Allied Worldwide, Inc. History

Address:

5001 U.S. Hwy. 30 West
Ft. Wayne, Indiana 46818
U.S.A.

Telephone: (219) 429-2511
Toll Free: 800-234-2788
Fax: (219) 429-1853

Private Company
Employees: 7,000
Sales: $2.37 billion (2000)
NAIC: 484210 Used Household and Office Goods Moving; 484230 Specialized Freight (Except Used Goods) Trucking, Long Distance

Key Dates:

1928:: Allied Van Lines is founded in Mackinaw, Michigan; office established in Chicago.
1933:: North American Van Lines is founded in Cleveland.
1952:: North American Van Lines begins international shipments.
1958:: Allied Van Lines establishes Allied Sea Van Company for international shipments.
1965:: North American Van Lines establishes its High Value Products division.
1968:: Pepsico purchases North American Van Lines.
1975:: Allied Van Lines launches Special Products Division.
1980:: Motor Carrier Act and Household Goods Transportation Act deregulates moving industry.
1985:: Norfolk Southern purchases North American Van Lines.
1992:: Both Allied Van Lines and North American Van Lines initiate quality service programs.
1998:: Investment firm acquires North American Van Lines.
1999:: Allied Worldwide is formed with the merger of Allied Van Lines and North American Van Lines.
2000:: Allied Worldwide purchases Global Van Lines.

Company History:

Allied Worldwide, Inc. is the largest provider of relocation services in the world and one of the largest providers of high value freight transportation. Through its four brands of service--North American Van Lines, Allied Van Lines, Global Van Lines, and Pickfords--Allied Worldwide provides transportation services in North America, Europe, Asia, Australia, and New Zealand. In addition to residential, corporate, and government relocation services, Allied Worldwide provides domestic and international shipments of high value goods, such as delicate electronics, communications, and medical equipment and fine art. Services at North American Logistics include warehousing, parts distribution, less-than-load transport, and emergency shipments of replacement parts; these services are offered in domestic and international markets.

The Early Decades of North American and Allied Van: 1920s-60s

Allied Worldwide formed in 1999 when North American Van Lines acquired Allied Van Lines. The transaction merged two of the oldest and largest moving companies in the United States. Both companies emerged from the increased mobility of Americans during the 1920s and 1930s when highway development and road improvements eased family relocations over longer distances.

A group of independent movers formed Allied Van Lines (AVL), the first national moving company, in 1928 in Mackinaw, Michigan. Prompted by the National Furniture Warehousemen's Association, the group banded together to create more efficient operations, primarily to limit the number of empty miles as trucks often returned empty from a long distance delivery. Allied Van Lines provided dispatch and information services from a central office in Chicago, allowing for coordination of outbound and return deliveries. The network of agents grew quickly along the East Coast, the Midwest, and the South. In 1929 AVL transported more than 5,700 shipments and recorded $850,000 in revenues. By 1931 the company counted 261 truck owner-agents, an additional 113 sales agents, 234 vans, and 13 dispatch offices, attaining a reputation as "the careful movers." The company expanded to the West Coast in 1934, providing coast-to-coast service. Allied Sea Van Company provided international shipping services beginning in 1958, finding many of its customers among military personnel stationed abroad. In 1965 AVL revenues surpassed $100 million. Although AVL had been originally established as a nonprofit company, stockholders approved conversion to for-profit status in 1968, allowing excess funds to be retained for capital improvements. AVL became a private company in 1981 when the operator-shareholders purchased publicly owned stock.

North American Van Lines (NAVL) had similar origins, being founded in 1933 by a group of 12 independent movers associated with United Van Services. They were dissatisfied with the quality of that company's operations and the lack of an extensive agent network. In addition to opening a central dispatch office in Cleveland, NAVL issued the moving industry's first pricing tariff, by county, to simplify agent sales. By 1938 the founders built a network of 120 agents. In 1940 the company started to provide household moving with company-owned vehicles driven by company employees. NAVL entered commercial freight trucking services in the late 1940s, transporting furniture and appliances. The company relocated to New Haven, Indiana, in 1947. Overland and water transportation services to Alaska began in 1952, and expanded into van-sea-van service to Europe in 1956.

During the 1960s NAVL sought to improve the quality of its moving services. The company initiated a quality assurance program to enhance estimation, packing, storage, and transportation performance. The company later extended the program to agent warehouses and facilities. Also, in 1965 NAVL began to provide transportation for sensitive high technology and electronic equipment and other special needs with the formation of the High Value Products division. Trucks for the division were equipped with air-ride suspension for a smoother ride. Equipment on some vehicles included lifts, cranes, or climate control, the latter for art and medical research. The company owned the trucks which transported delicate goods and manned them with highly skilled drivers. During the early 1970s NAVL's reputation for quality played a role in retaining a contract to transport the renowned King Tutankhamen exhibit of ancient Egyptian treasures.

