Con-way Inc (NYSE: CNW) provides truckload and less-than-truckload shipping services for retail, industrial, and government customers. Con-way's customers typically don't have a full truckload of goods, and the firm consolidates shipments at a central location before sending the goods on the road. Con-way also has a secondary logistics business - managing product transportation, storage, delivery, and other supply-chain details - and while this business is smaller and less profitable than freight, Con-way has grown its presence in this sector by expanding into Asia by acquiring logistics companies in both Singapore and China.
Because Con-way is a nonunion freight carrier, its workers can do several different jobs when they transport goods, differentiating Con-way from their unionized competitors who must hire a separate person to perform each task. This allows Con-way to operate at lower costs and higher margins than its competitors.
Like others in the competitive trucking and logistic industry, Con-way's revenues are closely tied to the overall health of the economy. A decrease in demand of consumer goods means lower trucking demand and a negative impact on Con-way's bottom line. In 2009, the company's net revenues fell 15% due to lower freight volume. Con-way faces additional challenges from fluctuating oil prices and increased government regulations.
Con-way provides a variety of transportation services. The company charges shipping rates, which typically include a fuel surcharge, to transport goods. The transportation and logistics company also makes money by offering supply-chain management and logistics consulting. Con-way operates in over 17 countries, but almost all of its revenue is generated in the United States.
Con-way's business can be divided into four main operating segments:
Con-way competes with a range of regional, national, and global transportation and logisitics company.
Con-way's Freight and Truckload divisions compete primarily with FedEx Freight and YRC Worldwide (YRCW). The national LTL freight service has seen consolidation and liquidation, but remains competitive. This part of industry has seen the least growth, but also involves high barrier to entry. Capital expenses needed to build sorting facilities and operate trucks involve substantial capital contribution. At the regional level, Con-way competes with a wide selection of transportation businesses. The larger competitors are Arkansas Best (ABFS), Old Dominion Freight Line (ODFL), and Saia (SAIA), but there are also entities that only own a few trucks and operate as a for-hire contractor. The asset-based model still requires large expenses to operate facilities but less than the national scale. Transportation companies typically compete based on freight prices, service, reliability, transit times, and scope of operations.
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