Fresh Start 2002: On the Road Again

Each dock worker is equipped with a wireless mobile data terminal, or MDT, designed to speed up the loading and unloading process. Before a tractor trailer arrives, the worker can see what's on board, as well as which doors on the dock correspond to those destinations. If he is taking longer to unload the pallets than the system estimates that it should take given the amount of freight, an alert is sent to his MDT. The dock supervisor also has access to the incoming and outgoing freight at his computer station. If he notices that a truck is running behind, he can dispatch a second employee and a forklift to speed things along. The old system was inflexible: one employee per trailer.

The technology enables Yellow to give the employees who are closest to the customers the information they need to solve problems quickly. And the leadership style allows those employees to make decisions themselves, rather than wait for a supervisor's response. That's how Yellow's facility in Chicago is able to operate as effectively as it does, says Bob Zimmerman, its director of operations. With 367 doors and two terminals that are a quarter-mile apart, it's the largest distribution center in the network. The staff fills 500 trailers a day, loading and unloading thousands of shipments. Many trucks are in and out in half the time that it used to take. "We call it the 'zoom process,' " says Zimmerman.

A sense of urgency has replaced the long-haul mentality. Yellow used to hold a trailer on the platform for hours, he says, eager to fill every inch of available space, even if it meant that the truck fell far behind schedule. These days, in order to meet the shorter transit times, the terminals have regularly scheduled departures, just like the airlines. But the trailers aren't leaving the terminals half full, says Zimmerman, because about 90% of Yellow's freight is predictable.

Yellow's Regional Advantage represents another crack at the lucrative regional market for the company. The deliveries are shorter, including two-day shipments within 550 and 1,100 miles. And the demand is growing, unlike that for long-haul deliveries, which have been on the decline. The difference for Yellow this time is the technology, says Zimmerman. Dispatchers and dock workers can identify regional shipments in the system and keep them on schedule. About 70% of Yellow's shipments take three days or less, a significant decrease compared to several years ago. But the trucks aren't traveling any faster. The engines are equipped with governors that limit the top speed to 62 MPH. The fleet runs faster because Yellow is managing its network smarter: fewer stops, fewer freight transfers, and fewer damaged shipments. "Every time the freight is handled," says Zimmerman, "it's slowing down, and the risk of damaging it increases."

The central dispatch office in Overland Park serves as Yellow's air-traffic control tower. Dispatchers have what John Braklow, senior manager for service improvement, calls "a 40,000-foot view" of the day's shipping activity on a map of the United States. They identify service failures in the making and work with the terminals to devise solutions. The system, which updates every 10 minutes, allows the dispatchers to see each shipment in the system, color-coded according to whether it's on schedule, or each driver in the system, color-coded according to his availability. The red shipments are the ones that are in danger of arriving late. "One of the guys calls it the 'Visine system,' " says Braklow, "because you're supposed to get the red out."

The Road Ahead

These are tough times for the ground-freight industry. As James Welch, the current head of Yellow Freight, says, "We truck the economy." So when the economy hit the brakes and manufacturing came to a stop in 2001, there was less freight for Yellow to move. The company's stock price dropped, it missed its earnings estimates, and it had two rounds of layoffs that totaled 591 nonunion employees. About 800 drivers were issued furloughs as well. Immediately after the September 11 terrorist attacks, there was speculation that ground-freight carriers might see more business as companies avoided using air cargo. But it didn't happen.

Despite the setbacks, Zollars remains upbeat about the road ahead for several reasons. First, Yellow's defect rate is down from 40% to 5%, and its on-time performance (excluding weather delays) is in the high nineties. The number of customers surveyed who said that they would recommend Yellow has doubled since 1997. And in an industry that is notorious for slim margins, the company continues to create promising sources of revenue, including Transportation.com, a logistics service for small- and medium-sized businesses. Zollars predicts that, like the airline and telecommunications industries after deregulation, a handful of big ground-freight companies will ultimately survive. One of them will be Yellow. "We were a one-trick pony before, and now we're able to provide a full suite of transportation services," he says. "This is the time to be even more aggressive. We should be grabbing more market share and thinking strategically."