Smaller Trucking

YRCW announced that the company has been named a recipient of the 2010 CIO 100 award by CIO magazine. The 23rd annual award program recognizes organizations around the world that exemplify the highest level of operational and strategic excellence in information technology (IT).

YRC Worldwide was honored by CIO magazine for the company’s integration and systems migration of Yellow Transportation and Roadway Express into YRC. Combining the strengths of Yellow and Roadway through the integration of networks, services and capabilities required the largest technology migration in the history of the transportation and supply chain industry.

“Our team is dedicated to creating an exceptional customer experience. Accelerating our business leadership through technology leadership is an important part of delivering on our commitment to customers,” said Mike Naatz, president-Customer Care Division and chief customer officer-YRC Worldwide. “Receiving this honor again this year recognizes the outcome and significant value of successful business and IT collaboration at YRC Worldwide.”

The primary business goal of the project has resulted in increased operational effectiveness and margins; improvements to the industry value chain; globalization and supply chain efficiency.

“The IT team at YRC Worldwide managed to do what no one had done before: a complete and successful migration of all systems between two huge transportation providers. And it was accomplished in a very compressed amount of time,” added Naatz.

The comprehensive business integration included:

• New use of existing technology to minimize disruptions and ease the transition
• Migration of all systems, data, and processes, including custom applications
• Innovative use of team resources to prepare for the transition and deal with challenges that inevitably arose during the integration process
• Freight quote system

“This year’s CIO 100 awards draws well-deserved attention to companies that are not only innovating with IT but creating genuine business value as well,” said Maryfran Johnson, editor in chief of CIO magazine & Events. “These winning companies and their IT organizations are an inspiration to businesses everywhere.”

The 2010 CIO 100 awards will be presented at the Terranea Resort in Rancho Palos Verdes, Cal., on Aug. 24 at the conclusion of the 12th annual CIO 100 Symposium(R) and Awards Ceremony.

YRC Worldwide Inc., a Fortune 500 company headquartered in Overland Park, Kan., is one of the largest transportation and logistics service providers in the world and the holding company for a portfolio of brands including Yellow Transportation, YRC Reimer, YRC Glen Moore, New Penn, Holland and Reddaway. YRC Worldwide has the largest, most comprehensive network in North America with local, regional, national and international capabilities. Through its team of experienced service professionals, YRC Worldwide offers industry-leading expertise in heavyweight shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence.

The shipper starts with a requirement to ship a piece of cargo. The first decision is whether to pay a premium for next day air freight and hand the consignment over to an integrator, or to use an air freight forwarder. There may also be a third option involving value added services if the company is using a logistics provider (usually one of the larger forwarders). In these cases, the logistics provider would be offering a wider service involving, for example guaranteed air freight, order processing, storage, pick and pack, labeling etc. The logistics company can have a part to play in the manufacturing process by customizing the product subject to orders made and then distributing the goods from the logistics providers warehouse. Increasingly, integrators also offer logistics services Again, the definitions of these companies are somewhat blurred with the larger forwarders describing themselves as logistics providers and indeed managing the entire movement of the shippers goods in some cases, yet offering traditional forwarding services to others. Forwarders and logistics providers may well use the services of an integrator where that is appropriate. The integrators are interested in filling their aircraft and will take forwarders traffic where they are able. Where the shipper wishes to move a small package or documents there are further choices of international couriers or mail.

There are various ways of categorizing the goods requiring movement by air whether by weight or by the need for transportation within a defined period of time. For simplicity, we have generally distinguished between general air freight and express air freight. The former will tend to be carried by forwarders and airlines, though by no means always; and the latter by the couriers, express operators and especially the integrators.

Traditionally, general air freight would expect to have a transit time measured in days whereas the express services offer a guaranteed delivery time often measured in hours, typically an overnight transit. The distinction between time-critical and time-definite products blurs with the increasing interest of the integrators in carrying general freight and the forwarders in providing a total logistics solution, including express services. There are also a great many crossovers in relation to the role and function of many of the actors involved in air freight, as will become evident.

Increasingly, the integrators accepted larger consignments and thereby entered the traditional air freight forwarders industry. The air freight market in the UK has developed a concentration around Heathrow because that is where the mass of carrying long-haul bellyhold capacity is offered.

This concentration in and around Heathrow airport, has encouraged forwarders to invest in warehousing and handling facilities at their own consolidation centers. Cargo is collected from all over the UK and trucked to the consolidation center where it is then aggregated by destination into unit loads which attract an advantageous freight rate from the airline, helpful for next day air shipping. The concentration of activity in volume terms at the Heathrow bases enabled the forwarders to negotiate keen rates with the airlines and effectively now allows them to influence the supply of capacity. Many forwarders have branch offices in the regions, however the focus of their business remains centered on the London hubs.

