TNT Freightways Corporation
TNT Freightways Corporation
9700 Higgins Road
Rosemont, Illinois 60018
Fax: (708) 696-2080
Operating Revenues: $1.01 billion
Stock Exchanges: NASDAQ
SICs: 3711 Motor Vehicles & Car Bodies; 4212 Local
Trucking Without Storage; 4213 Trucking, Except Local;
4226 Less-Than-Truckload (LTL) Transport; 4731
Arrangement Transport Freight & Cargo; 6719 Holding
Companies; 7549 Automobile Dead Storage &
TNT Freightways Corporation is one of the most successful trucking firms in North America, crisscrossing the country with over 40,000 shipments each day by six regional carriers. Specializing in less-than-truckload (shipments under 10,000 lbs.) overnight and second-day delivery, TNT’s subsidiaries have divided the United States into six overlapping parcels: Bestway covers the Southwest from California to Texas; Dugan serves the central United States, from the Dakotas to Texas and the Gulf states and stretching into Georgia, Florida, and the Carolinas; Holland services the Southeast to the Great Lakes; Reddaway covers the entire West Coast with Alaska and Canada; Red Star services the East Coast, Quebec, and Ontario and is venturing into the Carolinas and Georgia; and United handles the Pacific Northwest and Rocky Mountain states. Working independently and in concert, TNT’s divisions have continued to conquer an ever-increasing share of the specialized, time-sensitive trucking industry.
TNT’s story began decades ago in the Southern Hemisphere. Sir Peter Abeles, a Hungarian refugee who settled in Australia and became a prominent entrepreneur, took a two-truck operation named Thomas Nationwide Transport in the 1950s and over the next 40 years turned it into a worldwide transportation conglomerate. Known as TNT Limited and based in Sydney, Abeles’s group of businesses came to include railcars, trucks, and aircraft, with operations in 185 countries on six continents. During the late 1980s and early 1990s the vast TNT empire became unwieldy and fell victim to economic recession.
After losing $155 million in 1991, TNT Ltd. decided to spin off several non-core assets, including its U.S. trucking interest. As part of the deal, John “Cam” Carruth, who had headed TNT Ltd.’s North American trucking operations since 1985, became president and CEO of the newly independent TNT Freightways Corp. In February 1992 TNT Freightways initiated the largest initial public offering of a trucking company in U.S. history. Luckily for TNT Freightways, trucking company stocks had already risen by 12 percent in early 1992, making it an optimal time for an IPO. The company’s 14.4 million shares (75 percent of its stock) were snapped up at a price of $19.50 in a matter of days. The stock sale raised over $280 million, which TNT Ltd. applied to its $1.5 billion debt load. An additional 1.3 million shares netted the newly independent TNT Freightways more than $24 million for what it called “general corporate purposes.” Although TNT Ltd. retained equity of more than 20 percent, TNT Freightways was now free to pursue its own interests.
At the time of its IPO, TNT Freightways’ six LTL trucking units served most of the United States and some of Canada, with gaps only in the Southeastern states. In addition to the regional trucking operations were TNT Contract Logistics, TNT Distribution Services Inc., and TNT Auto Warehousing. TNT Contract Logistics, founded in 1990, provided a wide range of logistics solutions for North American companies needing dedicated transport vehicles, warehousing, administrative, inventory management, and customer service functions. TNT Distribution Services Inc., also founded in 1990, handled assembly and distribution services for the Chicago metropolitan area, southeastern Wisconsin, and northwestern Indiana. And TNT Auto Warehousing (known as the “little Detroit” of the Northwest), located on Puget Sound at the Port of Tacoma, accessorized and stored foreign and domestic vehicles for sale in the United States or abroad, and provided a reconditioning service for fleet and rental cars. TNT Auto Warehousing was later sold in 1993 when the company decided to concentrate solely on trucking and logistics operations.
Before going public, TNT Freightways’ operating revenues were $458.7 million for fiscal year 1989, with net income of $14.4 million; in 1990 revenues rose more than 30 percent to $597.9 million and net income to $15.9 million; and in 1991 operating revenue climbed about 13 percent to $675 million, but net income fell by nearly half to $7.3 million in the midst of the trucking industry’s downturn. (Only TNT’s operations in the Southwest and Northeast registered actual losses.) In 1992 TNT had regained its footing and once again posted gains in operating revenues, which totaled $800 million; net earnings, while less than the previous year, were $6.9 million while many competitors either closed down or were swallowed by stronger rivals. TNT was able to register an impressive 16.3 percent increase in its LTL revenue despite the woeful economic conditions.
In 1992 the company also launched Nationwide Logistics Corp. to do for the trucking industry what TNT had already achieved on a smaller scale for auto manufacturers. By offering one-stop, long-term outsourcing through TNT’s vast trucking networks, Nationwide Logistics was designed to take over for the traffic departments many companies were forced to abandon during the recession. Though its competitors were plentiful (including divisions at ABF, Roadway, Ryder, Yellow Freight, and others), TNT believed the developing contract logistics field, with no established leader, had room for one more player. Nationwide Logistics Corp. was not meant to eclipse TNT Contract Logistics, but to complement its operations.
