Carolina Freight Corporation Business Information, Profile, and History

History of Carolina Freight Corporation

Carolina Freight Corporation is the holding company for several general freight trucking operations. The combined revenue of Carolina Freight's major operating subsidiaries puts the corporation among the ten largest motor carriers in the United States. These subsidiaries include Carolina Freight Carriers Corporation, G.I. Trucking Company, Red Arrow Freight Lines, Inc., Cardinal Freight Carriers, Inc., and Complete Leasing Concepts, Inc. Carolina Freight Carriers accounts for over three quarters of the company's revenue. Three of these companies--Carolina, G.I., and Red Arrow--are primarily less-than-truckload (LTL) carriers. LTL refers to cargo shipments of less than 10,000 pounds, or one quarter of the actual capacity of most van trailers. LTL operations consolidate these smaller shipments into full trailer loads using a system of centrally located terminals. Carolina Freight Corporation (CFC) also provides international service as a non-vessel operating common carrier. By working in tandem with other companies, particularly ocean carriers, CFC serves over 120 countries, consolidating shipments into containers that are transportable by ocean vessels and sending them on combined freight bills to agents in the receiving countries. CFC operates subsidiaries in Canada and Mexico--Carolina Freight Canada, Ltd., and Carolina Freight de Mexico, S.A. de C.V.--and maintains a branch office in Rotterdam, the Netherlands. The entire CFC operation transported 3.8 million tons of freight in 6.4 million shipments over 240 million intercity miles in 1991. The company's fleet consists of over 4,000 tractors, more than 12,000 trailers, and 181 trucks.

Carolina Freight's founder, C. Grier Beam, bought his first truck, a one-and-a-half ton Chevrolet, for $500 in 1931. Beam had recently returned from Florida to his hometown of Cherryville, North Carolina, after losing his first post-college job in the poultry business, an industry reeling from the Depression at the time. In the early days of the Beam Trucking Company, Grier Beam, along with his crew of part-time drivers chosen from the vast numbers of local unemployed men available, would haul whatever they could get paid for. In the summer of 1933, for example, Beam's drivers carried sweet potatoes to Florida and returned to North Carolina with a truckload of tomatoes and other fruits, which they sold to local distributors and also peddled directly to the public from the back of the company truck.

In 1934, Beam Trucking Company obtained its first headquarters and its first significant freight contract. The headquarters was a corner of the Shell service station run by Grier Beam's brother Guy; the contract was for hauling cotton yarn to New England for Cross Cotton Mills of Marion, North Carolina, in a new truck financed by the owner of Cross Mills. The Beam drivers would load the yarn at the mill on Saturday morning, make the 700-mile drive through the mountains of West Virginia and Pennsylvania in time for a Monday morning delivery, and return loaded down with Hershey candy, Ballantine beer, and Keystone Roofing products picked up on the way back.

The Motor Carrier Act of 1935 changed the trucking industry profoundly. Prior to 1935, the market was completely open, and operators were free to charge whatever they could get for delivering goods in any manner they were able. The Motor Carrier Act established strict guidelines pertaining to routes, driver and vehicle safety, and rates.

By 1935, two other trucking companies had been opened in Cherryville: Mauney Transfer and a one-truck operation run by Cone Beam (no relation to Grier). That year the two Beams merged, and in 1936 they purchased, with two other partners, the struggling Mauney Transfer. In 1937, they issued six shares of stock, elected themselves as officers, and adopted the new corporate name Carolina Freight Carriers Corporation. The acquisition of Mauney Transfer was key because it had, unlike many other small trucking concerns, bothered to file with the Interstate Commerce Commission under the terms of the Motor Carrier Act. With the takeover the new Carolina Freight obtained Mauney's authorization to operate.

The grip of the Depression was still strong in 1937, and by the end of the year all of the partners except Grier Beam had given up on the company and sold their shares to Beam. At the January 1938 stockholder's meeting Carolina Freight became a family business as stock was purchased by Beam's wife, Lena Sue, his older brother Dewey, and Dewey's wife, Sallie. As the sole stockholders, they became the company's board of directors as well. With $1,000 borrowed from Sallie Beam, the company bought a small piece of land in Cherryville and built its first real office, loading dock, and maintenance shop. In 1938, Carolina Freight Carriers carried a total of 9,030 tons of freight almost 800,000 miles. The company lost about $800 on total sales of $137,000.

