DG: Let’s kind of go into
those a little more specifically, if you would. This relatively new
service, I know you’ve been working on it for a period of time;
I think you personally have been working on it for a period of time,
that I believe you’ve titled “The Regional Advantage”.
JW:
Actually it’s called “Standard Ground Regional Advantage.”
DG: Can you give us an overview
of how or what is different about “Standard Ground Regional Advantage”
particularly again as it relates to the shipper and then impacting your
own bottom line?
JW:
Well if you go back and look at Yellow, especially over the last twenty
years, we had this hub and spoke system in place coming out of deregulation
that has served us well. But you know the economy was changing, distribution
patterns were changing, customers’ needs were changing, the competition
was changing, and so we felt very strongly that we were going to have
to not abandoned our hub and spoke system but we were going to have
to do something that complemented it to put us in a position to compete
more head-to-head with these regional carriers who have been doing pretty
well over the last ten years. Thus, "Standard Ground Regional Advantage”.
We basically took our existing system and molded it and adjusted it
to where we could run a lot of two day service lanes through it, while
at the same time running our large national hub and spoke system. That
put us head-to-head with the regional carriers. Some of our major competition
has tried to duplicate what we’re doing, but we feel like they’re
certainly not as effective as we’ve been. And our customers are
telling us they like the fact we can not only go the five day points,
but we can also be very competitive with two day points.
So we think it’s benefiting shippers by allowing them to have a
little more of a one-stop shopping mentality and certainly the “Standard
Ground Regional Advantage” business has performed better than our
traditional long haul business, so we feel like we’re on the right
road.
DG: New services, getting them
out there, having them understood by the shipper so that the shipper
can participate with you obviously is an ongoing challenge. One of the
things that you exposed a couple of years back and I think it was announced
at your annual meeting two years ago last January.
I remember Jim Bramlett and some others coming out with a big sign
that said EXACT EXPRESS. And it was really introduced, it obviously
had zero revenue at the time, and it was an idea and the field force
took it up and went out and talked to the shipper community about what
it was that you could offer. That’s grown into a real business
now. How has it impacted again, the shipper as well as the revenue stream
for Yellow?
JW:
Looking from a shipper standpoint, it allows us to go in and again offer
multiple services to those customers and we’re getting really good
feedback. And in fact that business grew double digits in 2001 when
the expedited industry as a whole suffered double digit declines. So
we’re real proud of that and I guess even more so is the fact that
that double-digit growth is continuing in 2002. And really what it allowed
us to do was to get on a level playing field with companies like Eagle
or Emery and really put us in a different light with our customers.
And we’re trying again to change our company to where we’re
not just viewed as a "______" national LTL carrier. We’re
multi-dimensional, we’re multi-modal, we can do long haul, we can
do regional, we can do expedited global and that’s how we’re
trying to mold the company.
DG: You mentioned global. Certainly,
at least in terms of North America, initially. You’re getting real
involved now with NAFTA and bringing together service offerings that
really do have very major implications for all of North America. So
I guess the questions is, “What is Yellow’s involvement in
NAFTA business and how is it benefiting shippers in the marketplace?”
JW:
Well, NAFTA is a real priority for our company. In fact, it’s about
12% of our total business and we’re very involved in Canada and
Mexico and certainly we work hard on those two pieces of our business.
It is one of our largest priorities because again, as the economy changes,
as distribution patterns change, as the world changes, NAFTA is going
to be a bigger piece of the pie that we can compete for. So we’ve
really worked hard on trying to improve our services, both transit time
and administratively in Canada and Mexico. We think that when you’re
looking at the total portfolio of services we’re providing our
customers, that just makes it easier for our customers to do business
with Yellow, which that’s our goal.
DG: One of the things that really
goes beyond that then is your global business. I know that there has
been some restructurings internally, but there is also the customer
who needs that global service or activity. I think that it’s falling
now within your non-asset based group of business, which is part of
the corporation.
JW:
Right.
DG: But again, from the customer’s
perspective, how is it that they should know what Yellow is doing in
a global sense?
JW:
Well, one of the things that we’re working very hard on is improving
our global business. And another good success story there, last year
that business grew double digit and although it’s not a huge portion
of our total revenue pie, it still grew in a good manner, and that trend
has continued this year, much like Exact Express.
But I think it’s important again to understand what’s going
on with our global economy and as things change, as our manufacturing
base in this country continues to erode, and that’s a concern that
all of us should have. But the fact of the matter is there are plants
every day closing and that business being manufactured is moving to
China, to Taiwan, to South America, you name it. And so somehow if Yellow
is going to survive and prosper over the long term, we’ve got to
find a way to get our hands on that freight, either at origin in a foreign
country or at a port here in the United States.
So really with the door-to-door service that we offer through Yellow
global, that gives our customers the ease of doing business with a company
that can handle it from origin to destination and not have to get involved
in the difficulties of trying to manage freight on a global basis. So
it’s really the simplicity of doing business that we’re trying
to sell as an advantage to our customer.
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