If an LTL carrier is looking outside the industry for a pricing manager, it seems logical that the airline industry be their first stop.
This is the path taken by XPO Logistics Inc. (NYSE: XPO), which announced on Tuesday that it has appointed David Phalen, a 22-year veteran of the airline industry, to the newly created position of senior vice president of pricing for its LTL segment, effective immediately. .
Phalen spent seven years with American Airlines Group (NASDAQ: AAL), where he served as Managing Director of International Revenue Management and Managing Director of Revenue Analytics, Ancillary Services and Execution. Previously, he held leadership positions in pricing and revenue management for eight years at the former US Airways and for seven years at the former America West Airlines. Both carriers are now part of American.
Phalen should feel at home at XPO. The LTL industry created the hub-and-spoke distribution model after World War I, nearly 60 years before airlines implemented their version after the industry was deregulated in 1978. LTL carriers use lines or truck routes as spokes, with terminals functioning as hubs. Terminals collect local freight from different shippers in their areas and use hubs to consolidate freight in the regions or areas where these shipments are to be delivered.
The hub-and-spoke model is essential for both industries to maximize efficiency and profitable revenue from their respective customer densities.
LTL carriers live and die on their ability to properly cost and price their freight because they operate high-cost, high-interaction networks. Old Dominion Freight Line Inc. (NASDAQ: ODFL), considered the best-run LTL carrier, owes much of its success to its cost and pricing prowess. Todd Polen, Vice President of Pricing Services for Old Dominion, has been with the company for nearly 32 years, the last 12 and counting in his current role. Prior to that, Polen spent nearly 11 years as Director of Performance Management at Old Dominion.
Greenwich, Connecticut-based XPO plans to become a standalone LTL carrier by the end of the year after spun off its North American truck brokerage, managed transportation and freight forwarding businesses. It also plans to divest its European operations. In March, XPO sold its North American intermodal and drayage business to STG Logistics for $710 million in cash.
FREIGHTWAVES’ Top 500 For-Hire Carriers list includes XPO Logistics (#8) and Old Dominion Freight Line (#9).
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