staying competitive: the changing ltl...
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All rights reserved by CarrierDirect, LLC, 2014
Staying Competitive: The Changing LTL Environment
July 30, 2014
@CarrierDirect
CarrierDirect
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Legal Disclaimer
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CarrierDirect and its affiliates are in the business of providing, among other things, consulting and marketing services to carriers
and third-party logistics companies. In their role they are entrusted with information, some of which may be confidential and
proprietary, regarding market strategies and operations, technology and route-to-market tactics. All information provided herein
is based upon public information shared in publicly disclosed documents, industry events and company-sponsored
presentations. CarrierDirect may be currently, may have in the past or may in the future provide services to certain of the
companies referenced in this presentation.
For more information, contact us at www.carrierdirect.co.
Staying Competitive: The Changing LTL Environment
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Introducing CarrierDirect
From The Great Recession To Today
Strategically Engaging Carriers For Partnership
What We’re About At CarrierDirect
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Bringing fresh perspectives to the
transportation and logistics industry.
A Brief History of CarrierDirect
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CD gets started, initially
working with small LTL
carriers to grow their
business with 3PLs
2Q 2011
Begins offering consulting
services to 3PLs, with huge
demand from freight brokerages
on scaling their businesses
1Q 2012
Opens satellite office in Scottsdale
to keep up with demand; has
double digit employee count
Q2 2013
Carrier sales and international
revenue exceeded $75M
since launching carrier
development services
Q4 2013
Over 150 clients and carriers
worked with to grow and
strengthen their businesses
Q1 2014
What We Do At CarrierDirect
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3PL
3PL
3PL
3PL
3PL
3PL
3PL
3PL
3PL
3PL
Management AdvisoryCarrier Development
ServicesInternational Logistics Transportation Analytics Market Perspectives
For more info, email
For more info email
For more info, email
For more info, email
For more info, visit
www.carrierdirect.co
Staying Competitive: The Changing LTL Environment
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Introducing CarrierDirect
From The Great Recession To Today
Strategically Engaging Carriers For Partnership
M&A Continues At A Rapid Pace In The Logistics Sector
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Source: Company Filings, Internal CD Analysis, CapIQ
Date Target
Announced Buyer Transaction Notes
5/13/2014 One Stop Logistics Echo Global Logistics acquires One Stop Logistics, a leading LTL brokerage based in California for
Echo Global $37.3 million, representing an 8.7x EBITDA multiple
3/31/2014 Access America Transport Coyote and Access America complete their merger for a combined revenue of $2+ billion, helping to
Coyote Logistics diversify Coyote's service offerings and strengthen its presence in the LTL arena
3/14/2014 Unitrans International Corporation Roadrunner acquires Unitrans International, a leading provider of international logistics, for $55 million;
Roadrunner Transportation Unitrans generated a TTM total revenue of $84 million at the time of acquisition
2/26/2014 Comcar Logistics Echo Global Logistics acquires Comcar Logistics, a non-asset based truckload brokerage based in
Echo Global Jacksonville, FL; Comcar has approximately $15 million in TTM revenue at the time of acquisition
2/24/2014 Rich Logistics / Everett Transportation Roadrunner acquires Rich Logistics and Everett Transportation for a total transaction value of $48 million
Roadrunner Transportation to strengthen Roadrunner's truckload capacity to/from Mexico; TTM revenue from Rich was $113 million
1/6/2014 Pacer International Pacer, the 3rd largest intermodal provider in America, agrees to be acquired by XPO for an Enterprise
XPO Logistics Value of $296 million; Pacer generated a TTM total revenue of $1.0 billion at the time of announcement
12/10/2013 Landstar SCS XPO Logistics purchased Landstar's Supply Chain Solutions group for $87M at a 7.5X EBITDA multiple
XPO Logistics
7/12/2013 3PD XPO Logistics purchased 3PD, a last mile delivery 3PL for $365 million
XPO Logistics
3/19/2013 Open Mile Echo Global acquired Open Mile, an East Coast TL brokerage for $2M
Echo Global Logistics
Echo and Coyote acquisitions increase the
already well-established dominance of
Chicago’s brokerage market
As XPO integrates its numerous
acquisitions the industry holds
its breath to see what’s next
LTL Carriers Getting Good Freight From Third-Party Logistics Companies
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Source: CD LTL Benchmarking For 3PLs – 2014
Inbound % of Total
TX 15.36%
CA 14.49%
FL 4.89%
IL 4.73%
OH 4.20%
IN 3.39%
PA 3.37%
NY 3.30%
MI 3.12%
AZ 3.06%
6.2%
14.3%
23.8%
4.0%
16.9%
6.8% 7.2%5.7%
4.0%
0.8%3.3% 3.3%
0.0% 0.3% 0.4%2.4%
0.5% 0.1% 0.0%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
CL50
CL55
CL60
CL65
CL70
CL77.5
CL85
CL92.5
CL100
CL110
CL125
CL150
CL160
CL175
CL200
CL250
CL300
CL400
CL500
37.95%
20.38%17.13% 16.47%
8.07%
0.00%
10.00%
20.00%
30.00%
40.00%
0 - 499lbs.
