Con-way Freight to close 40 service centers to cut costs

The move, along with other changes to improve network efficiency, are expected to save Con-way Freight about $30 million to $40 million per year.

The Associated Press

11/4/2008

ANN ARBOR, Mich. — Con-way Freight, a unit of trucking company Con-way Inc., said Monday it is closing 40 service centers across the country to cut costs.

The less-than-truckload carrier said the freight normally handled at those locations will be redistributed to 100 other locations. The 40 service centers are expected to be shuttered by early December. At that time, the company will operate 303 service centers across the U.S. and Canada.

The move, along with other changes to improve network efficiency, are expected to save Con-way Freight about $30 million to $40 million per year.

The company is also adjusting routes and planning for nightly intercity line-haul operations that will reduce the mileage traveled by freight and increase direct deliveries.

In addition to cost savings, Stephens Inc. analyst Thom Albrecht said the streamlined network is a competitive move designed to “create a more notable gap” in delivery performance, and that the present — even in a challenging freight environment — is as good a time as any.

“Indirectly, this probably suggests that Con-way is not optimistic that LTL volumes will rebound in a meaningful way anytime soon,” Albrecht said in a research note. “However, overall, we like this move and believe it is a legitimate opportunity to improve service (transit times, cargo claims and safety), reduce costs and create ‘separation’ versus its competitors.”

The company said about 75 percent of affected workers will be given opportunities for work at other nearby locations.

Con-way Freight said it expects it will cut its work force by about 1 percent because of the closures. It employs about 27,100 workers, according to Thomson.

“These types of changes are never easy, but they are necessary for us to advance our mission to provide the best LTL service in the market,” said Con-way Freight President John G. Labrie. “This is the right decision at the right time for Con-way Freight. It is one that ultimately will help insure that we continue to provide stable careers for our employees, enhance shareholder value and improve industry- leading service for our customers.”