Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Those waiting for the consolidation needle to be moved in the deeply fragmented U.S. truck brokerage field
need not wait any longer.
On March 18, Chicago-based Coyote Logistics LLC acquired rival Access America Transport (AAT) in what is viewed
as a significant first step towards concentrating the $50 billion-a-year brokerage industry into the hands of fewer players.
Terms of the transaction were not publicly disclosed. However, an industry source said Coyote bought AAT for $125 million, of
which $98 million was cash.
The move blends companies with complementary service lines and operating strategies, which would appear to be a plus so
long as the integration is properly implemented. But it also combines disparate corporate cultures, which, if not handled
correctly, could cause heartburn for Coyote Founder and CEO Jeff Silver and his team. Though both firms have entrepreneurial
bents, Coyote functions in a more aggressive, flashy atmosphere with younger staffers whose drive mirrors Chicago's
rough-and-tumble mindset, according to a top industry executive familiar with both companies. AAT, by contrast, brings less
sizzle to the table and has a more blue-collar attitude that stems from its smaller-town Chattanooga, Tenn., roots, the executive
said.
It will be up to Silver, the hard-charging executive who co-founded Coyote in 2006 after taking a five-year sabbatical
from transportation to pursue advanced degrees, including a Masters of Engineering in Logistics from the Massachusetts Institute
of Technology, to meld the two cultures without alienating AAT employees. The integrations of Coyote's two prior acquisitions,
Memphis-based Integra Logistics in 2008 and Atlanta-based General Freight Services in early 2009, did not go well in part because
employees of the acquired firms resisted Coyote's corporate approach, the executive said.
Chris Pickett, Coyote's chief strategy officer, however, said that despite the geographic differences, the Coyote and AAT
cultures are more alike than they may seem. Pickett said that the cultural similarities were a key reason for doing the deal,
and that Coyote put a lot of forethought into the issue. The previous deals were five and six years ago, and "we've learned a
lot along the way," he said.
The deal spells big paydays for AAT's three founders, Ted Alling, Barry Large, and Allen Davis, Chattanooga-based venture
capitalists in their mid-30s who launched AAT in 2002. In recent years, the three have drifted away from AAT to focus on other
holdings of the Lamp Post Group, their venture capital firm. AAT President Chad Eichelberger, who has been handling the day-to-day
business, will stay on to run the new company's brokerage operations.
The Coyote-AAT combination will have annual gross revenues (revenues before the cost of purchased transportation) of $2
billion, 17 North American locations, and a partner base of 40,000 carriers. Coyote generated slightly more than $1 billion
in gross revenue in 2013, but its first quarter gross revenue was 35 percent higher than in the prior quarter, according to
Pickett. AAT generated $400 million in gross revenue in 2012, the last year information was available.
Coyote's fortes are in dry van—the most commonly used form of truck transport—refrigerated trucking, and to a
lesser extent, intermodal. AAT's strengths lie in flatbed transport and in moving outsized commodities requiring special handling.
It also has a stronger presence in the less-than-truckload arena, a fertile market for brokers. Coyote's information technology
(IT) system, which goes by the internal name "Bazooka," will serve as the platform for the new entity. Bazooka is considered one
of the better broker IT networks in a world of largely mediocre systems.
The two companies also have different operating models, according to Evan Armstrong, president of Armstrong & Associates,
a West Allis, Wis.-based third-party logistics (3PL) consultancy. AAT works in teams that handle both sales and carrier operations,
Armstrong said. By contrast, Coyote uses what Armstrong calls a "split buy/sell operational model," where different groups focus
on securing loads and procuring trucks. Armstrong said the Coyote model is more efficient because employees can focus on one task
instead of juggling two roles.
Pickett said Coyote is "keeping an open mind" about what it can learn from AAT. However, he added that two elements of Coyote's
model will remain untouched: its philosophy of providing a single point of contact for the company's shipper and carrier base
and its centralized capacity management structure. The centralized structure has proven to be effective in leveraging Coyote's
network to build lane density, the holy grail for brokers. The brokerage model in general is easily scalable because it is
sales-driven and operates with significant variable costs, meaning a company can get to critical mass of network capacity
without a massive fixed investment.
"MEGABROKER"
Armstrong said the deal creates a "megabroker" to rival a select group of firms that preside over a marketplace of
thousands of mom-and-pop-like brokers. The market leader is C.H. Robinson Worldwide Inc. with more than $13 billion in
total 2013 gross revenue. Of that, $8.6 billion came from the "domestic transportation management/freight brokerage" category,
according to Armstrong data. The other major players are Greenwich, Conn.-based XPO Logistics Inc. (which is on a fast-growth
track of its own); Cincinnati-based Total Quality Logistics (TQL), and Chicago-based Echo Global Logistics Inc. The biggest
potential threat to this tight-knit group could come from traditional truckload carriers, which are muscling in on the action
to round out their product offerings and to diversify away from no-growth, over-the-road transport services.
Although there are approximately 10,000 licensed brokers in the United States, only about 28 have annual gross revenue
of more than $200 million, according to Armstrong data. Robinson reported net revenue (revenue after transportation costs) of
more than $1.3 billion from the domestic brokerage segment last year. The next 29 largest had combined net revenues of $2.2
billion, Armstrong data show.
Kerry R. Byrne, executive vice president of TQL, said he's unsure the Coyote-AAT deal will dramatically alter the
brokerage landscape because of the industry's size and continued fragmentation. Byrne said in an e-mail that he wasn't
surprised by the announcement because there has been much talk about merger and acquisition activity. (Echo, for its part,
in late February snapped up Comcar Logistics, a small Jacksonville, Fla.-based broker primarily serving the Southeast and Rocky
Mountain regions.) Although TQL plans to follow an organic expansion path, "growth through acquisition has been, and will continue
to be, a popular strategy for many others going forward," Byrne said.
