USPS signs Consolidated Freightways to handle LTL freight in Continental U.S.

VANCOUVER, Wash., Jan 2, 2002 (BUSINESS WIRE) — The U.S. Postal Service has selected trucking giant Consolidated Freightways (Nasdaq:CFWY) to manage all USPS non-mail LTL freight delivery in the continental U.S.

The contract comes with options that allow the USPS to extend the partnership through February 2012, with a value of at least $9 million per year. The decision condenses the USPS LTL freight network from 20 national, regional, and local carriers to just one transportation provider.

"Transportation cost is certainly a factor, but we are looking at this move well beyond a typical shipper-carrier relationship," says Frank Scheer, Material Distribution Systems Specialist at USPS. "The Postal Service sees this partnership as a collaborative effort that will take cost out of our entire supply chain, a process that is going to take time and investment."

Scheer says he is impressed with CF's long-term vision and the company's ability to overhaul an array of business processes. "If Consolidated Freightways can help the USPS instigate change in how we exchange information, and the way we adopt new technologies, this working relationship will deliver cost savings up and down the supply chain," he says. "Our goals are ambitious, and we expect to reach them."

The wide variety of USPS freight moving on Consolidated Freightways trucks will give the $2.3 billion carrier plenty of opportunity to uncover supply chain practices that can impact the Postal Service's LTL network of the future.

CF will be hauling everything from the familiar blue mailboxes on the local street corner, to office furniture and small equipment, and postal supplies. Freight will move from more than a dozen vendors, between individual postal facilities, as well as from USPS distribution centers in Kansas, Indiana, and California.

CF's high performance standards, demonstrated electronic data interchange capabilities, and the company's geographic coverage were three key factors in the USPS decision to sign on with Consolidated Freightways.

"CF is now our right arm between suppliers and postal facilities," says Scheer, explaining that some small post offices employ only a couple people. Likewise, some specialty manufacturers do not have extensive traffic departments. "These smaller postal and supplier facilities will tap CF's ability to provide professional guidance in packaging and electronic commerce techniques, along with pick up and delivery tailored to local needs."

TECHNOLOGY EXPERTISE

But Scheer agrees with Marty Larson, Senior Vice President of Sales & Marketing at CF, that real change and substantial cost savings require an overhaul of business processes as well as the integration of practical business tools.

"CF sees technology as an enabler," adds Scheer. "And we agree that without change within our day-to-day processes, we might simply automate outdated manual activities."

Larson notes that both CF and USPS will begin immediately investing in merging electronic information exchanges between the two organizations.

"We're entering a commitment that affects our relationship for many years down the road," says Larson. "But experience proves that investments in business tools and business processes will wring out substantial savings throughout the entire supply chain."

Scheer adds that making big changes like these is not easy. He notes that the USPS is held accountable by senior Purchasing and Materials staff. The decision to enter into a business relationship with a single carrier required significant justification with the expectation of substantial due diligence during the contract term.

NATIONAL COVERAGE

Before moving to a single-carrier, the USPS relied on up to 20 different less-than-truckload carriers. "Lots of different carriers, serving lots of different markets, means lots of variables in terms of service and cost," Scheer says. "With one carrier, serving virtually every market in the continental U.S., we can streamline shipping processes, improve service consistency, rely on accurate freight invoicing, and reduce loss or damage claims."

The USPS will tap into a dedicated customer service center that Consolidated Freightways has set up to support the service. CF's exclusive USPS team, based at the company's headquarters in Vancouver, Wash., includes experts on spot pricing, custom and white-glove services, and an array of CF's expedited services.

ABOUT CONSOLIDATED FREIGHTWAYS

With $2.3 billion in revenues, Consolidated Freightways operates one of the largest less-than-truckload (LTL) transportation networks. The company's 20,000 employees specialize in long-haul freight transportation throughout the North American continent.

CF's network of more than 300 terminals serves virtually every market in the U.S., Canada and Mexico. More information about the company is available at www.cf.com. CF's corporate stock is traded on the Nasdaq exchange using the CFWY stock symbol.