Rick Campbell, chief executive officer of ICAT Logistics, said franchising is one of the fastest growing segments of U.S. business, and he also believes it’s an effective way to organize a logistics company.
Franchises make sense, he told American Shipper
, because nearly every businessman is “likely to have a limited set of skills and running a business will require a broader set of skills… you can plug into a system that has acumen in other areas and balance things out. That is the model that we have.”
ICAT has 15 agencies around the country and Campbell would like to add 15 in the next five years.
“If there is ownership on the ground, skin in the game, at these regional service centers, then we are better off as an organization,” he said. “Many of our competitors have ‘company stores’ and agencies. Our belief is that gets a bit convoluted, because as an agency you’re paying a fee back to the corporate office. Are you paying that so that they reinvest their resources back into somebody else other than you?
“Some agencies feel that they don’t get the same attention as the company store,” he added. “Whether that’s true or not, I don’t know, but that is the perception. We wanted to rid ourselves of that so we are striving for 100 percent agency-owned modeling.”
The only agency he owns is at the company’s headquarters in Elkridge, Md.
The corporate office performs back office work, information technology, marketing, cash management, payment for transportation, credit processing, and collections, he said. The agency pays ICAT a percentage of sales.
ICAT also provides agents with a system that ranks vendors by performance, cost and ease of doing business with them. The system is continually updated with information provided by the agents.
Campbell entered the forwarding business after a stint at American Airlines’ cargo operations and formed ICAT in 1993.
He wouldn’t disclose ICAT’s current sales, but in 2006 the company was ranked No. 352 on the INC
magazine’s list of the 500 fastest growing companies when sales jumped 393 percent from 2002 to 2005 to $43.8 million.
The company was hit by the recession, seeing volumes fall 15 percent from 2008 to 2010. ICAT did not close offices, but some customers reduced shipments.
Business snapped back to levels above 2007’s peak last year, and Campbell noted sales climbed another 35 percent in 2012.
While international sales represent about 27 percent of the company’s business today, he said they were up 55 percent last year and could account for half of ICAT’s total sales in three to five years. ICAT has about 100 affiliate partners overseas.
Of the 73 percent of his business that’s domestic, he estimates only about a third actually touches a plane. Instead many forwarders like ICAT use less-than-truckload and expedited carriers, and even UPS and FedEx for “lift.”
ICAT is heavily involved in three vertical markets — trade shows, asset recovery (for example, collecting used computers or security equipment), and aerospace. — Chris Dupin