Arkansas Best puts its best efforts on the road to provide freight transportation services in its home state and the rest of North America. Specializing in long-haul, less-than-truckload (LTL) shipments of general commodities (no hazardous waste or dangerous explosives), subsidiary ABF Freight System accounts for over 90% of the company's sales. (LTL carriers combine freight from multiple shippers into a single truckload.) ABF Freight System operates a fleet of about 3,800 tractors and 19,000 trailers from about 275 terminals in the US, Canada, and Puerto Rico; it offers service into Mexico via alliances. Freight carried by the company includes chemicals, food, textiles, apparel, appliances, and furniture.
The ailing economy has impacted not only these consumer industries, but the residential and commercial construction markets, as well -- less demand equals less need for truckload transportation. This challenge presented a long and winding road for ABF, starting as far back as 2006. With a more than 20% reduction in 2009 revenues, the company responded by implementing cost reduction programs, including headcount and equipment reductions, general rate increases, added fuel surcharges, and reduction of nonunion fringe benefit costs. With 2010 revenues up more than 12% over 2009 and tonnage delivered increasing more than 12%, the reductions have paid off. Also part of the equation is the fact that 70% of Arkansas Best's workforce is in the International Brotherhood of Teamsters (IBT), making ABF Freight System one of the largest unionized LTL carriers in the US next to industry giant and rival YRC Worldwide (formerly Yellow Roadway). Unionized carriers face growing competition from nonunion rivals, which tend to have lower personnel costs.
To better compete with regional LTL rivals, ABF Freight System is offering overnight delivery service from many of its terminals. The company provides next-day and second-day delivery in the eastern two-thirds of the US through its Regional Performance Model (RPM) network, which operates alongside ABF Freight System's well-established long-haul network. The RPM service is being expanded to cover the western US.
Arkansas Best's subsidiaries support ABF's business. FleetNet America unit provides maintenance and emergency roadside services for the commercial trucking industry. Data-Tronics provides computer information services primarily to ABF, while FreightValue works in association with ABF to provide alternative transportation options.
In 2012 Arkansas Best acquired freight transportation and logistics firm Panther Expedited Services for about $180 million from Fenway Partners. The acquisition will help Arkansas Best service the end-to-end logistics needs of supply chains that are becoming more complex. Panther will operate as a sister company to ABF Freight System. – less