Here’s Con-way Freight’s problem: pick up 60,000 small consignments of freight from separate locations around North America–anything from a generator to half a dozen pallets of flooring. Bring them to one of more than 300 warehouses, and combine them to fill more than 6,000 semi-trucks. Get every truck onto the interstate bound for another warehouse. Unload the generator, the flooring, and the rest of the cargo, put it on other trucks, and get everything to its destination–reliably, quickly, and cheaply.
This is the “less-than-truckload” freight business (LTL). And scheduling and routing all those shipments is so complicated that early last decade, Ann Arbor-based Con-way Freight (CF) asked the U-M business school to help figure it out. But even the university was daunted.
Instead, the company hired a Thai-born programmer who had once worked on targeting antitank missiles for the Chinese army.
“It turned out it was actually tougher than rocket science,” laughs Yafeng Du. But, in the end, not too tough for Du, who has a PhD from the University of California.
So, at 6 p.m. every day, in a large suite of offices overlooking US-23, a Con-Way supervisor sets Du’s computer program running. Seven minutes of heavy computation time later, it spits out the routes and schedules for the 4,000 drivers whose runs are east of the Mississippi River.
What follows is a tense hour as CF’s regional coordinators make sure every route is covered. “We’re four drivers short in Dayton!” announces Keith Fisher, the war room’s general for the night. Studded with maps and with TV screens showing the Weather Channel, the room looks like a cross between a gamers’ convention and an air traffic control center, but it’s populated by truckers–lots of balding or crew-cut good old boys huddling over computer monitors.
The volume, location, and destination of shipments from regular and not-so-regular clients change daily, so the puzzle is always different. And in a highly competitive industry where time really is money, there’s little room for error.
“It’s like chess,” says Du. “You make a move, but it’s hard to tell at the beginning whether it’s a good move or a bad move.”
By 7:30 p.m., the trucks are starting to move out of Con-way’s eastern facilities. A half hour later, Fisher launches the program again to start the drill for another 2,000 drivers in the western half of the country.
The LTL business is all about “velocity”–keeping shipments in motion instead of sitting in warehouses. Through the night, Con-way drivers roll, taking the fastest routes between assembly and distribution facilities, securing their company’s role as an LTL industry leader.
Con-way Freight is the biggest local business that most Ann Arborites have never heard of. In 2009, it had more than $2.5 billion in sales and $50 million in operating revenue. It operates a fleet of more than 8,400 tractors and 25,000 trailers and employs more than 20,000 people, including 254 at its headquarters on Old Earhart Road.
“I think that we’re one of the best-kept secrets in Ann Arbor!” laughs company president John Labrie. A Mount Pleasant native and Central Michigan graduate, he has worked his way up through the company, which is a subsidiary of California-based Con-way, Inc.
To most motorists, a tractor-trailer is simply a lumbering road elephant. But a large part of the economy rides in those big boxes on wheels. Most tractor-trailers carry full loads of the same thing from one place to another–a shipment of wheel bearings, say, from a supplier to an automobile plant. CF’s smaller corporate cousin, Con-way Truckload, hauls a fraction of those cargoes. Con-way Freight sticks to the trickier less-than-truckload business, filling its trailers with comingled shipments of wildly different items, from beverages to air compressors.
The LTL business was invented after the trucking industry was deregulated under Ronald Reagan. Con-way, Inc. started a regional carrier, Con-way Central Express, in Ann Arbor in 1983. With freeway access to Chicago and points west, to Toledo and the Ohio Turnpike and points east and south, Ann Arbor was an easy ride to many of the company’s customers.
The company “focused on something new at the time in the freight markets: same-day service,” says Labrie. Con-way later added LTL operations in the west and south, but for years the three regional carriers operated as separate entities, figuring out their nightly logistics puzzle manually–with regional supervisors relying heavily on their familiarity with local routes.
In 2007, the regional carriers were consolidated into Con-way Freight, and the geographical centrality of Ann Arbor made it the natural choice to be the headquarters. “Given its proximity to many universities and its large business community, Ann Arbor provides a great base for recruiting employees,” adds Labrie. “The community and surrounding area have a strong population of highly educated and talented people.”
And the state’s struggling economy also has a silver lining for CF: “Because of what Michigan is going through,” says Labrie, “there are a lot of really good people available.”
