As CF Fades, Some See Logistics Sea Change

With Consolidated Freightways in Chapter 11, startup promotes new model for logistics outsourcing

Los Angeles  September 23, 2002  If you can't beat 'em, join 'em.

That seemed to be the message in the logistics arena last week as a gaggle of sales managers jumped ship from bankrupt Consolidated Freightways and joined one of the new breed of logistics services providers.

The once legendary Consolidated Freightways (CF) Corporation announced earlier this month that it was filing for Chapter 11 bankruptcy and discontinuing operations after 73-years as an American transportation icon and the nation's third largest less-than-truckload (LTL) carrier.

Last week, CaseStack, a startup provider of outsourced logistics solutions to mid-sized companies, announced the hiring of CF's former vice president for national sales, Gary Murphy, to be its vice president of logistics solutions. CaseStack said it was also hiring other CF sales staff.

Upon CF's liquidation announcement, analysts speculated that large rivals such as Roadway, Yellow and Arkansas Best would benefit as Consolidated Freightways' customers scoured the landscape for trucking capacity. "Consolidated's bankruptcy should be a significant earnings catalyst for the other LTL carriers," said Mark Levin, transport analyst at Davenport & Co. in Richmond, Va.

But some experts see a more profound change occurring as the industry evolves further into the Information Age. Over the past few decades carriers like CF have had to face the challenges of a deregulated competitive marketplace while managing an old infrastructure heavy with billions of dollars of assets and unionized labor.

Dan Sanker, president and CEO of CaseStack, sees CF's demise as indicative of a sea change in the industry. "There are still far too many companies force-feeding inappropriate transportation, warehousing, and software services to clients," Sanker said bluntly. "The future is about providing client-based logistics solutions that include those services."

We all realize that CaseStack represents the future of this industry," said Murphy. "The CF team has developed and nurtured customer relationships over prior decades while providing only one component to address their supply chain challenges."

Murphy suggested that at CaseStack he and his team would be better able to address their customers need for what he called "end-to-end logistics solutions" that include all modes of transportation, warehousing and supply chain management software.