Crane’s world

CraneÆs world Former EGL chief nurtures new forwarding company that bears his name.

By Chris Gillis

   The takeover of Eagle Global Logistics by private equity firm Apollo Management in 2007 was a major blow to the company's long-time Chief Executive Officer Jim Crane.
   But almost five years later he's once again flying high with a freight forwarding operation that bears his name.
   Since the inception of Houston-based Crane Worldwide Logistics in mid-2008, the non-asset-based logistics firm has rapidly established a name for itself among shippers, especially those in the oil and gas, aerospace, life sciences and high-tech industries.
   'When I first started in this business, I didn't have any money and little sense. Now, I have the money and a lot more sense,' said Crane, who founded and led EGL for 24 years.

Jim Crane chairman, Crane Worldwide
'When I first started in this business, I didn't have any money and little sense. Now, I have the money and a lot more sense.'

   Under Crane's leadership, EGL became one of the largest U.S. air freight forwarders, with a menu of services that included local delivery, domestic truck brokerage, customs brokerage, warehousing and other supply chain management activities.
   Now Crane and his senior management team at Crane Worldwide have set out to reestablish and improve upon the freight logistics and customer service offerings that once made EGL a prominent industry player.
   The goal, Crane said, is to turn Crane Worldwide into a $1 billion global company with 100 offices in 35 countries in the next three to four years. The plan appears to be well under way. By the end of 2010, the company opened nearly 60 offices in 22 countries and generated about $246 million in revenue.
   Crane believes the new company should aim to become a strong mid-sized player. He noted there are numerous shippers that have become disappointed in recent years by watered-down customer service from many of the logistics industry giants. 'We're able to offer a higher touch than the big guys can give,' Crane said.
   More importantly, he said, Crane Worldwide's goals can be reached as a private enterprise, the crux of his battle in 2007 to retain ownership and re-privatize EGL. 'We won't need to go public,' Crane said.

New Way Forward. Crane's battle to retain control of EGL played out in the industry media, including American Shipper, with reports of revolting shareholders, allegations of insider leaks and senior management taking sides.
   A New York-based mutual fund that held 900,000 shares of EGL filed a complaint in a Texas district court in early April 2007 against the company's board for accepting Crane's initial offer of $38 per share ($1.7 billion) when Apollo was willing to pay more.
   In August 2007, Apollo succeeded in acquiring EGL for nearly $2 billion, or $47.50 per share. This was about the same price it paid a year earlier to Dutch postal and express group TNT for TNT Logistics. Like TNT Logistics, the EGL name would disappear as it became part of the newly formed U.K.-based giant CEVA Logistics.
   Crane, formerly EGL's largest shareholder, and investors Centerbridge Partner L.P. and The Woodbridge Co. Ltd., received $30 million from the EGL board for terminating the original sale agreement.
   Looking back, Crane believes that letting EGL go was ultimately a beneficial move. 'Fortunately or unfortunately, it was a good decision because the market tanked' in late 2008, he said. He formed his own investment firm, Crane Capital, and pursued other interests while he rode out a year-long non-compete with CEVA as part of his separation from EGL.

John Magee president, Crane Worldwide
'We want to be a global, mid-sized player. We don't subscribe to bigger is better.'

   Doing the same were nine other former EGL managers. This group, led mostly by John Magee, a former EGL senior vice president, and Keith Winters, previously chief administrative officer, sought to build a new forwarding operation.
   'This period gave us a chance to slow down and get a grasp on where the industry was going and put some strategy in place,' Magee said.
   Once they created a business plan, they approached Crane about financing and leadership support for the new company, which he agreed to do. Crane Worldwide officially opened its doors in Houston in mid-August 2008. Crane was named chairman, with Magee as president and Winters as chief operating officer.
   To get started, Crane Worldwide acquired three small forwarders: two based in Houston and Shanghai-based Qifan International Transportation Co. Ltd. These transactions provided an immediate base of 12 offices with about 100 total staff in seven countries, and starting annual sales revenue of $48 million. The shipper base at this time was heavily focused on oil and gas equipment and chemicals.
   One of the most important upfront decisions for the new company's management was implementing a single information technology platform.    'We learned a hard and valuable lesson at EGL that we're not a software company,' Magee said.

Zubradt

   Crane Worldwide settled on a system developed by U.K.-based Kewill. 'This single system helps us scale and provides clear and concise visibility throughout the logistics process,' said Tim Zubradt, vice president of sales and marketing.

Global Footprint. Since 2008, Crane Worldwide has rapidly expanded its global footprint. The company opened its 59th office in Dubai on Dec. 1.
   Magee said Crane Worldwide will open 10 to 12 offices a year for the next three to four years, with a concentration on overseas market development.
   Only one new office will be opened in the United States in 2011 for a total of 20, and that will occur at Columbus, Ohio, in February. Other offices will be set up this year in Canada, Italy, China, Australia, Germany, Mexico, India and the United Kingdom.
   'We want to be a global, mid-sized player,' Magee said. 'We're not going to take on the CEVAs, FedExs and DHLs of the world. We don't subscribe to bigger is better.'
   The company's forwarding business is 60 percent air and 40 percent ocean. During the past three years Crane Worldwide's customer base has moved from solely focused on oil and gas equipment and chemical shipments to 40 percent, with the rest now coming from other industries. 'We expect that oil and gas will soon be about 25 percent of our total business,' Magee said.
   He said the company also wants to avoid gaining customers simply for the sake of building volume. 'We don't make sales calls saying we're going to give you the cheapest rate, rather we give you a value-added service, which will reduce your logistics costs overall,' he said. In 2011, the company conservatively estimates it will generate $390 million in revenue.
   Crane Worldwide also recently formed a partnership with Magno International, a small Miami-based forwarder operated by Chief Executive Officer Raul Pedraza and focused on companies looking for diversity spend in the logistics arena. 'Magno gets to sell our network, technology and transportation base. It's a good business model for them and for us it's an additional business stream,' Magee said.
   As for Crane, he remains engaged in the strategic development of Crane Worldwide. However, he's not content to sit behind a desk. He's often out meeting customers and recruiting new employees for the growing company.
   'It's a nice formula,' Crane said. 'While my job is to keep a close eye on things, they also know I'm here to help.