ArcBest is undergoing a “significant” change in the shipping and logistics company’s management structure that will result in a loss of 130 jobs. The moves will “differentiate ArcBest from the crowded field of competitors,” ArcBest President and CEO Judy McReynolds announced Thursday (Nov. 3).
The company did not provide detail on how many of the job cuts are at the headquarter operations in Fort Smith.
McReynolds said the move is geared toward gaining marketshare in what the Fort Smith-based company believes is a $266 billion “market opportunity” for the company’s services through ABF Freight – a less-than-truckload hauler – and its asset-light (non-trucking) segments. Gaining more ground in the market requires a more seamless interaction with customers, according to McReynolds.
“Quite simply, our customers are asking for integrated solutions from us and easier access to them. Based on that feedback and our own market research, we feel confident that this is a significant step toward delivering best-in-class customer experience and greater shareholder value,” McReynolds said in a Thursday morning conference call with investment analysts who follow the publicly held company.
In addition to resulting in an estimated $15 million reduction in pre-tax operating expenses, the changes consolidate ABF Logistics, ABF Moving and Panther Logistics into one division. Most of the company’s logistics services will be under the ArcBest brand, and the sales, pricing, customer service, marketing and capacity operations will fall under the ArcBest brand on Jan. 1, 2017.
Following is a summary of the key division changes.
• ABF Freight field sales, ABF Logistics sales and Panther territory and vertical sales will become ArcBest Sales with Dave Darter being chief sales officer and reporting directly to McReynolds.
• Jim Ingram will be the chief operating officer for Asset-light Logistics and will report directly to McReynolds. Lou Schneeberger, now the Panther President & CEO, is retiring. Ed Wadel will oversee the ground expedite services, third-party transportation, and vendor relationship management. He will remain in the former Panther office in Medina, Ohio, and report to Ingram.
• Danny Loe, with the title of chief yield officer, will oversee the company’s “yield management” focus, and will report to McReynolds.
“Danny, whose experience includes leading yield management at ABF Freight, has been instrumental in leading the ArcBest Enterprise Solutions team over the last few years, providing better solutions for customers in the integrated fashion they desire. The success of this effort gives me a great deal of confidence that our new market approach will succeed,” McReynolds said.
• Steven Leonard was named vice president-customer solutions, and will report to Ingram. All the company’s customer service functions will consolidate under Leonard.
• Dennis Anderson will be the chief customer experience officer, a new position in the company. All marketing functions and corporate strategy will fall under Anderson, who also reports directly to McReynolds.
“Various other departments and functions will be realigned to support this comprehensive operating model refinement. There will be some job losses associated with these actions communicated today, which I recognize are difficult, but necessary, for us to take our organization to an enhanced level of customer experience,” McReynolds said in the Thursday note to the company’s 13,000 employees.
The changes are expected to reduce fourth quarter earnings by $9 million, and reduce first quarter 2017 earnings by $1 million.
The restructuring was announced after the company announced third quarter earnings. Third quarter income was down more than 32%, and income in the first nine months of 2016 is down 57.2% compared with the same period in 2015. The quarterly income of 49 cents per share was just above the consensus estimate of 48 cents per share among the 11 analysts who cover the company.
The market reacted well to the changes. ArcBest shares (NASDAQ: ARCB) closed Thursday (Nov. 3) at $21.95, up $1.75, or almost 9%. The share price in the past 52 weeks has ranged from a $28.12 high to a $14.85 low.