How am I ever going to get any busines for my comopany with E-1 taking over the entire broker market? :-(
At the Sylectus conference, in the question and answer time that followed Jacobs' speech, someone in the audience asked, "Who are the losers?"
Jacobs had just laid out his plan for building a multi billion-dollar freight forwarding and truck brokerage company and was then asked, "Who are the losers?"
The questioner wanted to know, at whose expense would this big company be built? Who will go out of business when Jacobs builds his big business?
Jacob's first response was that he did not know. He said he does not spend much time thinking about losers. He likes to think about winners. Then, after having a moment to consider the question, he said the losers would likely be the small companies that will not have the software, networks and reach that larger brokerages do.
When Jacobs thinks about the industry, he sees XPO growing to compete head on with the likes of Expediters International and other huge companies. The companies he acquires will not be losing market share to XPO. They will bring their market share to XPO when they become part of that larger organization.
When Jacobs is looking for companies to acquire, he is looking for companies that are already large in the eyes of small brokers who work at their kitchen table or home offices.
You can get an idea of the scope of his vision by reading this:
XPO Logistics Opens North American Operations Center in Charlotte, N.C.
XPO is clearly on the move and proceeding according to plans previously announced. Below are the CEO comments from
XPO Logistics Announces First Quarter 2012 Results.
Bradley Jacobs , chairman and chief executive officer, said, “Our strategy is to scale up our operations through acquisitions, cold-starts and organic growth. Our first acquisition is Continental Freight Services, a 32-year-old company based in South Carolina with a loyal customer base and excellent employees. Continental is a good strategic fit because we can scale it up quickly by adding salespeople and carrier capacity.”
Jacobs continued, “Our cold-start program is running ahead of plan: Ann Arbor opened in mid-April, and Dallas started operating last week. Phoenix, our first cold-start, has exceeded our expectations – it launched in December and quickly ramped up revenues to $760,000 in April. Given our cold-start performance and healthy backlog of acquisition candidates, we’re comfortable with our target of a $500 million revenue run rate by year-end.
“At our new operations center in Charlotte, where our goal is 100 hires by year-end, we’re already nearly 30% staffed. The new IT platform we rolled out in March is giving us greater internal visibility, and stronger tools for sales and service management. And we recently added two key leaders in carrier procurement and employee training. These roles are vital to our strategy, and we’ve brought top talent on board.
“While it was a very successful quarter in terms of executing our plan, the investments in new infrastructure impacted our earnings, as expected. We also experienced market softness for both expedited and freight forwarding services. However, our truck brokerage business delivered very strong growth, with same-store profitability more than doubling year-over-year. We’re focused on optimizing our operations within each operating segment to position the company for substantial value creation in the coming years.”
Preacher Rich, kindly note that just because a company is big, it does not follow that trusted personal relationships cannot be developed between its brokers and/or agents and the customers it serves.
Landstar agents are a case in point. Landstar is a big, big broker and carrier, yet its agents develop and cultivate good customer relationships all day long. Many of these relationships were years in the making. Landstar Express America BCO's (owner-operator independent contractors) serve such customers, some of whom spend millions of dollars a year on transportation.
There will probably always be room for the kitchen-table or home-office broker to do develop personal relationships with small shippers. But when small shippers become larger, they will be targeted by larger brokers and carriers that can offer more than a small players can. Also, nothing prohibits a small shipper from using a large broker from the beginning, and many may prefer to do so because they feel they can count on the large broker still being in business tomorrow.
It's all one big slog. People pick their levels in this business and fight in that arena. Baseball has its major leagues, minor leagues and other leagues that don't even show up on the major league radar. So too with transportation. Jacobs aspires to be a major league player and intends to get that way by bringing a number of minors into the big-league game.
Blizzard, how will you get business for your company? You will do it tomorrow like you do it today. Pick your league and compete at that level.
(Full disclosure: Diane and I own shares of XPO Logistics.)
