CNF Shuts Down Emery Worldwide Airlines

Combines four units to form new logistics, supply chain services provider

Palo Alto, CA  December 6, 2001  Transportation and logistics provider CNF this week announced that it is shutting down its Emery Worldwide Airlines unit and combining its Menlo Logistics, Emery Worldwide and Vector SCM (supply chain management) operations into a single unit.

The new unit, Menlo Worldwide, will offer logistics, transportation, freight forwarding and supply chain management services.

Gregory Quesnel, president and CEO of CNF, said in a statement that by providing customers with a full range of logistics services from a single source, Menlo Worldwide would be better positioned to capitalize on the growth prospects of the global supply chain management market than any of the three separate entities on their own.

"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 in the statement. "Menlo Worldwide is ideally positioned to meet this growing demand."

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.

Menlo Worldwide will be organized into four divisions: Emery, with international air and ocean forwarding, North American airfreight, customs brokerage and expedited services; Menlo Worldwide Logistics, offering third-party logistics services; Vector SCM, a joint venture with General Motors that manages GM's worldwide distribution system and that will serve as a model for developing other "fourth-party" logistics business; and Menlo Worldwide Technologies, a provider of information technology, supply chain engineering skills and consulting services.

Menlo Worldwide reportedly will have combined annual revenue of $3 billion, 15,000 employees and 200-plus service centers and operations facilities. The new unit will be headquartered in Redwood City, Calif., although Vector SCM headquarters will remain in Novi, Mich.

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

Meanwhile, CNF also announced that its airline subsidiary, Emery Worldwide Airlines  which had not been flying since August 13 after Federal Aviation Administration inspections turned up various violations over an 18-month period  would not resume operations.

The Associated Press reported that the shutdown would result in the loss of about 130 jobs. CNF said it would 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.

For more information on logistics, look for the Global Enabled Supply Chain Series article on Logistics in the January 2002 issue of iSource Business.