Pepsico purchased NAVL in 1968. Initial changes involved adding the red, white, and blue colors to the logo and relocating its headquarters to Fort Wayne, Indiana, in 1978. During its tenure as a subsidiary of Pepsico, NAVL thrived despite a difficult economy and industry deregulation.

Economic and Legal Developments Leading to Changes in Operations: 1970s-80s

During the 1970s the demand for moving household goods declined as high mortgage rates deterred people from purchasing and moving to new homes. Corporate relocation slowed as middle-management employees often shunned relocation. Both NAVL and AVL responded to the situation by expansion in other areas of service. In 1975 AVL launched its Special Products Division, to handle delicate, high technology equipment, art exhibits, and other special needs. NAVL sought new national accounts for its High Value Products and Commercial Transport Divisions and improved its on-time record. The company based promotions for its Household Goods Group on having "moved the treasure of a King," referring to its handling of the King Tut exhibit. The resiliency of the Household Goods Group came from military and government accounts and new agent locations, with 832 in 1981, the largest network in the country.

The Motor Carrier Act and the Household Goods Transportation Act, both passed into law in 1980, deregulated household goods moving, creating a very competitive environment. Prior to the change the Household Goods Bureau fixed prices used industry-wide, based on weight by mile, and competition among van lines occurred mainly over service quality. Deregulation allowed carriers to increase or decrease rates by 10 percent without approval by the Interstate Commerce Commission. After deregulation carriers lowered prices, offering discounts up to 60 percent off previous rates, and new companies entered the business. The price to haul household goods decreased from $1.28 per mile in 1980 to $1.14 per mile in 1990. AVL responded to the "price wars" with a 9 percent rate discount in early 1983. Meanwhile the whole system of determining prices became more complicated with regional pricing, including within a metropolitan area. Whereas AVL's mainframe computer had been used primarily to track shipments and equipment, deregulation made strategic pricing imperative. In 1987 AVL invested in a system of personal computers, allowing employees to determine profitable but competitive prices more quickly.

NAVL had already implemented internal cost controls and responded to deregulation with volume incentives, guaranteed pricing, and replacement cost protection. The company gained federal approval in 1982 to transport almost any general commodity. NAVL changed its commercial fleet to accommodate larger, heavier loads, adding 48-foot trailers and converting single axle tractors to tandem axle. Also, NAVL introduced the Customized Logistics and Distribution Services to provide just-in-time delivery. For instance, newly produced automotive parts were shipped to assembly plants as needed, saving customers inventory expense by storing freight at intermediate warehouse facilities. By 1983 general freight accounted for 60 percent of total revenues of $560 million; NAVL recorded net income of $25 million in 1983. Despite difficulties in the moving industry during the 1970s and the early 1980s, NAVL recorded a compound annual growth rate of 13.6 percent from 1975 to 1984.

Pepsico decided to focus operations on its core food and beverage business in 1984 and sold NAVL to Norfolk Southern Corporation, the holding company for Norfolk Southern Railroad. Norfolk Southern purchased NAVL for $315 million, plus accrued interest for deferred payment, finalizing the sale in June 1985 for a total of $375.7 million in cash. Norfolk Southern allowed NAVL to continue to operate as before, though it did integrate NAVL into a network of intermodal transportation with Norfolk Southern Railroad.

Triple Crown Service, introduced in 1986, offered customers the convenience of the van line's door-to-door service and the cost benefits of less expensive rail service. "Road-railer cars," outfitted with both rail and truck wheels, were connected to a tractor or placed directly on the railroad for ease of transfer. Also, the road-railer cars were connected to lighter and faster lines of transportation. In 1993, Conrail purchased a stake in Triple Crown, initially adding four rail terminals to the existing system of 12 terminals.

In the late 1980s emphasis on NAVL's International Group increased, providing relocation services and commodities freight forwarding through 250 overseas agents and sales representatives. The 1987 acquisition of Midi Data Transport Speditions GmbH, in Frankfurt, provided a foundation for expansion into Europe. In 1992 NAVL formed a joint venture with 60 European moving companies in 15 countries. With a 40 percent stake in UTS Europe, NAVL shared its operational technology and expertise to coordinate shipments for fully loaded trucks and fewer empty miles.

AVL experienced similar changes during the late 1980s. In 1988 AVL initiated VanRail service using shipping containers easily transferred from truck to railcar. The same year National Freight Consortium (NFC) of London purchased AVL for $100 million and AVL became part of the largest international network of movers, as Allied Pickfords. In 1993 NFC acquired Allied Canada and opened Allied International offices in Beijing, Bangkok, Moscow, Saigon, and Manila.

