Intemodal firm sees growing demand for drayage services from shippers.
RoadOne IntermodaLogistics, formed earlier this year through the purchase of the former RoadLink transportation division, sees increased demand for drayage services, not just from transportation providers, but also from direct importers and beneficial cargo owners.
“Our primary core business is going to be intermodal trucking, intermodal drayage, but we are diversifying the business slightly,” said Ken Kellaway, RoadOne’s chief executive officer.
“Our whole new theme is single source solutions for our intermodal drayage customers,” he said. “Our customers today are not only intermodal marketing companies and steamship lines and railroads, they are also direct importers and the direct beneficial customers themselves.”
The company is adding some new services, including transloading, warehousing, dedicated fleet operations and container yard management, and is trying to “vertically integrate the business so we’re a more valuable partner than just being a pure-play drayage company.
“We think that just being a drayage company is commoditized to a degree, and our value in drayage, of course, is we have very strong systems capabilities,” Kellaway added.
“We have a national platform which is beneficial to our customers, in that they can single source,” he explained. “We do a lot of single source for big companies that only want to have one drayage partner in the country to reduce their vendor management costs. But we also want to have more vertical service offerings for our customers as well. We have a sister affiliate called E*Fill America that does national warehousing and distribution services and transloading.”
E*Fill has more than 175 locations around the country.
Kellaway said while 95 percent of RoadOne’s revenue comes from drayage, the company envisions growing the other services to eventually account for about a quarter of the company’s revenue.
“Drayage will still be our core business, we don’t want our customers thinking we’re getting out of that,” he said. The company has about 1,000 drivers and operates nationally. About 100 are employee drivers and the remainder owner-operators.
He said the firm’s biggest market is the Midwest, but the company is still a substantial operator in the Northeast and Southeast. “Our smallest operation is on the West Coast, but we’re everywhere on the West Coast,” Kellaway said.
The company was acquired by Kellaway and David McLaughlin, the company’s chief operating officer, at the beginning of this year from Fenway Partners in partnership with Oskie Capital.
Kellaway believes truck capacity is going to get significantly worse, and more shippers will move to dedicated fleets for drayage services.
“We think creative solutions are going to be a big component of our business long term,” he said.
Lowe’s Deal. That creativity is apparent via the company’s involvement in a program with Lowe’s to develop a dedicated fleet of chassis for the home improvement store to move its containers to and from marine terminals.
Speaking in September at the South Carolina International Trade Conference, Dean Tracy, director of import logistics at Lowe’s, said his company was motivated to lease its own chassis because it was unable to obtain a “single threaded solution” from container carriers as they have recently divested themselves of their chassis fleets.
Lowe’s began acquiring a chassis fleet over a year ago and has deployed the equipment to move containers in the Southeast, in and out of Atlanta, Jacksonville, Charleston and Norfolk, and plans to expand the program nationally.
“Lowe’s is one of the larger clients that we handle. We are their largest intermodal drayage company,” Kellaway said.
Lowe’s has a fleet of more than 1,000 chassis which are used full time, and Kellaway said they have a strong turn rate.
“We think that’s the model others are going to go to—where we will have dedicated trucks and we would go out and buy or lease chassis for customers to get that daily rate down significantly, but that means the customer is going to have to make longer-term commitment. We can keep the cost down and improve service if people are willing to make a longer-term commitment,” Kellaway said.
“Culturally, we know that people do it all the time on the outbound side. If you look at the way lot of big manufacturers and retailers and importers handle things today, a lot of them make dedicated commitments on their outbound store side. We are trying to instill the same culture on the inbound distribution center side,” he said.
“Companies are committing to the big truckload guys for long-term contact agreements to make sure they get the adequate capacity and service and equipment they need, we want to do the same thing on the inbound side,” he added.
Dual Growth Strategy. Kellaway said the company is pursuing a “dual growth” strategy where it will seek to expand by using both company-owned branches and agents.
“We have ‘company stores’ at 42 locations around the country, all company-based operations with our employees running it,” he said. “We believe there are certain markets where we may not care to have a company store, but it might make sense to have a service offering to our clients.”
RoadOne started a new affiliate called QLS Logistic Services that will serve as the foundation for a new coast-to-coast agent drayage and brokerage business, known as US IntermodaLogistics. (US IntermodaLogistics has the same owners, but is a separate business from RoadOne.) The business started with locations in Chicago; Norfolk, Va.; and New Jersey.
Mark Pontarelli, owner of US IntermodaLogistics, will remain at the company and fill the role of vice president of agent partner solutions for US IntermodaLogistics. He will be responsible for establishing and building a new agent network throughout the United States.
Kellaway said the expectation is that an individual who wants to own a drayage or dedicated fleet company, but “still needs a good operating system, good insurance, sales help, back office support and financial support could come to us and be basically an agent for us.
“What it does is bring to us successful entrepreneurs that can drive revenue, drive capacity, help to grow our overall business and service our clients in markets that we don’t want to be in or we don’t have,” he said.