The Passing Of CF:Did We Learn Anything?
The cause of death for the giant -- and many smaller fleets -- and many smaller fleets -- wasn't just high overhead.
DOUG CONDRA
President/Publisher
When Consolidated Freightways announced its demise, one of our staff members likened it to "the fall of the tallest redwood." Founded in 1929, CF was the stuff of legend -- once the largest, strongest for-hire carrier in the nation.
It pioneered coast-to-coast service. It designed and built its own lightweight, high-powered Freightliner tractors. It innovated with equipment like air starters and wedge brakes.
Prior to deregulation the company was masterful at buying up operating authority, first building domination of western freight markets, then methodically moving all the way east.
CF innovated in productivity, too. When Pennsylvania held out against twin trailers in the 40-mile-long Erie corridor, CF broke up its doubles at the border. The road tractor pulled the lead trailer. The second trailer, its dolly intact, was hooked to a shuttle tractor and followed. The twins were quickly reunited at the other border.
CF's announcement to close down surprised a lot of people, but others were not surprised at all. Its struggles were widely known, and some customers had already moved business to other carriers, worsening its situation.
And it was offering bargain rates as it fought for market share. One customer, who said CF prices were substantially lower than its competitors, added: "They possibly over-discounted themselves."
Sound familiar? Customers want top quality and top efficiency, and at the lowest price. In this case they apparently got all three from CF until it was bled dry. So history continues to repeat; if you don't sell your service or product at a profit, you die.
CF's departure did reduce the oversupply of freight transportation sources. Its competitors are better off; realistic rates will hopefully be back in vogue. There's also not much question that non-union Con-Way Transportation Services (owned by CNF Inc., which spun off CF in 1996) emerges a winner.
Biggest losers: the 15,000 Teamsters who were on the CF payroll. Some were picked up by other unionized carriers. But many others aren't going to find a carrier that will match the package they had.
Long-range, CF's death will likely strengthen the trucking industry. One shipper said, "Six months from now you won't even notice." It's a sad legacy, made even sadder by the thousands of smaller trucking companies that went under before it.
It wasn't just insurance costs, or personnel costs, or fuel costs that did them all in. In their pursuit of market share, they contributed to their own deaths with low rates -- deals that were just too good to be true.
Last spring Crete Carriers Chairman Duane Acklie put it on the line. He said "Volume is vanity. Profit is sanity."
If suicidal pricing in this industry does not stop, we haven't seen the end of the insanity.