Armstrong takes a different view, saying the transaction will spur "further consolidation within the small freight broker
ranks" as larger, better-capitalized brokers seek to beef up their service offerings, geographic reach, and lane density. The
industry executive said the broker/3PL market will shrink into a oligopoly of sorts. Under this model, only two or three big
vendors will have the necessary physical, technological, and capital resources to reorganize a traditionally inefficient business
and to offer large and small shippers the end-to-end solutions they increasingly demand. At the same time, the business itself
could easily double in revenue as more small to mid-sized shippers migrate to brokers and larger shippers use more of their
brokers' portfolio, the executive said.
Pickett of Coyote said the jury is out as to whether the AAT purchase will be the first big salvo in the consolidation wars.
But he is hardly oblivious to the wind's direction. "We hear from more than a few shippers that they're looking to rationalize
their vendor network," he said.
The Port of Oakland has been awarded $50 million from the U.S. Department of Transportation’s Maritime Administration (MARAD) to modernize wharves and terminal infrastructure at its Outer Harbor facility, the port said today.
Those upgrades would enable the Outer Harbor to accommodate Ultra Large Container Vessels (ULCVs), which are now a regular part of the shipping fleet calling on West Coast ports. Each of these ships has a handling capacity of up to 24,000 TEUs (20-foot containers) but are currently restricted at portions of Oakland’s Outer Harbor by aging wharves which were originally designed for smaller ships.
According to the port, those changes will let it handle newer, larger vessels, which are more efficient, cost effective, and environmentally cleaner to operate than older ships. Specific investments for the project will include: wharf strengthening, structural repairs, replacing container crane rails, adding support piles, strengthening support beams, and replacing electrical bus bar system to accommodate larger ship-to-shore cranes.
Commercial fleet operators are steadily increasing their use of GPS fleet tracking, in-cab video solutions, and predictive analytics, driven by rising costs, evolving regulations, and competitive pressures, according to an industry report from Verizon Connect.
Those conclusions come from the company’s fifth annual “Fleet Technology Trends Report,” conducted in partnership with Bobit Business Media, and based on responses from 543 fleet management professionals.
The study showed that for five consecutive years, at least four out of five respondents have reported using at least one form of fleet technology, said Atlanta-based Verizon Connect, which provides fleet and mobile workforce management software platforms, embedded OEM hardware, and a connected vehicle device called Hum by Verizon.
The most commonly used of those technologies is GPS fleet tracking, with 69% of fleets across industries reporting its use, the survey showed. Of those users, 72% find it extremely or very beneficial, citing improved efficiency (62%) and a reduction in harsh driving/speeding events (49%).
Respondents also reported a focus on safety, with 57% of respondents citing improved driver safety as a key benefit of GPS fleet tracking. And 68% of users said in-cab video solutions are extremely or very beneficial. Together, those technologies help reduce distracted driving incidents, improve coaching sessions, and help reduce accident and insurance costs, Verizon Connect said.
Looking at the future, fleet management software is evolving to meet emerging challenges, including sustainability and electrification, the company said. "The findings from this year's Fleet Technology Trends Report highlight a strong commitment across industries to embracing fleet technology, with GPS tracking and in-cab video solutions consistently delivering measurable results,” Peter Mitchell, General Manager, Verizon Connect, said in a release. “As fleets face rising costs and increased regulatory pressures, these technologies are proving to be indispensable in helping organizations optimize their operations, reduce expenses, and navigate the path toward a more sustainable future.”
Businesses engaged in international trade face three major supply chain hurdles as they head into 2025: the disruptions caused by Chinese New Year (CNY), the looming threat of potential tariffs on foreign-made products that could be imposed by the incoming Trump Administration, and the unresolved contract negotiations between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX), according to an analysis from trucking and logistics provider Averitt.
Each of those factors could lead to significant shipping delays, production slowdowns, and increased costs, Averitt said.
First, Chinese New Year 2025 begins on January 29, prompting factories across China and other regions to shut down for weeks, typically causing production to halt and freight demand to skyrocket. The ripple effects can range from increased shipping costs to extended lead times, disrupting even the most well-planned operations. To prepare for that event, shippers should place orders early, build inventory buffers, secure freight space in advance, diversify shipping modes, and communicate with logistics providers, Averitt said.
Second, new or increased tariffs on foreign-made goods could drive up the cost of imports, disrupt established supply chains, and create uncertainty in the marketplace. In turn, shippers may face freight rate volatility and capacity constraints as businesses rush to stockpile inventory ahead of tariff deadlines. To navigate these challenges, shippers should prepare advance shipments and inventory stockpiling, diversity sourcing, negotiate supplier agreements, explore domestic production, and leverage financial strategies.
Third, unresolved contract negotiations between the ILA and the USMX will come to a head by January 15, when the current contract expires. Labor action or strikes could cause severe disruptions at East and Gulf Coast ports, triggering widespread delays and bottlenecks across the supply chain. To prepare for the worst, shippers should adopt a similar strategy to the other potential January threats: collaborate early, secure freight, diversify supply chains, and monitor policy changes.
According to Averitt, companies can cushion the impact of all three challenges by deploying a seamless, end-to-end solution covering the entire path from customs clearance to final-mile delivery. That strategy can help businesses to store inventory closer to their customers, mitigate delays, and reduce costs associated with supply chain disruptions. And combined with proactive communication and real-time visibility tools, the approach allows companies to maintain control and keep their supply chains resilient in the face of global uncertainties, Averitt said.
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."