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For transport start-ups, the shoots have never been greener

Start-ups your engines! (Photo:Shutterstock)

The bad news about being a transportation start-up is, as with any start-up, it involves brutally hard work and no shortage of hard knocks. The good news about being a transportation start-up is there may not be a better time in the industry’s history to be one.

A near $1 trillion market that still operates on legacy systems presents a remarkable opportunity for start-ups to become big players in very short periods of time, according to three panelists who are veterans of the transport and logistics wars. Their comments closed the first day of the MarketWaves18 conference in Dallas yesterday.

“There are major inefficiencies in the core processes of every transportation company—asset-based and non-asset based,” said Robert Farrell, chairman and CEO of Phoenix-based broker GlobalTranz Enterprises, Inc., whose 15-year-old company was acquired in June by private equity firm The Jordan Co. Those who bridge the transition from babies to bigness will succeed in pushing out the benefits of nascent technologies to their customers and their customers’ customer, Farrell said.

Mark Yeager, CEO of Chicago-based 3PL Redwood Logistics, said he was impressed with “how many bright, determined people are getting into the business” as well as with the passion they exhibit. One of the challenges of being so gung-ho, he added, is that it is easy to lose focus on the primary task while trying to accomplish so much at once.

Chris Hines, founder of Atipical Holdings LLC, a Dallas-based consultancy, said start-ups inherently “get a little heavy on the development side of the business.” Start-ups must balance the natural desire to push development with the need to focus on functions such as sales and marketing, Hines said. “The first customers we bring in are so important,” said Hines, hinting that keeping those customers sticky is a key ingredient for sustained success.

The panelists outlined the universal challenges that transport start-ups are hardly immune from. One challenge is the easier-said-than-done task of positioning the business so it is ahead of the growth curve that could take it to the next level. Thus, the business is ready to manage the growth when it arrives.

On another front, Farrell said capital allocation strategies to support a new growth phase should emphasize hiring and retaining the right people. “It’s a difficult talent market,” he said, adding that it is difficult to not only build a strong team, but to make changes on a dime if some members are not aligned with the business model or if the business model changes.

Executing acquisitions to bridge the gap between start-up and established player is fraught with challenges. Yeager said a combination needs to “be a cultural fit” or else it is unlikely to succeed. Farrell, whose company has been acquisitive in its own right, advised companies to “think integration before acquisitions.”

For all the potential pitfalls that come with taking a start-up business to the next level, the consensus among the panelists is that the landscape has never been more fertile. Folks growing their business are asking questions about transportation from an IT perspective, behavior that is becoming more commonplace. In addition, the power of advanced technology allows a small, nimble group of folks to contribute to the industry’s transformation.

“It really amazes me how much a few great people can accomplish at a small company,” said Farrell.

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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.

One Comment

  1. After my successful start up through to sale, I now mentor small expedited carriers and traditionally open my first question my asking :

    "What is your FIRST days business plan for successes?" Then you get the "deer in the head light" stare.

    My reply to them is "planning on selling the business".

    Sadly far to many "start ups" are excited about going out and flexing their entrapenural muscles without a clue of what the "end" looks like. Yes there are variables but the only one that needs to be embraces from day one is the "SALE".

    You have to have the business plan in place from day one with meticulous record keeping not only for the authorities but down the road when someone’s accountants and attorney do their duediligences to establish just what your "start up" is worth. You simply can’t do this in the last 30 days and throw out a number.

    So while "start ups" are exciting you have to "man up" in the begining with a defined exit strategy.

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