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.
XPO Logistics Inc. said today it has acquired the supply chain operations of Landstar System Inc. for $87
million in cash. Landstar had determined its supply chain business was no longer suited for its decentralized
model built around a network of agents that function more like entrepreneurs than employees.
The transaction, finalized last night and expected to close within the next four weeks subject to government approvals,
would give Greenwich, Conn.-based XPO ownership of NLM, a provider of web-based expedited transportation management services.
NLM, based in the Detroit suburb of Southfield, Mich., is the main component of Landstar's supply chain business. NLM's
transportation management system automates the carrier selection process for expedited transportation, defined as
time-sensitive movements with defined delivery windows and no tolerance for unreliability. Once a shipper's load is
posted on NLM's site, its software selects a carrier among multiple bidders using multiple selection metrics. A
decision is usually made within minutes. The software then tracks the transaction all the way to completion. NLM's
revenue comes from transaction fees paid by shippers.
Expedited transportation accounts for about two-thirds of NLM's business. The remaining one-third is non-time-definite
services mostly in the dry van sector, the most common form of truck transportation. A second technology product, A3i, is
included in the planned acquisition, according to XPO. That product performs similar functions as NLM, though on a smaller
scale, said Bradley S. Jacobs, XPO's founder, chairman, and CEO.
NLM managed about $500 million in gross transportation spending over the 12-month period ending in November and
facilitated about 450,000 transactions over that time, according to XPO. NLM generated $9.8 million of adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA) on $23.4 million of transaction management fee revenue.
For XPO, the transaction increases its exposure to the expedited transport category, which is one of three reporting
divisions at the company. Expedited services account for about 15 percent of XPO's annual revenue, which is expected to
surpass $1 billion by year's end. The bulk of XPO's revenue comes from freight brokerage, with the remainder from freight
forwarding.
Jacobs said expedited services are poised for growth as just-in-time (JIT) production processes remain relevant and
companies rely on fast-cycle shipping services to mitigate the costs of carrying buffer inventory. "We are committed to
being a leader in this space," he told DC Velocity in an interview today.
The deal also marks XPO's first big foray into transportation management, a segment Jacobs said a couple of months
ago would be a focus of the company's attention in 2014. In today's interview, Jacobs noted the success that rival C.H.
Robinson Worldwide Inc., the nation's largest freight broker and a major logistics provider, has enjoyed with its own
transportation management business, known as TMC. The unit is growing by about 20 percent a year, Jacobs said.
By the end of 2014, XPO expects to be the second only to Robinson in annual brokerage revenue. The company projects that
it will achieve $5 billion in total annual revenue by 2017 through a combination of acquisitions and organic expansion.
For Jacksonville-based Landstar, the deal enables it to exit a business that it acquired in two separate investments
during 2009. The company will realize $32 million after-tax profit from the sale. Partly because of its increased cash
position, Landstar's board today declared a special on-time dividend of 35 cents a share and authorized an increase in its
share buyback program to 3 million shares.
Henry Gerkens, Landstar's chairman, president, and CEO, said in a statement that the divested business was "better suited for
a company-store type operation" instead of for Landstar's model which supports a network of agents who, for the most part,
operate independently. The company will maintain offices in the greater Detroit/Southfield area to provide services to its
automotive customers. The auto sector has been a big part of NLM's revenue mix.
Jacobs lauded Gerkins' acumen in acquiring a valuable asset during a period where asset prices were artificially depressed
due to the financial meltdown and severe recession. However, Jacobs said that over the long haul a system like NLM's has more
value being managed within a centralized environment like XPO than in an agent-driven enterprise like Landstar's where the agent
is "in it for himself."
Charles W. Clowdis Jr., a long-time transportation executive and today managing director of transportation for IHS Economics,
a unit of the consulting company IHS Global Insight, said he wasn't surprised by the news. "[Landstar] has been saying they
would sell [the business] for several years now," he said.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.