Old Dominion targets
smaller rivals in bid to
boost market share
Old Dominion Freight Line Inc., one of the nation’s
most successful less-than-truckload (LTL) carriers, aims
to reach $3 billion in annual revenue in five years, a figure roughly double the revenue the carrier reported in
2010, its president and CEO said.
David S. Congdon told attendees at a transportation
and logistics conference sponsored by investment firm
Stifel, Nicolaus & Co. in Key Biscayne, Fla., that Old
Dominion will seek to capture market share from sec-ond-tier players, companies that rank just below the top
25 LTL carriers in size. Those smaller companies
account for about $5 billion of the $35 billion U.S. LTL
market, he said.
Smaller carriers may have trouble competing because
of their lack of scale, their inability to competitively
price their services, and their relative dearth of products, Congdon said. Those firms will likely go out of
business, combine with one another, or be candidates
for acquisition, he added.
Congdon forecast that 85 to 90 percent of Old
Dominion’s growth would come from its traditional
domestic LTL business. The rest will come from value-added services such as drayage, warehousing and distribution, and third-party logistics, he said.
In 2010, Old Dominion reported revenue of $1.49 billion, a 19-percent increase over 2009 totals.
Old Dominion, based in Thomasville, N.C., holds an
8-percent share of the LTL market in the South, its
strongest region.
Congdon said the
carrier’s first-quar-ter yields—
measured by revenue per
hundredweight—
would rise 4 to 6
percent, excluding
fuel surcharges.
In a move that
runs counter to
what’s happening elsewhere in the trucking industry,
Old Dominion will add trucks to its fleet for “growth,”
not just to replace aging equipment, Congdon said.
Other trucking executives have been reluctant to expand
their fleets in light of concerns over the sustainability of
the economic recovery and the availability of qualified
drivers.
—M.S.
American Airlines Cargo
launches first U.S. service to
Tokyo’s Haneda Airport
American Airlines Cargo has launched daily Boeing
777 service between New York’s John F. Kennedy
International Airport (JFK) and Japan’s Tokyo
International Airport at Haneda, becoming what
American says is the first U.S. airline to transport
cargo between the continental United States and
Haneda.
American already offers daily service between JFK
and Tokyo’s Narita International Airport. Narita,
located 35 miles from the center of Tokyo, has long
been Japan’s international air-cargo hub. By contrast, Haneda, which is much closer to the city, has
mostly handled flights within Japan.
One of the attractions for American was Haneda’s
recent development of—and continuing investment
in—cargo infrastructure, said Jennifer Pemberton, a
spokeswoman for the carrier’s cargo division. By providing cargo service to Haneda, moreover, the airline
can attract new customers and more effectively utilize domestic air and road connections with cities like
the auto manufacturing center of Nagoya, she said.
Pemberton said American expects the Haneda service to attract high-value commodities, including pharmaceuticals, consumer electronics, and auto parts.
The additional service was made possible by a
bilateral “open skies” agreement signed in 2010
between the United States and Japan. The new
route will provide more opportunities for American
to offer connecting service through intra-Japan partnerships that feed cargo into key hubs in Japan, said
Dave Brooks, president of the cargo division.
The airline has scheduled the New York-Haneda
service to support connections between JFK and
Latin America. American expects to use the new
service to move consignments of flowers from South
America to Asia, as well as auto parts and construction equipment from Asia to destinations like São
Paulo, Brazil.
