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The Wind Beneath Their Wheels
Monday, 27 July 2009 00:00

Alliances power regional LTL carriers past recession’s roadblocks toward recovery.

They may seem an odd couple at first glance: a southeastern less-than-truckload carrier with a hub-andspoke network and a New Jersey-based carrier with a hybrid LTL truckload business model But Milan Express and New Century Transportation say their differences translate into strengths as partners in a new inter-regional venture.

The carriers launched their “Lightning Alliance” this month to speed LTL freight between Milan’s Midwest and Southeast territory and New Century’s northeastern home market. It’s already helping Milan Express gain freight in a recession.

“We’re nearing 100 pricing proposals, and there are a few dozen already that are up and running,” said David A. Kramer, president of LTL at the Milan, Tenn.-based company.

Alliances that are important for regional LTL carriers when freight is plentiful and capacity is tight are even more so when they’re not. They not only provide access to new markets and customers, but also encourage existing customers to ship more freight.

“They allow you to grow your revenue without expanding your cost. That’s probably your biggest advantage,” said Charles L. Hammel III, president of Pitt Ohio Express, a Pittsburgh-based regional LTL carrier operating in the mid-Atlantic region stretching from Chicago in the west to Virginia and North Carolina in the south. “We’re able to offer our customers a bigger geography so they can spread out farther.”

Pitt Ohio is part of the Reliance Network, a multicarrier alliance formed last year that connects it with Averitt Express, Land Air Express, Lakeville Motor Express, DATS Trucking and Canadian Freightways and Epic Express in Canada.

The alliance is giving Pitt Ohio a much welcome boost in a year when its revenue is down 14 percent from 2008. Shipments that enter Pitt Ohio’s system from alliance partners “now amount to about 10 percent of our revenue,” Hammel said.

Hammel expects to see more alliances and partnerships among LTL carriers, especially smaller companies, in the recovery as well as the recession. Carriers are more willing to share information and even develop common technology platforms, he said.

“You used to never do that unless you had common ownership,” Hammel said.

It’s the result of a shakeout spurred not by the poor economy but by the arrival of new competitors in the LTL market. “We used to compete with regional and national carriers, but once FedEx and UPS entered the LTL market, that changed,” Hammel said. “We no longer have to be as good or better than another LTL carrier, we have to be as good as or better than the package carriers. That changed the game substantially.” 

At Milan, Kramer believes much of the new freight its alliance with New Century will generate will come from existing customers. “We have focused the entire sales effort so far on current customers,” he said. “We’re looking for additional density and pickups—if we can get three shipments instead of two, that’s a good thing.”

It’s tough to fatten lanes when freight is thin. “Shipment sizes are smaller, freight density is lighter across the board; it’s just the economy we live in:’ Kramer said. “We’re trying to gain a little extra line of haul.”

Milan, which had close to $200 million in revenue in 2008, operates in the Midwest from Ohio to Illinois and a part of Wisconsin and in the South from Mississippi to North Carolina. Its relationship with New Century began last year, when the Westampton, N.J.-based company began sending it freight.

New Century typically handles heavier LTL freight outbound and backhauls truckload freight to customers in the Northeast. The company doesn’t have the cross-dock terminal network typical of LTL carriers; instead, it delivers its freight directly.

Many of its shippers, however, had smaller LTL shipments headed to the South and Midwest—freight New Century couldn’t handle on its own. “They were saying no to some of the smaller shipments because they didn’t have an outlet and they can’t run a traditional pedal network for deliveries with their system,” Kramer said.

Milan became that outlet in the South and Midwest. “Instead of just picking up two or three larger shipments, they were picking up one or two large shipments and filling in with smaller LTL freight we would deliver for them,” Kramer said.

Now Milan is returning the favor, funneling LTL freight to New Century’s main facility in Westampton, NJ., from terminals in Columbus, Ohio, and Charlotte, N.C.

Inbound freight volumes from New Century have been growing consistently, Kramer said. He expects outbound volumes to rise. “Customers told us in no uncertain terms that greater opportunity exists for us if we would handle a larger geography,” he said.

Journal of Commerce, 7/27/2009