Business-to-business service became a more important aspect for moving companies. The business of moving household goods was a mature and seasonal market, with most moves occurring during the summer, while commercial accounts provided year-round stability. Logistical parts distribution and temporary warehousing of goods became more important aspects for competing for corporate clients in domestic and international markets. AVL instituted "Express One" less-than-load transportation service for commercial customers, consolidating freight with household goods to make a full load. Both NAVL and Allied Pickfords offered international service which streamlined the transport of a client's retail goods by offering a single-source of distribution, rather than a number of carriers, transporting goods from the factory to port of departure, and from destination port to warehouse.

Another economic downturn in the late 1980s, and increased competition from railroads led to a decline in demand for van line movers. NAVL revenues declined from a peak of $844 million in 1988 to $797.3 million in 1991. Business slumped in all areas, with the biggest decline in Relocations Services, at 9 percent in 1991; NAVL fared well compared to the 10 percent decline nationwide. NAVL recorded losses beginning in 1989 when the company began to convert the Commercial Transport Division from owner-operator carriers to company-owned trucks driven by employees. Though business remained steady in the division, losses prompted Norfolk Southern to put that business up for sale. Without a buyer, however, NAVL discontinued service and dismantled the division in 1993.

NAVL continued to provide special logistical services, order fulfillment, and parts distribution to commercial customers as part of the High Value Products division. NAVL invested in trailers with special equipment for moving delicate goods, and satellite communications, for moment-by-moment location. To accommodate expansion into this area of shipping, NAVL opened logistics centers in Sacramento; San Diego; and Billings, Montana. The company obtained lucrative contracts for parts distribution with Wang, Hewlett-Packard, and GE Medical and a contract renewal with IBM.

Quality service became an important means of competition in the moving industry during the early 1990s. Both NAVL and AVL initiated programs to improve service. AVL's standards, under "The Quality Alliance," sought to improve customer service with its agents, drivers, and corporate personnel. AVL formed Allied University, a training facility which provided courses on safety, equipment standards, and customer service. Also, AVL developed the Special Products Division by launching its Showcase Fleet with drivers specially trained to handle exhibits. In 1995 AVL became the official carrier of the Imperial Tombs of China exhibit, featuring art and treasures from 500 B.C.

NAVL took the initiative to provide quality service as well. In 1992 the company introduced the first mobile driving simulator, taking driver education classes directly to drivers nationwide. NAVL launched its proprietary Home Touch! software, allowing agents to perform estimates on laptop computers in the customer's home. The company became the first van line to receive ISO certification for the movement of certain electronic equipment. In 1996 NAVL recorded revenues of $930 million.

Merging to Form Largest Carrier of Household Goods: 1999

The formation of Allied Worldwide began in 1998 when the investment firm Clayton, Dubilier & Rice (CDR) purchased NAVL from Norfolk Southern for $200 million. A year later CDR arranged a merger of AVL and NAVL, forming the world's largest relocation company. CDR paid NFC $400 million in cash and $25 million in stock. The merger also involved Pickfords Removals, a moving and storage service, whose history has been traced to the 1630s, with operations in the United Kingdom. NFC acquired Pickfords in 1969 and sold the company along with AVL. Allied Pickfords operated through agents, representatives, and company-owned branches in Europe, Australia, New Zealand, and Asia.

The list of Allied Worldwide brands expanded further in April 2000 with the acquisition of Global Van Lines for $4.2 million. The predecessor company was founded in 1933 and Global grew to become one of the largest van lines in the country, offering domestic and international relocation services and special handling transportation services. Global established industry standards for equipment, including air-ride suspension, climate control, donut wheel trailers, high cube trailers, logistic-track cargo systems, and aluminum cargo beams. It was the first moving company to develop separate divisions for electronics and exhibits. Global gained renown by becoming a major carrier of NASA equipment, such as lunar rovers and manned spacecraft. Allied Worldwide integrated Global into the NAVL network of agents, but retained the brand name.

At the start of the new century Allied Worldwide placed the emphasis for future growth on customized logistics and parts distribution for commercial customers. Activities included restructuring the division and several executive appointments. An alliance with Jardine Logistics expanded parts distribution opportunities in the Asia-Pacific region. In Europe, North American Logistics initiated a system of "parts banks," decentralized warehouses that stored replacement parts for electronic equipment. These warehouses were located strategically so mobile repair engineers had easy access to replacement parts. Warehouse computers were linked to client systems for inventory availability and stock management. The company completed implementation of the system in October 2000.

Principal Subsidiaries: Allied Van Lines, Inc.; Allied Pickfords; Global Van Lines; North American Van Lines, Inc.; Transguard Insurance Company; VanGuard Insurance Agency, Inc.

Principal Divisions: Van Lines Network Services; Moving and Storage Services; Logistics Services.

Principal Competitors: AMERCO; Atlas World Group, Inc.; UniGroup, Inc.

Allied Worldwide, Inc. History

Key Dates:

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