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Nov.14, 2016

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SURFACE & DOMESTIC TRANSPORTATION TRUCKING | RAIL | INTERMODAL | AIR & EXPEDITED | DISTRIBUTION 38 THE JOURNAL OF COMMERCE www.joc.com NOVEMBER 14.2016 By William B. Cassidy NOT LONG AGO, shippers primarily turned to third-party logistics providers for help moving freight. Now they want companies such as Sunteck/TTS Holdings to analyze enormous amounts of data and produce predictive and proactive services to help manage supply chains. That is spurring the growth of freight management ser vices and is likely to encourage more mergers like that of TTS and Sunteck Transport Group, announced in October, as demand increases for cloud- based technolog y that enables big data analysis and predictive analytics. "Shippers want visibility, they want a na lysis, a nd t hey wa nt it a lmost in real time," said Andy Cole, president and CEO of TTS and now chairman of Sun- teck/TTS. "They're looking for us to be much more than just transportation pro- viders. They want us to be their data engines." Those needs are changing the logistics landscape, said Ken Forster, CEO of Sunteck and now president and CEO of Sunteck/ TTS, as logistics providers rapidly morph into "third-party logistics technology pro- viders." That trend will accelerate over the next few years. "You're going to have a handful of really big players with sophisticated technology, and then really small niche guys in specific markets," Forster said. "The guys in the middle providing generic, people-based commoditized brokerage services are going to get crushed." "The big word in transportation right now is disruption," Cole said. "We want to be a disruptor." The merger, terms of which weren't dis- closed, makes Sunteck/TTS a bigger player. The company will approach $1 billion in annual gross revenue, and handle more than 700,000 intermodal, truckload, and less-than-truckload shipments a year, Cole and Forster said. The new company will have more than 200 agents, a combined network of 30,000 carriers, and about 2,000 trucks in its asset- light capacity divisions. TTS has access to more than 200,000 pieces of rail intermodal equipment, and Sunteck has an intermodal drayage network. "In terms of size, it puts us in the top 10" freight management service providers, Forster said. "We'll be the second- or third- largest agent-based freight management company, behind Landstar System," he said, along with $928 million Hub Group subsid- iary Mode Transportation. Freight management is an increas- ingly lucrative and fast-growing subset of third-party logistics. In the third quar- ter, net revenue for logistics services includ- ing freight management rose 31 percent at C.H. Robinson Worldwide, although traditional truckload brokerage revenue declined. TMC, the transportation management subsidiary of C.H. Robinson, recently signed a global technology and managed services contract with Microsoft. Microsoft is lever- aging TMC's cloud-based technology paired with process management and supply chain services. Technology and the ability to scale and deliver technology to customers large and small are becoming the key differentia- tors in logistics, Cole, Forster, and many other executives believe. XPO Logistics will spend about $425 million this year on technology. The need to take the enormous amount 3PL METAMORPHOSIS TTS-Sunteck merger underscores shippers' needs for freight management technology "Shippers want visibility, they want analysis, and they want it almost in real time."

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