Con-way Multimodal recently launched Con-way TweetLoad™. It helps connect carriers with transportation loads by leveraging the popular social network platform Twitter. Carriers can view available loads from Con-way Multimodal by following the company’s load tweets at www.twitter.com/ConwayTweetLoad. Available loads are updated every 15 minutes and links are provided to information on how to place a bid for a load. In addition to online computer access, carriers can also follow TweetLoad from mobile handheld devices allowing them to bid for loads while on the road.

Seasonal Transportation Management Case Study - Christmas Trees

Every year in the U.S. after Thanksgiving and up to the week of Christmas, Christmas tree growers Southwest of Portland, Oregon such as Holiday Tree Farms and Noble Mountain Tree Farm rely on transportation providers such as Con-way Multimodal to transport loads of Christmas trees to big-box retailers including: Wal-Mart, Home Depot, and Lowes.

Bound trees are picked up at the growers and stack loaded into Con-way Multimodal carriers’ trailers. The carrier then transports the trees to a nearby truck stop offering specialized ice blower services. 2,500 pounds of ice is blown into each trailer to ensure the trees stay fresh during transportation. The major lanes for Christmas trees grown in Oregon are to California, Texas, and the Northeast and Midwest U.S. In addition, some of the trees are transported to Mexico and Hawaii. Con-way Multimodal develops an optimal routing for each Christmas tree load. Each load has approximately three to four appointment deliveries and requires significant driver assist in unloading. Since most of the carriers are small, Con-way Multimodal manages transit status updates through its check call process. 

Summary

Con-way Multimodal has been extending the Con-way brand and is becoming a significant domestic transportation manager. It has grown by focusing on “nuts-and-bolts” spot-market transactional transportation management supporting its customers and related Con-way companies. We anticipate that it will continue to build its network and develop additional business by increasing its value-added service offering and systems capabilities.

*Source: Armstrong & Associates, Inc. Report "Restoration 3PL Market Analysis and 2010 Predictions".

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