ABF TurnKey Takes Off

ABF Freight Systems Inc. is coming to a neighborhood or office near you.

Don’t expect 50-foot big rigs to start grinding gears through gated communities, or downtown office parking lots to develop into drop yards. The Fort Smith less-than-truckload carrier is simply addressing the needs of many existing customers by using its 28-foot “pup” trailers to transport generally large merchandise via a two-man doorstep delivery service.

Think of it as FedEx with muscles.

ABF TurnKey is a single-source premium delivery service that’s been fully integrated into the carrier. Originally launched through a partnership with now defunct van line Burnham Services, the product is part of a suite of value-added commercial services that includes ABF TimeKeeper and ABF FreightValue.

Art Lynch, ABF’s vice president of sales, said ABF TurnKey was developed during the mid-1990s due to increased demand from manufacturers. The dot-com craze eliminated a lot of middleman distribution firms, creating an opportunity for shipping networks with enough gusto and gumption to attempt consumer-direct deliveries. Enter ABF.

“TurnKey is a product that evolved to add value for our customer base,” Lynch said. “So many shipments now go straight to the consumer instead of a retailer, and many manufacturers have figured out that shipping is where most of their headaches are. Now instead of them having to contract out with a lot of little delivery firms all over, they’ve figured out there’s value in dealing with one source.

“Let’s say you order some furniture and need someone to deliver it, maybe attach some casters to a couch and take away the packaging. That’s what ABF TurnKey is.”

Lynch said it would be hard to calculate the amount ABF has invested in the TurnKey product, but he estimated “it would have to be several million dollars since 1998.”

Lynch said ABF, the largest subsidiary of publicly traded Arkansas Best Corp., has about 50,000 active customers. About 10 percent of those use ABF TurnKey, which is operated through the firm’s By Request department.

Although it’s a niche product, Lynch said revenue from turnkey is growing at a rate of 30 percent to 40 percent annually. Everything from large office products such as copying or mailing systems to large medical products is in the pipeline.

Greater governance in the financial sector post the Enron and WorldCom scandals prompted three national less-that-truckload analysts to balk at commenting on ABF Turnkey, for fear a mountain of paperwork would be required to say “boo.”

One who asked not to be identified, however, said the idea makes sense and that most trucking firms are now laser-focused on value-added products.

Spokesmen at Con-Way Transportation Services Inc. and Yellow Roadway Corp., two ABF competitors, said they don’t yet have competing products for ABF TurnKey.

“Many of our customers will have a one-time need for this kind of thing,” Lynch said. “But our customers are figuring out this is more trouble than the rest of their business, and they can track the whole thing if they want through our system. The downside is two-man delivery requires more coordinating

“Overall, the product is affordable, but it’s not a loss leader,” Lynch said. “If it helps them cut down on inventory and aggravation, they’re happy to pay for it.”

Lynch said ABF TurnKey rates run about 25 to 30 percent more than the firm’s regular rates.