Friday, February 11, 2011

Trucking Success Implies High Yield

Let's talk a little about yield, or the trucking measurement for revenue per hundredweight.  How does a company maximize it?

Hiring a senior exec who focuses on yield management is one way, as Con-way Freight is doing right now.  It works if the exec has a plan to cut across the firm and gets buy-in from every business unit.  This hire had better have an excess of charisma and networking ability. 

Product focus helps.  Limiting your freight to stuff that commands a premium - like perishables - means you've staked out a niche in a channel where customers absolutely must pay to have something delivered on time.  It also means you deliberately prune away low-cost business lines using your hand-dandy BCG growth-share matrix. 

Tiered pricing helps.  Charge more for rush deliveries.  Don't eat costs like bridge tolls if you can compete on non-price service metrics like timeliness.  If you have to pass on fuel surcharges to your customer, don't count them towards yield.  Fuel costs are mostly out of a company's control although they can be partially hedged with energy futures. 

Reader, your thoughts are always welcome.  There must be plenty of people out there with relevant wisdom.