Con-way Multimodal Taps Multiple Channels to Fuel Growth
Portland, Oregon USA
March 7, 2013
Tommy Barnes, President
Angela Ridge, Senior Manager Operations of L&D
Charles Minarsich, Senior Operations Manager
Con-way Multimodal Overview
While its name says Con-way, non-asset based transportation manager Con-way Multimodal is actually part of $1.7 billion global third-party logistics provider Menlo Worldwide Logistics (Menlo). It was founded in 2008 from the previous freight brokerage operation of expedited carrier Con-way NOW. Since 2010, Con-way Multimodal has grown rapidly through increased work supporting Con-way affiliate companies (Menlo, Con-way Freight and Con-way Truckload) in addition to developing new customers such as Cooper Industries and Skyline Steel. Its core service offering includes managing transportation for multiple truckload modes (dry van, refrigerated, flatbed, bulk, and specialized), intermodal and LTL (less-than-truckload) shipments.
Con-way Multimodal has a staff of 145 operating from four offices: Portland, OR; Bentonville, AR; Dallas, TX, and Ann Arbor, MI and is planning to launch internationally this year. It finished 2011 with top-line revenue of $132 million and ended 2012 with $176 million in gross revenue and approximately $25 million in net revenue. Con-way Multimodal projects growing its annual gross and net revenues by over 26% year-over-year from 2010–2015, while maintaining an above industry average gross margin of over 17%.
Con-way Multimodal’s Gross Revenue Growth Trajectory
In terms of individual revenues, Con-way Multimodal is a mid-market domestic transportation management 3PL. However, it gains a significant competitive advantage by leveraging the aggregate $2.4 billion in annual purchased transportation/freight under management from all affiliated Con-way companies in securing competitive transportation rates for customers.
Operationally, most Con-way Multimodal freight brokerage activity is managed using an “eat-what-you-kill” model where the broker that gets a load to cover from a shipper also secures the required carrier capacity. For larger customers and affiliates, Con-way Multimodal uses a split “buy/sell side” model. Within customer teams, members are split and focused either on working with customers on loads, or finding carrier capacity. Like its parent Menlo, Con-way Multimodal operates in a “Lean” management culture focused on process improvement and operational effectiveness.
To support its growth, Con-way Multimodal spent the last three years developing and refining its new-hire freight broker training program. In August 2011, Con-way Multimodal kicked off the first class of its internal Broker Certification Program. What was originally scoped as a sales training initiative evolved into a 12-month operations and sales training certification program. The program consists of an initial three-week classroom training session covering topics such as: customer service, transportation modes, Con-way Multimodal’s service offering, transportation equipment types, carrier qualifying and sourcing, transportation pricing, transportation management systems, and mode conversion. Then, each broker’s education continues through their first full 12 months of “hands on” work. Mentors and coaches focus on improving each broker’s overall knowledge of the industry, company, operations and sales, while filling gaps to further develop broker’s customer service skills and provide support to increase each brokers ability to attain sales goals.
The implementation of the Broker Certification Program has improved Con-way Multimodal’s aptitude in attracting and retaining quality brokers. Current broker retention is 74%. The program was designed, built and deployed through a Lean principled approach. The foundation of the training program utilizes an experiential instructional design method which ensures immediate application during day-to-day operations.
Forty-one percent of Con-way Multimodal’s net revenues are generated through its work supporting affiliated Con-way companies (Menlo, Con-way Freight and Con-way Truckload). How Con-way Multimodal supports Con-way Freight is an example of its affiliated company work.
As part of its LTL network, Con-way Freight utilizes outside contract carriers for additional linehaul truckload capacity. In mid-2009, Con-way Multimodal began supporting Con-way Freight’s central linehaul dispatch team. Con-way Freight posts available loads on its website, and Con-way Multimodal has four staff members bidding against other transportation providers for the business. Through this bidding process, Con-way Multimodal is securing and managing approximately 2,500 linehaul truckloads for Con-way Freight annually. Five Con-way Multimodal service coordinators work with Con-way Freight on the linehaul moves. Service requirements are considerable; the average lead time from winning a bid for a linehaul move, to having a truckload carrier available to pick up a Con-way Freight load, is four hours. For deliveries, Con-way Multimodal must hit appointed delivery times within 15 minutes. If a load is delivered beyond the 15-minute window, it is late. To date, Con-way Multimodal is running at 96.8% on-time performance.
