Merger of three parcel software firms integrates auditing, IT functions

A merger announced today of three parcel software providers will combine the functions of parcel auditing and information technology under one roof, rather than the traditional approach of different companies partnering with each other to provide a level of integrated services.

The merged company, to be called Logistyx Technologies, combines the operations of Advanced Distribution Solutions, Inc. (ADSI), Agile Network, and Pantechnik International. Private equity firms Kidd & Company, LLC and McLarty Capital Partners, LLC, which together control the three companies, orchestrated the combination. Kevin V. Cox, CEO of Agile Network, which is based in Chesterfield, Mo., will run the merged company. Logistyx is based in Tulsa, Okla.

The entity is believed to be the first to blend parcel auditing, where a specialist examines carrier invoices to identify overcharges and helps with carrier negotiations, with a Transportation Management System (TMS) that compares parcel rates, routes, services, and carriers to provide shippers with optimal scenarios for their shipping spend. The auditing function typically works on a "gain sharing" model, where the shipper and auditor (sometimes called a consultant) take pre-negotiated percentages of savings from the return of overcharges.

There is no shortage of existing relationships between parcel auditing and technology firms. However, the two services have traditionally functioned at arms length. Krishna Iyer, director, strategic partnerships & business development for consultancy ShipStation, said in an interview today that the process of separate auditing and technology functions is unwieldy because the data rests in different pOréals and workflows. In addition, an audit firm benefits from identifying parcel shipping inefficiencies on the back end, whereas a technology provider is tasked with finding cost-effective shipping solutions on the front end. Thus, a TMS could actually dilute the auditor's value proposition, Iyer explained.

The merger of the three companies "could be pretty powerful" because the shipper gains access to both functions with one provider, Iyer said. A fully integrated system could also add flexibility in shipper relations, Iyer said. For example, the new company could apply the audit savings to IT investments, and offer the shipper an enhanced service at no up-front cost, he said.