CFC's fleet grew to 53 vehicles by 1939. In the division of labor between the Beam brothers, Grier handled the drivers, trucks, and maintenance, while Dewey was in charge of the books, billing, and the office. That year, CFC leased terminal space in New York City; Jersey City, New Jersey; and Providence, Rhode Island. By the end of 1939, the company had turned its first profit, $5,546.56 on revenues of $315,000. CFC by then had 94 employees.

World War II increased the trucking industry's workload sharply in the early 1940s. CFC, like other companies, received government contracts for hauling war-related items such as ammunition and clothing. Tire and rubber shortages were a serious concern during this period. In 1941, CFC's purchase of the operating rights of the C. O. Lovette Company was approved by the I.C.C. This purchase extended the company's operating authority to several towns in North and South Carolina, as well as to Richmond, Virginia, Philadelphia, Jersey City, and New York. The same year, the operating rights of Jennings S. Edmunds were purchased. Included in these rights were areas in Florida, Georgia, Tennessee, and Virginia. With the acquisition of this southern gateway, CFC became the only motor carrier operating along nearly the entire East Coast of the United States, from Key West, Florida, to New England.

In 1942, Carolina built a terminal in Providence, its first company-owned terminal outside of Cherryville. By that year, the company's fleet was 125 units in size and included diesel engine tractors. This equipment hauled almost 66,000 tons of freight for CFC that year, and company revenues broke the $1 million mark for the first time. Around this time, Carolina became one of the first trucking companies on the east coast to test drive the new Cummins Diesel engine. CFC increased its New England activity in 1944 by purchasing part of the Whippet Motor Lines Corporation of New York. This purchase included authority to operate in parts of New Jersey, Rhode Island, and Massachusetts. The company lost about $10,000 in 1944, but the business was growing, with revenues up to $1.4 million.

By the end of the 1940s, CFC's gross intake had reached $3 million, and its payroll was over $1 million. The company operated six terminals in addition to Cherryville by this time. These were located in Atlanta; Charlotte, North Carolina; Greenville, South Carolina; Philadelphia; Jersey City; and Providence. Several company call stations were located throughout the region as well. The 92,000 tons of Carolina cargo, 90 percent of which was textiles, were carried by a fleet of 140 tractors and trailers, some of which were now refrigerated.

After World War II, Carolina Freight drivers began to join the Teamsters Union. By that time, most trucking companies in the North were already unionized, and membership in the Teamsters meant better treatment for the drivers and equipment when traveling in New England. CFC drivers got their own local based in Cherryville by 1951. Another benefit for employees came in 1956, when CFC opened a recreation center for its workers. The facility, which contained meeting rooms, tennis courts, a bowling alley, a swimming pool, and picnic grounds, was built for $250,000 on a 16-acre piece of land.

CFC's first Florida terminal was opened in 1950 in Miami. From there, the company carried oranges and orange juice, scarce commodities in the North prior to the 1950s, as far as New York. A second Florida terminal was established in Orlando the following year. Among the freight hauled from the Orlando terminal were materials destined for Cape Canaveral to be used in the space program. These Florida outposts enabled the company to begin hauling products from outside the United States. Items such as tobacco from Cuba and coffee from El Salvador were flown into Miami and routed north from there. In 1958 Carolina purchased the operating authority of Marion Freight Lines, which opened up a large portion of North Carolina. By that year, the company's fleet consisted of over 800 pieces of equipment; it operated 36 terminals and call stations in 14 eastern seaboard states. For the year 1958, CFC carried 421,000 shipments totalling almost 352,000 tons.

