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June 09, 2014

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SURFACE & DOMESTIC TRANSPORTATION 56 THE JOURNAL OF COMMERCE www.joc.com JUNE 9.2014 IN BRIEF n Canada's TransForce Buys Transport America TransForce, Canada's largest trucking operator, has announced it will acquire U.S. trucking company Transport America for $310 million, including the assumption of $150 million in debt held by the Eagan, Minnesota-based carrier. This year's largest trucking deal to date and the second purchase for TransForce, the acquisition gives the Montreal-based transportation holding company "critical mass" in the U.S. truckload market and a platform for more expansion in the United States — where about 30 percent of TransForce's $3 billion in revenue originated last year. "We stand to benefit from Transport America's extensive geographic footprint and long-standing relationships with blue chip customers," said Alain Bédard, TransForce chairman, president and CEO. The transaction is the latest and largest in the truckload sector since Heartland Express paid $300 million in cash and debt for Gordon Trucking last November. (For more perspective on the TransForce deal, see page 86.) n Truckload Rates Extend Rally Shippers are agreeing to pay more to secure truckload capacity even as the sharp contraction in capacity seen this past winter eases. Truckload contract rates in May rose between 2.5 and 4 percent, BB&T Capital Markets reported, while truck capacity swung back toward a balance. The range of those rate increases is a bit below expectations voiced by carriers and analysts in the first quarter, when contract rates seemed ready to soar. However, the rate of increase is higher than many people predicted before the severe winter cut into capacity. "As several shippers told us, capacity feels balanced, neither tight nor loose," BB&T analyst Thomas S. Albrecht said in a June 2 note to investors. "We heard several times in the days before and during Memorial Weekend that capacity was orderly, with minimal service failures," he said. "The DAT national average dry van spot rate rose from $1.95 to $1.97 per mile from May 3 to May 24 after falling from a March peak of $2.10 per mile. The dry-van spot rate average was still 15 percent higher than a year ago. JOC While there, he and a few friends launched a freight brokerage, Lane Source. "We started it on a whim," he said. "We were relatively suc- cessful for how small we were, just three or four guys with a load board making a profit." The experience provided important schooling on how trucking works — and where it doesn't. Too many owner-opera - tors, he realized, "work their butts off, but they go broke because they can't get a grip on their costs. Why would a person want to drive a truck and barely make any money?" He also saw the writing on the wall for his brokerage business, especially when the federal government raised the surety bond requirement for freight brokers last year from $10,000 to $75,000. "It's hard to make it when you're that small, so we knew we had to pivot," he said. "When the $75,000 bonding requirement came, that's when we decided to get out (of brokerage). We're not going to keep scratching and clawing with this old model when we think we have a better way." Here's how Dashhaul.com works: When truckers sign into the website, their trucks are identified by location. They automati- cally receive information from nearby shippers or brokers with loads. They're able to review the load and customer require- ments. Dashhaul assigns a rate to each shipment, using a proprietary rating engine. "From our experience, a lot of time is wasted with rate negotiations," Schreiber said. "We've created a pricing algorithm that takes time, distance and location into con- sideration and gives the trucker a fair rate. We're very close to the spot market. The goal is to make sure the owner-operator won't lose money on a run; that's our purpose." If the price looks right, "the trucker can make a decision right then and there," he said. "If it's a standard load, the carrier may never have to make a phone call or send an e-mail." Shippers pay Dashhaul via credit card, and payments are released to truckers, often within 24 hours of delivery, Schreiber said. Dashhaul charges shippers or brokers a per transaction match fee. "We've gotten some pushback to paying via credit card, and we do have an invoice option for qualified bro- kers and shippers. But paying via credit card is the safest way to pay," Schreiber said. Dashhaul isn't just a new tool, it's a new way of doing business, and that's a hard sell. "This industry is 'old school,' and it's hard to change that," Schreiber said. "We still have truckers calling to ask how they can search for loads. We purposely designed against that. Searching for loads is a time-waster. We explain that all you have to do is share your location and the offers will come to you." By late April, Dashhaul had about 500 trucks and a couple of hundred compa- nies registered, and Schreiber and LeVert were busy recruiting shippers and brokers. "We're small, cash-strapped, bootstrapped, and only a couple of people. We all wear a lot of hats," Schreiber said. In particular, Dashhaul may prove valu- able to smaller shippers that don't have the technological resources of larger compa- nies. Larger shippers and brokers could add Dashhaul to a portfolio of tools used to find capacity, Schreiber said. "I see them using our platform as a backup plan to cover spot shipments or shipments with carriers that aren't in their network," he said. "We see it working almost exactly like Uber. As technolog y starts changing the landscape of the industry, we think (customers) will see the benefits of doing business this way. It's going to take some work and a lot of explaining." JOC Contact William B. Cassidy at wcassidy@joc.com and follow him on Twitter: @wbcassidy _joc.

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