500 - 999lbs.
1,000 -1,999 lbs.
2,000 -4,999 lbs.
5,000 -9,999 lbs.
41.43%
22.92%
14.72%
8.94%
11.99%
< 500 Miles 501 - 1,000 Miles
1,001 - 1,500 Miles 1,501 Miles - 2,000 Miles
+2,001 Miles
Outbound % of Total
CA 19.91%
TX 12.54%
IL 6.44%
MI 5.01%
OH 4.79%
NJ 4.58%
IN 3.89%
PA 3.64%
GA 3.59%
TN 3.19%
Top 10 OB / IB States
% of Total Weight By Weight Break
33.4%
22.8%20.1%
16.3%
4.5%1.6% 1.3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Revenue To Carrier (Includes FSC) Length of Haul
Average
$209.26
Average
944 mi.
Average
1,529 lbs.
Median
CL 70
Class Allocation of 3PL Freight
(Actual Class – No FAKs)
Shipments to LTL Carriers From 3PLs (<10K lbs., Actual Class, 60 Days)
New Leaders In Market And Consolidation May Pave Way For Change in LTL
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Carrier
2013
Revenue*
Share
of Market
$5,095M
$3,466M
$3,127M
2,502M
$2,126M
14.47%
9.85%
8.88%
7.11%
6.04%
Source: Journal of Commerce, Company 10K Reports, Internal Estimates
Change
from 2012
+1.7%
+2.2%
(1.9%)
+5.2%
+9.5%
Carrier
2013
Revenue*
Share
of Market
$1,835M
$1,730M
$1,721M
$1,298M
$1,139M
5.21%
4.91%
4.89%
3.69%
3.24%
Change
from 2012
+4.8%
+5.4%
+3.1%
+3.8%
+3.7%
$11,161M 31.71%Every Other LTL Carrier
*Includes ancillary business unit revenue in some cases
TLAsset-
LightLTL 3PLEconomy
What We’re Seeing In The Trucking Industry
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ATA Monthly Truck Tonnage Index (2007 – Present)
95
100
105
110
115
120
125
130
135
2007 2008 2009 2010 2011 2012 2013 2014
Tru
ck T
on
nag
e In
dex
(20
00 =
100
)
Continued strong freight levels
keeping trucking companies busy
2009 starting to
seem like just
a bad dream
New market conditions will force carriers to develop new strategies to remain
competitive; the most forward thinking carriers will be rewarded first
New challenges: how to deal with the
problem of too much freight and the right
way to strategically “purge” the bad freight
1
LTL carriers being affected by the good and
bad spillover from the truckload market and
increasingly competitive driver recruitment
2
Technology enabled carriers will be the
winners in generating greater profit and
improving operating efficiencies
3
“Pushed” Into 3PLs and Shipper Systems
We’re Standing On The Edge Of Big Pricing Changes For LTL Sector
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Web Services
Connections
Dimensional
Pricing
Dynamic
Pricing
Real-Time
Information
Gathering
Pay for space taken up in trailer
vs. confusing class-based system
FedEx/UPS goes first, then the industry
Pricing based on needs of carrier’s network
Ability to set future discounts to guide freight
shipments to days that are typically light
Driver / sales rep pricing using
handheld “dimensioners”
LH planning before freight hits dock
Output From Carriers’ Operating System
Getting Paid For What’s
Moved vs. Hoping For Best
Ability to Standardize / Tier
Pricing For Different 3PLs
Immediate Change Of Freight
Mix vs. Long Tariff Changes
Source: CD Internal Perspective
It’s been talked about since de-regulation, but we are truly on the cusp of some pretty significant changes
in the LTL industry that will let carriers better manage their businesses and run more efficient networks
Staying Competitive: The Changing LTL Environment
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Introducing CarrierDirect
From The Great Recession To Today
Strategically Engaging Carriers For Partnership
Carriers’ Goal for Using Third-Party Logistics Providers
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Add Your Book Of Business With Their Current
Volume That Brings Better Utilization To Their
Assets And More Profit