The 1960s were a decade of rapid growth and development for Carolina Freight. In 1960 a contract was signed with Sea-Highways, Inc., for roll-on, roll-off trailer service. This service, in which loaded trailers are rolled directly onto ocean-going vessels, gave the company access to Central America. As the areas reached by CFC continued to spread, more terminals were opened. Terminal locations included Athens, Georgia; Jacksonville, Florida; Pittsburgh; Dayton, Ohio; and Brooklyn. CFC's revenues in 1962 were about $20 million. In 1963, 100,000 shares of stock previously owned by Grier and Dewey Beam were offered to the public, making Carolina Freight a publicly owned company for the first time. Previously, all stock had belonged to Beam family members and some company officials. By the time of the stock offering, CFC was serving over 9,000 cities and towns, and the authorized routes it traveled covered about 7,600 miles. The company had over a half million customers and 1,650 employees. Comer Motor Express, a company operating in Ohio, was purchased by CFC in 1964, marking the company's first venture into the Midwest. This move was reinforced in 1966 with the purchase of Wilson's Motor Transit, based in Middletown, Ohio. The 1968 purchase of portions of Kilgo Motor Express enabled CFC to operate terminals in Wilmington, Delaware; Norfolk, Virginia; Raleigh-Durham, North Carolina; and Allentown, Pennsylvania. Two more acquisitions were made in 1969: Kane Freight Lines of Scranton, Pennsylvania, and Western New York State Lines, Inc.

By 1970, Carolina Freight was one of the 20 largest general freight carriers in the United States, with operating revenues of $60.4 million. The company added five more terminals in 1970: Scranton, Pennsylvania; Raleigh, North Carolina; Athens, Georgia; Titusville, Florida; and a second Cherryville facility. In April of 1970, CFC was paralyzed briefly by a wildcat strike in which the company's drivers participated when the Teamsters contract expired. Although the strike lasted only five days, it resulted in the dismissal of 18 employees and lawsuits against the company for wrongful discharge.

Also in 1970, John L. 'Buck' Fraley was named president and chief operating officer of Carolina Freight. Grier Beam remained as chairman of the board. Fraley had been with the company since the early days, when he sold oranges that Beam had brought from Florida, and had left the company only briefly to hold a government position in the 1950s. CFC continued to acquire operating rights in the early part of the 1970s. The purchase of rights from Byrnes Long Island Motor Cargo, Inc., allowed the company to operate in Suffolk County on Long Island. Additional West Virginia authority was gained with the purchase of Perrow Motor Freight Lines; the company entered the lucrative Detroit market by buying the rights of Indianhead Truck Lines.

In 1971, Carolina Freight stock was first traded on the New York Stock Exchange. That year, the company purchased Arthur Ovens Motor Freight Co. and Terminal Transfer and Storage, Inc. CFC was listed on the Pacific Coast Stock Exchange in 1972. In 1973, CFC opened a new breakbulk facility in Rocky Mount, North Carolina. Along with relay stations in Jacksonville and Orlando, Florida, and in Darlington, South Carolina, this enabled the company to bypass Cherryville on its routes between Florida and eastern areas, which saved so much time that the company converted from a largely two-man sleeper truck operation to primarily a one-man relay system.

CFC merged with Leonard Express, Inc., in 1974. The addition of Leonard Express, which had revenues of $17 million the previous year, gave CFC east-west service routes between New York, Philadelphia, and Boston, and also from West Virginia to as far west as Chicago. The merger helped raise company revenue to over $114 million in 1974. But the recession of 1975 was a severe blow to the entire trucking industry, and for that year CFC recorded a loss of $1.3 million, only the third year since the company was founded that it lost money. About 500 employees were laid off during the slump.

During the mid-1970s, Carolina Freight began to shift its focus increasingly toward LTL shipments. A primarily LTL operation requires a complex system of terminals at which small shipments can be consolidated into more fully-loaded trailers. Because it is more labor intensive, LTL rates are considerably higher than those for full truckloads. To help implement this shift, Ken Younger was brought in as company president in 1976. The company rebounded in 1976, posting record revenues of $123 million and earning profits of $1.1 million. Several factors contributed to the recovery. The engine power of all company tractors was cut to conform to the 55 mile-per-hour speed limit, creating significant fuel savings. Also in 1976, CFC established its Rapid On-Line Information Network, a computerized routing system that kept track of what each truck was carrying from what source to what destination. $500,000 a year was saved by reducing routing mistakes. Advances in computerized systems for billing and other services were made during this period as well.

