Even for a successful dice-roller like Andrew Leto, founder of freight brokers GlobalTranz and Emerge, it took guts to contribute $10 million of his personal capital to a $50 million private placement for downtrodden transport firm Roadrunner (NASDAQ:RRTS).
Once a darling of growth-minded investors, Roadrunner spent the latter half of the past decade disgorging most of the 34 companies it had acquired during the prior 10 years. The chickens of Roadrunner’s failed growth strategy came home to roost in early 2017 when it was forced to restate three years of financial results. It was subsequently delisted from the New York Stock Exchange.
Leto’s faith, he said during his Wednesday keynote at FreightWaves’ virtual Enterprise Fleet Summit, is that Roadrunner has returned to its less-than-truckload roots and is poised to capitalize on what he called the strongest pricing environment in the segment’s long history. Shippers are being slapped with 10% to 15% rate increases, Leto said during an interview with FreightWaves President George Abernathy. What Leto didn’t say was that shippers could, or would, push back on those hikes.
“There has never been a better time to get into the LTL business,” Leto told Abernathy.
Roadrunner had long been an asset-light provider, where it effectively controlled its capacity but didn’t have drivers or equipment on its payroll. In what will be the company’s mantra, Leto said that Roadrunner is “not a trucking company. It is technology that moves trucks.”
Roadrunner has not benefited from those rate hikes as much as other LTL players, Leto said. Part of the reason is that shippers in the past have been burned by the company’s failure to consistently hit its published time-in-transit commitments. If the public promise is delivery in seven days, hit it in seven days, not eight, he said.
Leto, who will join Downers Grove, Illinois-based Roadrunner’s board, hinted that the company could carve out a solid niche by underpricing the competition for deliveries that might not have to be expedited. As part of the turnaround plan, Roadrunner hired David Ross, a longtime industry analyst at Stifel Financial, to become executive vice president and a partner.
Leto and Roadrunner will now face the challenge of persuading shippers and brokers that the company can deliver on the road and in the marketplace. The prior incarnation, he said, was “an example of what not to do.” Now, he said, the revamped Roadrunner needs to show what it can do.
Brokerage Compliance Symposium
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
F3 Awards Dinner
The night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
F3: Future of Freight Festival
Industry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowThe night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowIndustry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now