Carriers Will Start Using 3PLs As An Extension Of Their Sales Channel
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A smaller handful of 3PLs will start to be considered a legitimate extension of the carrier’s sales force (and
not thought of as a competitor) that can be used to extend the reach of the carrier without the sales costs
Carrier
Head of Sales
National Account ManagersRegional Key Account ManagersValue-Added Resellers
Carrier 3PL
Whose Employee
A small sub-set of 3PLs that meet
the carrier’s rules of engagement
Tiered pricing that is well thought
out by the carrier to meet goals
Offer business to carriers that is
“scaled” and meets needs of
carrier’s network
Deployed in local markets across
different regions in carrier’s
footprint
Tasked with directives to build out
local sales presence targeting
specific kinds of accounts
(of a size or growth potential)
Located at carrier’s headquarters
Works closely with pricing and
operations teams to build account
and implement new initiatives
Focus on large accounts that
span multiple-regions with
centralized decision-making
Even Bigger and Better Collaboration Between Shippers / 3PLs / Carriers
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Strategic Value Curve for 3PL / Carrier Partnerships
Source: BG, Menlo Worldwide Logistics
What’s Ahead In Carrier / 3PL Collaboration
The 3PLs who treated carriers poorly when the
pendulum was in their favor are now getting
crushed as it swung back towards carriers
Best-in-class 3PLs understand that carrier
services aren’t a commodity and are finding
ways to improve collaboration, such as:
− Gain share programs on new opportunities
− “Open book” agreements with target
profitability for carrier and 3PLs
− Tackling shipper opportunities with
combined sales and technology efforts
The 3PLs who don’t adopt this kind of
partnership will fail in the next 3-5 years
*Take the 23rd Annual Trends and Issues survey to share your
perspectives on the industry
With the pendulum swinging back in favor of carriers, there will need to be more strategic conversations
and collaboration between 3PLs and carriers to make the relationship work for all parties
How 3PLs and Shippers Can Better Compete In This Environment
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Understanding what’s important to carriers and the factors involved in designing an engagement
strategy are crucial for successfully procuring and managing carrier relationships
Build A
Powerful Culture
Develop or Lease
Better Technology
Be A Good
Financial Partner
1
2
3
Industry leading practices are to pay timely and not require a POD, some may
even guarantee payment whether or not they’re paid by the shipper/customer
Freight isn’t rocket science, but it’s headed in that direction and anyone using
antiquated technology will fall by the wayside
3PLs and shippers provide a unique value to carriers, but that value is diminished
if carriers aren’t engaged in a cooperative, polite or understanding manner
What It Means
Respect A
Carrier’s Risk
Promote Carrier
Education
4
5
Knowing when to use a carrier will result in a better experience and service level,
not to mention steering more favorable freight in that carrier’s direction
3PLs and shippers can be valuable partners to carriers, but it’s limited without
respecting who owns the assets, has to make payments and holds most of the risk
CarrierDirect
All rights reserved by CarrierDirect, LLC, 2014 18
Erik Malin
Director of Strategy
(312) 546-3022
Erik Malin
CarrierDirect, LLC
105 West Adams, Suite 3010
Chicago, IL 60603
@CarrierDirect
CarrierDirect
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