Over the next few years, CFC's shift toward LTL accelerated. In 1979, LTL shipments accounted for 35 percent of the tonnage carried by the company and 62 percent of its revenue. By 1982 these figures were 53 percent of tonnage and 79 percent of revenue. Accordingly, from 1976 to 1981 revenue increased an average of 16.6 percent a year. The Motor Carrier Act of 1980 had a major impact on most trucking companies, reducing the full-truckload market of larger companies by deregulating the trucking industry and giving companies more freedom in pricing, expansion, and market entry. Since the company was committed by this time to LTL, 1980 was a record year in revenue and profit.

In 1982, while the rest of the trucking industry was suffering another recession, Carolina Freight was enjoying a record year. The company initiated truck-rail intermodal service to Texas, California, and Arizona that year. Freight originating in the East and Midwest was consolidated in Chicago and put on trains bound for Dallas. From there, the freight was carried to its destinations by agreements with area trucking companies: Red Arrow Freight Lines in Texas, G.I. Trucking Company in southern California and Arizona, and DiSalvo Trucking Company in northern California. A similar system was set up in 1983, with railroads connecting the service lines of CFC and Edson Express, Inc., for eventual delivery in Colorado, Wyoming, and Montana.

In 1983 Carolina Freight Corporation was officially formed as a holding company for Carolina Freight Carriers Corporation and its wholly-owned subsidiary Cardinal Contract Carriers Corporation. During the next few years, CFC's expansion transformed it from a regional carrier to more of a national carrier. The purchase of two of the company's truck-rail partners--the 1983 acquisition of G.I. Trucking and the 1984 purchase of Red Arrow Freight Lines--facilitated this transformation. These moves firmly established CFC in the Texas and California markets. Although both new subsidiaries lost money early on, CFC's profits were $11.6 million on revenues of $340 million in 1983, a 90 percent increase over the previous year.

In 1985, Fraley retired as chief executive officer and was replaced by Younger, who had previously held the positions of president and chief operating officer. That year, the company initiated freight service performed by its subsidiaries between the United States and the Far East, including points in Japan, Taiwan, and Hong Kong. Although price wars in the trucking industry caused rates to drop substantially, CFC reported record sales again in 1987: $635 million. This was accomplished in part by eliminating some of the unprofitable routes of G.I. and Red Arrow, thereby reducing the losses those subsidiaries were incurring.

Through the end of the 1980s and the beginning of the 1990s, CFC continued to internationalize its operations. By 1991, the company was serving 185 points of discharge on six continents. A subsidiary, Carolina Freight Canada, Ltd., was opened in Canada with three sales offices in that country. A Mexican subsidiary and a modern freight terminal in Puerto Rico were opened as well. In 1991, CFC teamed up with an established Mexican company, Tresguerras, S.A. de C.V., in a joint venture to better exploit the Mexican market. In spite of the recession, CFC recorded record revenue for the 16th consecutive year in 1991. Company profits dropped, however, from $2.4 million in 1990 to $1.6 million in 1991. Company officials blamed fierce price competition and rising employment costs (65 percent of company costs) for the backslide.

In an industry that is strongly affected by the state of the American and world economies, Carolina Freight has managed to show remarkably steady growth, weathering several recessions better than most of its competitors. The company stands to continue the pattern if it is able to react creatively--as it did with its shift to LTL and emphasis on intermodal transportation--to the pressures of the economy and the industry.

Principal Subsidiaries: Carolina Freight Carriers Corporation; Carolina Freight de Mexico, S.A. de C.V.; Red Arrow Freight Lines, Inc.; Motor Carrier Insurance, Ltd. (Bermuda); Complete Leasing Concepts, Inc.; G.I. Trucking Company; Carolina Freight Canada, Ltd.; Cardinal Freight Carriers, Inc.; Carrier Computer Services, Inc.