Scheduled airlines are driven by the passenger demand for a given route. It has been advantageous to airlines to see concentration of activities through a principal airport such as Heathrow. This has given them increased flexibility for routing passengers and exploiting economies of scale in handling the volume of passengers through a major terminal. The cargo departments have then to work with the scheduling, turnaround times and size of aircraft on the route without having much influence over the behavior of the airline.

Although the growth of cargo charter airlines was quite rapid from the mid 1970s due to freedom to operate outside bilateral agreements and growing deregulation of freight operations to and from the USA, UK and some other European countries, fuel price increases and economic recession in the mid to late 1970s hit these airlines particularly badly. At the same time, the scheduled airlines began to take cargo more seriously with more flexible and competitive pricing. The latter were able to offer considerably more freight capacity as they introduced wide-bodied passenger aircraft on more and more routes. Added to this was the restriction of charter operations by developing countries aiming to protect the interest of their own national airlines in the freight market.

Probably the most significant revolution in the air freight business in the last 25 years has been the rapid development of the express sector. Express parcel services, were pioneered by Federal Express (FedEx) in the USA. Fedex identified some key product features hitherto unrecognized by the traditional air cargo industry: the requirement for door-to-door and overnight transport, next day air freight,  which was not normal practice in the air freight industry for urgent/important small parcels often documents. Instead of selling on the basis of weight and price, convenience, speed and reliability became the principal product features. The express parcels sector in the USA boomed during the 1980s with courier and express parcels companies following Federal Express example and setting up their own airline operations. By the 1990s an international sector dubbed the integrators had emerged including United Parcel Service, BAX Global and Airborne Express in the USA and DHL and TNT who were stronger in Europe.

Globally air freight grew very rapidly during the 1960s, faster than passenger growth over the same period. This rate of growth slowed considerably in the early 1980s though it was still around 9% per annum. The early dominance of the European and North American airlines in the carriage of international freight up to the mid 1970s has since been eroded by the rapid development of the East Asian and Pacific region airlines. Recent IATA statistics covering their members shows Korean Air Lines, Singapore Airlines, Cathay Pacific and Japan Airlines are all in the top 10 of the top 50 IATA freight airlines in 1998.  Before the 1960s, air freight was considered as a way of filling up spare capacity on what were essentially narrow bodied passenger aircraft. However the high rate of growth in the 1960s coupled to wider bodied passenger aircraft provided the opportunity for many airlines to recognize the income value of air cargo and in the case of routes which developed cargo volumes greater than might be carried in passenger aircraft, the inducement to introduce scheduled all-cargo services. When introduced on the dense freight routes which could sustain them, they had the effect of stimulating demand. All-cargo aircraft enabled more unit loads and consignments to be carried and the increased use of specialized handling equipment speedup the movement of freight and the turn around of aircraft. All-cargo aircraft were also able to fly at night to schedules which would not be appropriate for passengers. This again led to shorter freight transit times as well as adding considerably more capacity.

Wholesalers buy capacity from airlines and sell this on to small and medium-sized forwarders for expedited shipping. This enables the latter to buy freight space more economically than they might otherwise by contracting directly with the airline. Couriers these services are often provided by express services operators, using the services of passenger airlines and on many occasions courier bags are delivered to airlines across passenger check in desks and carried provisionally by a passenger. Courier parcels are therefore carried on passenger tags and not classified as cargo. The advantage of these services to the shippers or importer is the more rapid transfer of overnight freight at the airport, of origin and destination. At London-Heathrow a purpose built courier reception facility has been built thus avoiding the need for courier bags to be handled across the passenger baggage desks.

Transit shed operators provide a transit handling service for airlines and sometimes forwarders. Their function is to receive cargo from the aircraft, de-palletise and deliver to truck or vice versa via a transit shed where customs clearance is required.  Specialized air trucking companies, like guaranteed air freight, provide road transport between the UK regions and the London airports, or continental airports, as well as intra-European services, where trucks substitute for aircraft, usually to a schedule. Most companies work on behalf of the airlines in servicing the forwarders requirements.  Express operators provide services for the movement of mail and small packages, where the timescales for transit are measured in hours by contrast to air forwarders whose service transit times are generally managed in days, like next day air freight.

General sales agents sale next day air freight and second day air freight and are appointed by some airlines (both scheduled and charter) to sell air freight capacity on their behalf, thereby allowing the airlines to avoid the potentially high fixed costs of sales and marketing.

Integrators provide a door-to-door service, usually using their own road transport, handling, transit warehousing facilities and aircraft. Normally integrators contract directly with the shipper. They started principally as express operators, but are now competing more directly with freight forwarders and the airlines.

Air freight forwarders provide a service to shippers and importers which originally involved receiving a consignment of freight from a shipper, arranging its routing, transportation handling and documentation to either the final receiver or to a foreign airport. The role of the forwarders has developed over the years with the largest forwarders describing themselves as logistics providers, like DB Schenker.