Turnaround strategy for a North American transportation provider

Faced with a declining freight environment and rising fuel costs, a leading North American transportation provider was experiencing declining margins. The company’s focus on growth resulted in excess network capacity, low yields on National Accounts, and large discounts on several lines of business.

To turnaround its situation, the company partnered with A.T. Kearney to develop and implement a comprehensive improvement program.

Challenge

The transportation provider wanted to implement an aggressive program that would not only change the company’s cost structure but generate immediate results. The challenge was driven by the need to protect and stabilize the core product, address network overcapacity, and change the mindset of the organization.

Approach

The team designed a multi-faceted approach to tackle these challenges:

• Developed a market perspective to better understand customer expectations, using surveys and interviews for a quantitative approach to estimate the top-line revenue impact that could be expected from different restructuring actions
• Created network scenarios to eliminate excess capacity and align capabilities with market expectations
• Identified productivity improvement opportunities to further reduce operating costs
• Realigned the field organization and incentive structure to create a greater focus on margin and profitability

Additionally, the A.T. Kearney team worked hand-in-hand with the client to develop an implementation plan to phase in the changes and monitor the initial actions to ensure results were achieved.

Results
The comprehensive improvement program identified means for the company to reduce network capacity by 30%, protect its core product offering, and improve EBIT by ~$400M. 

In addition, the revised strategy included a dramatic repositioning of the company’s image and focus in the market.

Contact

For more information, please contact Laurent Guerard.