As TNT Freightways continued to make its mark in the United States and Canada, its former parent, TNT Ltd., had less and less interest in the trucking outfit. When word came down that TNT Ltd. was interested in selling its remaining shares, TNT Freightways was more than eager to reclaim them. In March 1993 TNT Freightways negotiated the purchase of TNT Ltd.’s remaining equity of over 5.5 million shares (about 20 percent) in the company, following the former parent’s decision not to sell the stock in a public offering. By the end of the year, operating revenues had reached $898.9 million, just over 12 percent higher than in 1992, with income topping $27.3 million. Staffing had grown to more than 11,000 employees in the United States and Canada.
During the next year, 1994, TNT Freightways reached several critical milestones and was able to overcome an earthquake, severe weather conditions, and a potentially devastating strike. By 1994 TNT’s regional truck lines served 90 percent of the continental United States, and the company was determined to raise this figure to 100 percent coverage, including Alaska and Hawaii. Since the Southeast wasn’t adequately serviced, New Jersey-based Red Star Express (which covered the New England and mid-Atlantic states as well as Ontario and Quebec) announced plans to expand into the Carolinas and Georgia. Although Red Star’s networks extended as far as a 29-door terminal in Richmond, Virginia, new operations were slated for Charlotte and Raleigh/Durham, North Carolina, with a possible third in South Carolina. Red Star also initiated partnerships with two siblings, Dugan and Holland, for more extensive coverage of the Southeastern states.
While its regional carriers were busy ironing out details for overlapping markets, TNT Freightways put the finishing touches on extended coverage to all 50 states. In January the company acquired Coast Consolidators, Inc., a freight forwarding company based in Los Angeles providing shipments to and from Hawaii. Later in the year TNT opened new transportation routes to Alaska and completed a new agreement for service in Puerto Rico.
Despite crippling snowstorms in the central and Northeastern states, first quarter results brought in record income of $5.9 million—46 percent higher than the previous year’s figures— while LTL revenue as a whole climbed another 19.8 percent as each division continued to pull higher shipments and tonnage. In April, however, TNT’s two largest LTL haulers, Red Star and the Michigan-based Holland Motor Express, were stymied by what became a 24-day International Brotherhood of Teamsters strike. Red Star and Holland had accounted for two-thirds of the company’s revenues in 1993. After weeks of getting nowhere with 75,000 striking Teamsters, TNT was no longer willing to leave negotiations to a third-party agency and pulled out of the Washington-based TMI (Trucking Management Inc.) to resolve the strike on its own. Fortunately, an agreement was reached just over three weeks after the strike began.
Despite disruptions from the California earthquake, record cold, winter storms, the Teamsters’ strike, flooding along the Mississippi River, and special charges related to upcoming deregulation, TNT Freightways increased revenues by 13 percent over 1993 to break the $1 billion mark. Notable contributions were made by TNT’s logistics businesses (which increased revenue by nearly 53 percent), and in particular by the three-year-old Contract Logistics, which exceeded $50 million on its own.
To protect its hard-won status as an independent billion-dollar company, TNT’s board of directors adopted a poison pill provision in 1994 (which was set to expire on February 3, 2004). To maintain its growth rate, the company planned to continue increasing interregional shipment agreements between its six trucking divisions as well as cross-pollination with its four logistics businesses, and to further its globalization plans through an alliance with Direct Container Lines. Moreover, TNT hoped to speed delivery schedules and minimize handling costs through further territorial expansion and greater density within its already established networks.
TNT’s Bestway Transportation, Dugan, Holland Motor Express, Reddaway Truck Line, Red Star Express, and United Truck Lines have become industry leaders known for their on-time delivery and dependability, while TNT’s diversification into logistics with Coast Consolidators, Contract Logistics, Distribution Services, and Nationwide Logistics have taken computerized distribution and supply chain management to new levels of efficiency. By upping its territorial coverage and increasing its shipment size, TNT Freightways Corp.’s nearly 5,000 tractors and 11,000 trailers carried over 6.4 million tons of freight in 1994 and were well on their way to doubling this figure by the end of the decade.
Nationwide Logistics Corporation; TNT Bestway Transportation Inc.; TNT Coast Consolidators Inc.; TNT Contract Logistics Inc.; TNT Distribution Services, Inc.; TNT Dugan, Inc.; TNT Holland Motor Express, Inc.; TNT Red Star Express, Inc.; TNT Reddaway Truck Line, Inc.; TNT United Truck Lines, Inc.
Anderson, Veronica, “Trucker Keeps on Rolling,” Crain’s Chicago Business, April 11, 1994, pp. 46-47.
Commins, Kevin, “IPO Gives Area Trucking Firm New Firepower,” Crain’s Chicago Business, March 2, 1992, p. 41-42.
Hamilton, Dane, “TNT Freightways Begins Major Push for Customers of Logistics Subsidiary,” Journal of Commerce & Commercial, February 1, 1993, p. 2B.
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Luebke, Cathy, “TNT Bestway’s Parent Goes Public, Breaks from Foreign Firm,” Business Journal (Milwaukee), April 27, 1992, p. 5.
—— “TNT Freightways Corp.,” Business Journal (Milwaukee), June 25, 1993, p. 115B.
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