CNF COMBINES MENLO LOGISTICS, EMERY AND VECTOR SCM UNITS TO FORM MENLO WORLDWIDE

CNF Inc. (NYSE:CNF) announced that it is combining its Menlo Logistics, Emery Worldwide and Vector SCM operations to form Menlo Worldwide, a new company that begins today as a leader in the global logistics, transportation, freight forwarding and supply chain management field.

By providing customers around the world with a full range of logistics services from a single source, Menlo Worldwide is much better positioned to capitalize on the growth prospects of the enormous global supply chain management market than any of the entities on their own, said Gregory L. Quesnel, president and chief executive officer of CNF.

Menlo Logistics and its customers will benefit immediately from being a part of Emery’s extensive worldwide network, which provides service to more than 200,000 customers in over 200 countries. They will also benefit from Emery’s extensive international logistics projects and locations, including those in China, India, South America, Singapore and western and eastern Europe, which will be absorbed into the new organization.

Menlo Worldwide will have combined annual revenue of $3 billion, 15,000 employees and more than 200 service centers and operations facilities. Headquarters for Menlo Worldwide will be Redwood City, Ca. Vector SCM headquarters will remain in Novi, Michigan.

John H. Williford, formerly chief executive officer of Menlo Logistics, will head the newly combined companies as president and chief executive officer of Menlo Worldwide. Chutta Ratnathicam, currently chief executive officer of Emery, will return to his former position as chief financial officer of CNF.

“There is a clear trend among companies – from middle market to giant multinationals – to outsource the management of increasingly complex supply chains and logistics services in order to lower costs, reduce inventories, and increase speed, flexibility and efficiency,” said Quesnel. “Menlo Worldwide is ideally positioned to meet this growing demand by combining its air and ocean freight forwarding competencies, its extensive proprietary information systems and a full range of value added supply chain management services including transportation, warehouse, inventory management and customs clearance on a global scale.

“We’ll be able to help customers supply factories, distribute products, source supplies and manage their inventories faster, more efficiently, and at lower cost than ever before. By combining the strengths already within CNF, we have created a global logistics, transportation and forwarding provider that we believe is better integrated and more clearly focused than any other company serving this market.”

Emery, newly aligned as a division of Menlo Worldwide, will continue to provide full network service and coverage for its North American overnight and deferred services by utilizing a fleet of contract air carriers, as it has done since mid-August. CNF also announced that its certificated airline subsidiary, Emery Worldwide Airlines, would not resume operations. The airline has not been flying since Aug. 13.

“By altering the basic business model of Emery in North America, we are taking a major step in CNF’s strategy of reducing assets in a way that will benefit both customers and investors,” Quesnel said. “Emery freight division customers utilizing domestic and international services can rely on Emery to offer its extensive services as usual with no interruptions.”

The company will take an after tax charge of approximately $200 million in the fourth quarter for not continuing the operations of the airline, reflecting the planned disposal of all aircraft, leases and other costs.

Quesnel said that the formation of Menlo Worldwide effectively restructured the CNF portfolio of companies into two basic operating companies, Con-Way Transportation Services and Menlo Worldwide. He said the restructuring solidifies the company’s position as a leader in supply chain management. This worldwide network makes more efficient use of deployed assets and better leverages Emery’s global coverage with Menlo and Vector’s leading SCM skills.

Williford, the new CEO of Menlo Worldwide, said, “This new company brings together an exceptional team of experienced professionals, cutting-edge technology, engineering and execution skills on a global scale.

“For customers who want to work with us on a transactional basis, we offer Emery’s global network of air and ocean forwarding, customs brokerage and warehousing combined with Menlo and Vector SCM’s engineering and information technology skills. For customers who want a more strategic relationship, we offer Menlo and Vector’s global, world-class integrated logistics and fourth-party logistic services (4PL) combined with Emery’s geographic coverage.”

Menlo Worldwide is organized into four divisions:

Emery, a division of Menlo Worldwide, consists of Emery’s international air and ocean forwarding, North American airfreight, customs brokerage and expedited services. It builds on Emery’s leading position in expedited freight shipping in North America and international forwarding services. Peter Quantrill, vice president of international operations and Eric Kirchner, vice president of North American operations, have been named executive vice presidents, reporting to Williford.

Menlo Worldwide Logistics, combines the global logistics activities of Emery with Menlo Logistics to provide large and mid-size global clients with third-party logistics services. Robert Bianco, most recently vice president of operations for Menlo Logistics, is president of the logistics division.

Vector SCM, a division of Menlo Worldwide and a joint venture with General Motors that manages GM’s worldwide distribution system, will be a model for developing other “fourth-party” logistics business. Its current president, Gary Kowalski, will head the division.

Menlo Worldwide Technologies will be a top-tier provider of information technology, supply chain engineering skills and consulting services. Senior Vice President Ed Feitzinger, most recently vice president of technology and engineering for Menlo Logistics, will head it.

Williford announced that John Rocheleau, most recently vice president, controller and treasurer for Menlo Logistics would join Menlo Worldwide as vice president of finance.