In February, Con-way Truckload and Con-way Multimodal announced the launch of a new North American intermodal product. The new intermodal service will be managed using a “control tower” approach by Con-way Multimodal and will leverage Con-way Truckload’s U.S.-Canadian network and its CFI Logistica Mexican subsidiary. CFI Logistica has long-established infrastructure in Mexico with 10 Mexican offices and an extensive drayage network. Combined, the offering boasts 2,700 tractors and 8,800 total trailers and has more than 2,300 trailers operating in Mexico. For rail capacity, the new intermodal service is working with all major Class 1 railroads.
Con-way Multimodal supports Menlo’s customer the U.S. Department of Defense (DOD) through its U.S. Transportation Command DTCI (Defense Transportation Coordination Initiative). Con-way Multimodal works with Menlo in covering urgent spot market loads. They have included shipments of Humvies, rocket launchers, Chinook helicopters, boats, and other military equipment. When Menlo gets a load tender from the DOD, it has eight operating hours to accept a load and specify which carrier will be making the pickup. If Menlo cannot cover the load with its contract carrier base, it turns to Con-way Multimodal to secure carrier capacity. Often Con-way Multimodal receives a carrier request from Menlo with less than a six-hour window. The Con-way Multimodal DOD team has a staff of six based in the Portland, Oregon office and it utilizes two field operations agents. The Portland team has three members focused on carrier procurement and three for customer service. In the first three quarters of 2012, the Portland team managed 760 loads per month of which most were specialized truckload shipments. To date, Con-way Multimodal has provided Menlo and the DOD with 97.8% on-time service.
In addition to its affiliate business, Con-way Multimodal has been developing business from key customer accounts including: Chevron, Johnson Controls, Bandag and Scholastic Book.
Operationally, Con-way Multimodal also benefits from leveraging the Con-way Enterprise Services IT group with a staff of over 400. For operations, it uses a customized version of McLeod’s transportation management software (TMS). The customized TMS has significant customer LTL and truckload rating tools and reporting capabilities. Con-way Multimodal has also built in new mobile functionality which will produce real time rating to field based hand held devices. In addition, Con-way Multimodal has built out additional “buy/sell” functionality to support its brokerage operations.
Samuel Shapiro & Company – Con-way Multimodal Case Study
Samuel Shapiro & Company is a 97-year-old import/export management company based in Baltimore, MD. In 2007, Con-way Multimodal reached out to its organization and began developing a relationship. Later that year, Samuel Shapiro & Company offered Con-way Multimodal a single opportunity moving tile daily from Houston to Dallas, Texas. After proving itself through solid service performance levels, Con-way Multimodal was offered additional shipment volumes in this single lane.
From there, additional transportation management opportunities were provided to Con-way Multimodal from Samuel Shapiro & Company’s domestic offices and shipping locations. These opportunities have a mix of transportation management requirements and require top-notch service performance levels at competitive pricing. Samuel Shapiro takes advantage of Con-way Multimodal’s capabilities across multiple modes of transportation. This has included dry van, flatbed, refrigerated, drayage, intermodal and LTL shipments at standard and expedited service levels.
Con-way Multimodal and Samuel Shapiro & Company have built a solid relationship based upon high service levels, open communication, and the willingness to work jointly towards common goals. The strength of their relationship is reflected in the growth of Con-way Multimodal’s volumes with Samuel Shapiro & Company. Volumes have grown from approximately 2,300 shipments per month in 2011 to approximately 3,400 shipments per month in 2013.
Con-way Multimodal Operations Summary
Con-way Multimodal has been quickly growing its share of the domestic transportation management market by supporting external customers and affiliated Con-way companies. Like its parent Menlo, Con-way Multimodal’s emphasis on “Lean” operating principles and operational effectiveness is driving quality service performance levels and generating above average gross margins. We anticipate it will continue to expand its operating network and develop additional business through an ongoing focus on performance quality and by adding additional value-added services for customers.
Sources: A&A Primary Research, https://www.xpo.com