Logistics Companies Growing Larger, Spurred by New Capital, Innovation

This story appears in the Nov. 11 print edition of Transport Topics.

Logistics companies are undergoing a remarkable transformation, according to industry executives.

An influx of cash from investors and new ideas from entrepreneurs are creating companies that are larger and more capable in terms of the services they can provide.

The 2013 edition of Transport Topics Top 50 Logistics Companies reflects many of these changes as shippers increasingly turn over freight management to third-party logistics service providers, or 3PLs.

Traditional trucking companies, such as Schneider National Inc. and J.B. Hunt Transport Services, have become huge players in the logistics market by providing intermodal, dedicated contract carriage and freight brokerage services to shippers.

At the same time, logistics companies are expanding their services to include, in some cases, operating trucks or contracting with independent owner-operators to provide freight-hauling capacity.

“This blurring of the lines has been going on for some time,” said industry consultant Dan Goodwill of Goodwill & Associates in Toronto. “In some cases, they have crossed the line” between being a logistics company and being a trucking company.

Among logistics companies, the biggest change in the market could be one orchestrated by Bradley Jacobs, the chairman of XPO Logistics.

In the past 20 months, Jacobs has acquired eight freight brokerage firms and forwarders and started 18 new operations as part of a plan to create a $5 billion enterprise capable of providing virtually every kind of transportation and logistics service.

“3PLs have made the market more efficient,” Jacobs said in an interview with Transport Topics. “3PLs are the best way for shippers to access smaller fleets,

and from the trucking company’s standpoint, it’s often not feasible to hire a big sales force. 3PLs are essentially an outsourced sales force for carriers.”

XPO Logistics ranks No. 45 on the Transport Topics Top 50 Logistics Companies list this year.

Into the fray are new companies, such as Shift Freight, a firm launched six months ago by former traffic manager Tommy Skinner to provide less-than-truckload freight- hauling service specifically for 3PLs.

“I don’t think we could have imagined in our wildest dreams just how rapidly our business would grow by utilizing 3PLs,” Skinner said. “By letting the 3PLs take care of sales, it allows us to focus on operational efficiency and making sure the shipment gets picked up and delivered when they need it.”