Labrie, who has a bachelor’s in finance from CMU and a master’s in business from Indiana Wesleyan, worked in both the central and western divisions before taking over the combined firm in 2007. Since then, he’s led the company’s efforts to stay ahead of the competition–while also burnishing its credentials as one of the safest and most environmentally friendly trucking outfits.
At 9 a.m. on a snowy morning, Larry Porter grabs a stack of orders at Con-way Freight’s warehouse in Whitmore Lake. He’ll make deliveries this morning, pick up new shipments this afternoon, then get on a hi-lo to help load the trucks for tonight’s runs.
Good-natured and gregarious, Porter looks like Charlie Brown grown up. “I like being outdoors, meeting and talking to people,” he grins. And he likes figuring out how to efficiently tackle his routes, which spread up US-23 into Genesee County and out M-59 into the heart of Oakland County.
Though some truckers now use GPS, Porter, who lives in Howell, doesn’t trust it, having heard too many horror stories of being badly misdirected by the onboard voice. Instead, he uses his local knowledge and road smarts to avoid traffic snarls and find shortcuts. If a location, like the Linden one today, is unfamiliar, he might check out MapQuest on an office computer before he steps into his cab. But the Internet has actually made his job more complicated.
That’s because people order anything and everything online these days. Con-way’s destinations include big and small companies in cities, business parks, and small towns, as well as home-based businesses and residential customers. Porter grimaces as he tells a story about the time he had to make a residential delivery down an unfamiliar road. Calling ahead, he told the home owner he was driving a fifty-three-foot-long rig. “No problem,” she assured him. “Trucks come by here all the time.” She neglected to mention the ninety-degree turn a mile down the long, narrow road. Potter couldn’t negotiate it. He had to use all the skills he’d learned in more than thirty years as a trucker to back all the way out.
Porter’s a pro. If he could find the time someday, he’d like to try out for the Con-way team that competes each year in the state and national truck driving championships. “The company really takes care of those guys,” he says. Last year three Con-way drivers won state truck driving championships, Con-way’s Dale Duncan won the national title for the second time, and another driver was named national “Rookie of the Year.” The company pays competitors’ expenses and gives each winner a new Ford F-150 pickup.
The trucking competitions emphasize safety, a Con-way obsession. “Safety is our first core value,” says Labrie. Each year, the company recognizes drivers who have gotten through the twelve months on the road with no accidents. There’s more recognition when they log one million accident-free miles. That typically takes at least ten years of driving, yet in the company’s history 1,500 employees have achieved this milestone. More than 100 of them have piled up two million safe miles.
All Con-way drivers are trained and critiqued in defensive driving sessions. The company puts a mechanical governor on all its trucks–and a few years ago dialed down the maximum speed to sixty-two miles per hour.
That decision, says Labrie, “grew out of a larger, companywide sustainability initiative.” It’s reduced Con-way Freight’s annual fuel consumption by 3.6 million gallons, preventing 80 million pounds of carbon emissions. Labrie stresses those figures, because he’s keenly aware that “freight transportation, by its nature, is a significant consumer of carbon-based energy resources.”
While worrying about safety, its carbon footprint, and keeping the delivery system efficient, CF also has to survive the recession. As the third-largest player in the LTL industry, it has felt the squeeze. The downturn, says Labrie, left “too many trailers chasing too little freight,” forcing layoffs in late 2008. But CF re-engineered its network to increase efficiency and won business from competitors even as the economy contracted. “There is no doubt some of our market share gains reflect a ‘flight to quality’ on the part of customers who want to protect against any disruption in their supply chains,” says Labrie.
“With the supply/demand imbalance that persists in our market, it’s been tough to get our profits up where they need to be,” Labrie admits. But he thinks the firm has weathered the worst of the storm.
The other thing that keeps Labrie up at night is the state of America’s roads. “We have a major problem in this country: highways–and secondary roads too–are in horrible condition,” he says. CF pays more than $62 million in road taxes a year–and would be willing to pay more so long as the money gets to the places it’s needed. “We have a flawed capital allocation process, and we are committing far too few resources in both the maintenance of the existing infrastructure and in meeting new infrastructure needs,” Labrie says. “I think it is the one of the biggest issues facing the country today.”
It’s an issue that even Yafeng Du’s genius computer program can’t solve: the road to the future is paved with potholes.