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Outrunning a Recession: Unique ideas help transportation companies on Inc. 5000 list soar above the downturn – Journal of Commerce

Unique services, ideas help logistics, transportation companies on Inc. 5000 list soar above the downturn

William B. Cassidy | Sep 20, 2010 4:00AM GMT The Journal of Commerce Magazine – News Story

The transportation and logistics companies that made the Inc. 5000 list this year are mostly young and comparatively small, but they’re growing very, very fast.

Coyote Logistics, ranking sixth on the list of 5,000 fastest-growing private companies, left the recession in the dust, expanding revenue from $1.8 million in its first year of existence in 2006 to $249.8 million last year, a period that marked the worst three years in recent economic history.

The company is still growing. According to its Web site, Coyote Logistics is now a $350 million company offering truckload, LTL, intermodal, air, ocean and supply chain services across North America and Europe. Partnerships and mergers helped fuel that expansion in Europe and North America, along with a non-asset model that benefited from a move by shippers to third-party intermediaries in an effort to find capacity.

But the real rocket fuel was the entrepreneurial vision of founder Jeff Silver, who set out to offer customers a “great experience” that would differentiate Coyote in the market. The economic slowdown “was the perfect time to sit back and think about how to do it differently, how to do it better, and how to do it faster,” Silver told Inc.

That was a common trait among the logistics entrepreneurs whose companies made the Inc. 5000 list. Altogether, 50 logistics and transportation companies made the list, and nine were in the more select Inc. 500 list. Six companies had growth rates exceeding 1,000 percent.

Not all of the businesses Inc. classified as logistics and transportation companies handled freight or offered freight-related services. Some were technology providers of various types or transported passengers. But more than half were third-party logistics providers or freight brokers or otherwise engaged in the actual movement of goods through supply chains by ship, train, warehouse and truck.

Their growth rate during the recession illustrates the strength of the non-asset logistics model and the increasing power of technology, which is helping small, upstart companies compete with multibillion-dollar companies.

“We’ve seen startups that in just a matter of months are doing quite well,” said Robert Voltmann, president and CEO of the Transportation Intermediaries Association.

“I think the asset-light model, with its flexibility and the innovativeness, really works,” Voltmann said. And although Coyote’s growth rate is exceptional, he said, “we’re seeing successes at all levels.”

One of the more unusual logistics success stories on the Inc. 5000 is uShip, which is doing for shipping what eBay did for sales. The company allows consumers and businesses to post shipments directly on the Internet for bid by transportation providers — anything from less-than-truckload and heavy-haul freight to pianos, boats, cars and motorcycles and, earlier this month, a herd of whitetail deer.

“We’ve focused on categories and niches that are underserved in transportation,” said Matt Chasen, who founded uShip in 2003 after struggling to find a way to move an antique dresser from Ohio to Texas. “Our main innovation was to create an eBay-like model,” Chasen said. “There are load boards out there, and companies that aggregate leads and resell them, but we created a transactional marketplace.”

Auto transport is uShip’s biggest category, he said, followed by household goods. “Beneath that is traditional freight — LTL, truckload and flatbed,” Chasen said. “They’re interesting markets, particularly heavy haul, as it’s served by a really fragmented base of owner-operators. Our model does really well in those verticals.”

uShip isn’t a broker or a traditional load-matching services, he said. “The load boards by definition focus on the broker-to-carrier part of the transaction. We’re focused on acquiring the end-customer, not so much on the broker.”

So far, he’s acquired more than a million “shippers,” while growing 791 percent over the past three years, from $600,000 in revenue in 2006 to $5.4 million in 2009. Thousands of trucking companies of all types and sizes are listed on the exchange, and customers can read their profiles and reviews posted by other shippers.

About 20 to 30 percent of uShip’s customers are freight-shipping businesses, often smaller companies, that save as much as 50 percent using uShip, he said.

“Competitive bidding drives a lot of that, but also small trucking companies and owner-operators filling backhauls and using us to fill extra capacity in their trailers,” Chasen said. “That can really dramatically undercut traditional pricing.”

Access the article online in the Journal of Commerce.