After a year's delay, truckload, less-than-truckload (LTL), and logistics provider Roadrunner Transportation Systems Inc. today released its re-stated 2016 results. They weren't pretty.
The Cudahy, Wis.-based company, which has been under the gun since it announced last January that it would be forced to re-state results for the prior three years because of unrecorded expenses at two of its subsidiaries, reported a $360 million net loss in 2016. That was compared to revised 2015 results showing net income of $25.6 million. The company said it took a $373.6 million non-cash impairment charge in 2016 for re-valuing goodwill and other intangibles. The write-down reduced the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) to $7.8 million, compared with a revised figure of $93.6 million in 2015.
Revenue for 2016 came in at $2.03 billion, up slightly from $1.99 billion in 2015, Roadrunner said. The company has until April 8 to disclose re-stated results for the remaining periods.
In a statement today, Roadrunner outlined a litany of problems that hurt profitability, among then higher operating expenses across multiple fronts, lower truck productivity due to weak demand and network inefficiencies, revenue declines in the LTL segment, and a negative product and service mix as a higher percentage of revenue. The company also spent more than expected to settle certain lease purchase programs, on litigation settlements, and on related legal costs.
The re-statement "is a difficult, but important, step forward" for Roadrunner, said CEO Curtis W. Stoelting, who was brought in last May as part of a wholesale executive-suite house cleaning that included a new president and CEO, CFO, and chief information officer.
Traders and investors responded to today's news by driving down the price of Roadrunner shares at midday to $5.99 a share, down $1.15 a share. The shares traded in August 2013 at more than $30 before starting a long slide that would accelerate dramatically starting in mid-2015, and would fall hard again in January 2017 after news of the re-statement.
The company said it plans to disclose results in March that will cover the first nine months of 2017, and file results shortly thereafter for the full year. It said it expects 2017 revenue to be roughly the same as in 2016, with adjusted EBITDA coming in below $30 million. Roadrunner said it was pressured last year by the same operating headwinds that it experienced in 2016.
Stronger demand and higher rates—trends that are widespread throughout trucking today—are benefitting the company so far in 2018, it said.
Roadrunner operates under an "asset-light" model where it effectively controls its truck capacity but doesn't employ drivers or own equipment. Roadrunner was one of the most acquisitive transport companies between 2005 and mid-2015, acquiring 34 companies over that span. During that time, it evolved from being exclusively an LTL carrier to becoming one whose truckload services would generate most of its revenue.
However, as economic and industry conditions worsened in 2016 for truckload and LTL carriers, Roadrunner's organizational structure, which at one time consisted of 20 operating units, became a costly and inefficient albatross. The company also admitted it was slow to respond to shifting market conditions.
Roadrunner has since restructured its 20 operating units into six operating groups. Four of those groups are in truckload, one in LTL and the sixth in Roadrunner's logistics group, which is known as Ascent Global Logistics.
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.