Summary
Con-way's innovative new "True LTL Pricing" scheme has the potential to, as the company says in its press release, "transform" the Byzantine world of truck pricing. But that really is not up to Con-way; rather, it will be up the shipping community. Likely they will accept Con-way's pricing on one condition: their freight bills are lowered as a result.
Analysis
First off, let me admit my biases: I love Con-way. I've always thought Con-way had the best business model, sharpest and best management team and the most responsive and motivated workers in the LTL industry. I have friends at Con-way with whom I go back nearly 20 years when the company will still a small subsidiary of then-Consolidated Freightways Inc.
So I'm biased. Which makes it difficult to truly assess whether its new "True LTL Pricing" will, as the company claims, "transform" LTL pricing.
But what I do know is this: it's way, way past time that somebody tries.
Today, traditional LTL pricing reminds me of a drunk trying to cross an eight-lane highway; it's painful to watch. Between the list prices that nobody pays, the discounts, the surcharges, the extra accessorial fees for everything from sticking a package inside to delivering it on a weekend, the entire system is wasteful, arcane, Byzantine and a house of mirrors and horrors.
Kudos for the Con-way leadership team of CEO and Chairman Doug Stotlar to President John Labrie for trying to start a pricing revolution in the waning teeth of a recession.
My colleague Jay Thompson has it right when he posits that Con-way has the best data in the industry to try and pull this off. The Con-way folks I know are not known to just roll the dice; they analyze, develop and do plenty of research before they start any project.
And don't remember what Con-way did two years ago. It entered the TL market in a big way with its purchase of Contract Freighters Inc., which immediately gave it $500 million worth of capacity for its Con-way Truckload unit.
So any move that might boost truckload should be viewed as a result of that purchase.
And certainly any move to revolutionize and simplify LTL pricing would be welcome by the market place.
I've long thought LTL pricing should go the way of the Olympics: gold, silver and bronze.
Gold would be the time-definite, extra white-glove service. Silver would connote traditional delivery windows and service. Bronze would be the bargain-basement cheapie price.
And from what I'm hearing from the shippers, Bronze would be the most desired.
Con-way's decision to move LTL pricing closer to its truckload pricing model might be its version of Bronze pricing. It is hard to tell how much of what Con-way is doing is actually revolutionary and how much of it is merely shrew marketing. It's probably a bit of both.
But the market place already seems to be heading in this direction anyway. Given the flatness of the $34.5 billion LTL sector, and everybody from C.H. Robinson to thousands of truckload carriers trying to build TL loads out of many LTL shipments, Con-way seems to have its finger firmly on the pulse of the market place.
Whether this is revolutionary or not, I think, depends on price. Shippers, especially in these days of overcapacity, tend to vote with their pocket books. If Con-way can pull this off and win market share through this simpler, guaranteed form of pricing and service, more power to them.
