Copyright 2008, Traffic World, Inc.
Truckers partnering with trans-Pacific shipping lines are beginning to crowd the sea lanes.
With their domestic markets stuck in the doldrums, LTL motor carriers are eager to grab U.S.-bound freight originating in China and other Asian countries. That means replacing the "T" in LTL with a "C" for "container" and finding new shipping partners.
LTL trucking company Con-way is extending its reach overseas by expanding its ocean-trucking partnership with $6.9 billion container line APL. The carriers are sharply expanding the less-than-containerload service they offer jointly out of Asia, adding Canada as a destination and the key Chinese industrial city of Guangzhou as an outbound shipment point.
That gives the "OceanGuaranteed" LCL service nine points in Asia and its first delivery destination outside the United States.
"The expansion not only highlights continued demand for OceanGuaranteed, but by going to Canada we reach an entirely new market, as well," said APL Logistics President Brian Lutt.
Con-way isn''t the only trucking company riding the waves. Several truck-ship partnerships have sought to take advantage of the price and service gaps in the LCL supply chain.
In 2006, J.B. Hunt Transport Services teamed with Matson Navigation, establishing a service that allows shippers to consolidate ocean container shipments into 53-ft. domestic containers for delivery via intermodal or over-the-road trucks.
Earlier this year, YRC Worldwide launched Roadway Expedited Ocean Service from China using subsidiaries Roadway and YRC Logistics. YRC says the service can cut six days off standard ocean transit through better coordination of loading and transloading on both sides of the Pacific. YRC also has trucks on the ground in China, where it owns LTL operator Shanghai Jiayu Logistics.
Truckload carrier Schneider National operates in China as Schneider Logistics (Tianjin) with 26 locations.
Averitt Express claims it can trim as many as 10 days off cycle times for LCL imports into the Southeast with its own "Asia-Memphis Express" service, launched last month. The $580 million Cookeville, Tenn.-based LTL carrier is aiming for smaller shippers it says are getting mediocre service.
"We are going to level the playing field for the medium-sized to small importer who relies on LCL shipping and is trying to compete with the mass retailers, wholesalers and mega-manufacturing entities," said Charlie McGee, vice president of international development at Averitt.
Con-way and APL launched their partnership in August 2006, providing day-definite delivery and fast transit times for LCL imports from Asia, along with a money-back transit time guarantee. They started with service to the U.S. West Coast from Hong Kong, Shanghai and Shenzhen in China. The Asian ports of call grew to include Kaohsiung, Taiwan; Yokohama, Japan; Busan, Korea and Singapore.
In part, the trucker and the ocean carrier are trying to claim freight that otherwise would fly across the Pacific in plane bellies. So far, business has been "very respectable," said Thomas Nightingale, Con-way''s chief marketing officer. In addition to costing 75 percent less than traditional air freight rates, "we''re 99 percent on time," Nightingale said.
The latest expansion carries the trucking company and its customers further into China. Shippers sourcing in China''s Pearl River Delta can use OceanGuaranteed service starting from the Port of Guangzhou, 160 miles upriver from the Port of Shenzhen.
APL Logistics takes cargo from Guangzhou to the port of Hong Kong, where it''s stacked on APL container ships for the move to the West Coast. Con-way Freight manages receipt of ocean containers and deconsolidation in Los Angeles and delivery of cargo as LTL shipments to customers in the United States and Canada.
At this point, Con-way doesn''t plan to follow the route pioneered by YRC and Schneider and purchase or start up a trucking operation in China.
"We don''t see a market structure that lends itself for us to compete in the (domestic) LTL market in China," said Nightingale. "While some of our competitors may see that differently, we''re very comfortable with our current position. That may change - and I hope it does."
Specifically, Nightingale pointed out that Chinese operational authorities require that tractors and trailers remain together as a single unit. "That doesn''t match to our strengths in the LTL world," Nightingale said, which is built around the flexibility that comes with interchangeable power units.
"On the other hand, it''s a wonderful market to be in on the 3PL, transportation management and warehousing side, where we''re hugely committed."