Expedite NOW has been talking with Express-1 owner-operators since Jacobs came on the scene. From their vantage point on the road, drivers have seen…
Entrepreneur Bradley Jacobs made expediting industry news in June, 2011, when he announced plans to buy Express-1 Expedited Solutions, Inc. and build it into a multibillion-dollar company. Express-1 owner-operators and others were naturally curious about what that meant for them. Expedite NOW recently interviewed Jacobs and Express-1 president Jeff Curry to bring readers up to date.
First, a bit of history. While Jacobs was new to the transportation industry, there was little doubt that he has the capital and expertise to transform this small company into the large company he envisions. His announced intent made news on Wall Street too because he is known there as one who has done this before.
At a special shareholder meeting in September, 2011, Express-1 shareholders voted to change the company name to XPO Logistics, Inc., install a new board of directors, seat Jacobs as CEO and chairman of the board, and make changes to give Jacobs and other investors controlling interest in the company and bring their capital in. Reorganized under the new name, the company consists of the same three entities it did before Jacobs took control. They are Express-1, Inc. (expedited surface transportation), Concert Group Logistics, Inc. (domestic and international freight forwarding) and Bounce Logistics, Inc. (truckload brokerage).
Jacobs announced his strategy specifics in June and had already begun work when official control of the company was vested in him in September. With his primary focus on building the brokerage side of the business, expediters wondered if this Wall Street guy would simply dispose of Express-1 by spinning it off .
As time passed, Jacob’s actions indicated he would not. He showed great interest in growing Express-1; visiting the company’s Buchanan Michigan facility, meeting the employees and peppering them with questions about what can be done to make the company better.
Jacobs was the keynote speaker at the Sylectus Annual Conference 2012, in Orlando in January. Speaking in a room in which people representing over 100 expedite carriers were seated, Jacobs said that he wants to “build XPO from a company that is now doing about $180 million in revenue to a company that will be doing $4 to $6 billion of revenue five years from now, through a combination of cold starts and acquisitions and growth.”
To that end, Jacobs has assembled a management team, bringing in people with impressive credentials and experience. He is also spending money to build a platform that will unify IT in the three XPO companies. The management team’s involvement with Express-1 and the IT inclusion further suggest that the intent is to keep Express-1 with XPO and not spin it off.
Sylectus conference attendees listened with great interest when Jacobs talked about building Express-1. Many of them owned competing expedite carriers, the kind of companies Jacobs might buy in a growth by acquisition strategy. About that, Jacobs said, “I would guess that five years from now when we have another conference here … we’ll have bought 10 or 15 of the [companies] in this room.”
After saying that, he expressed a greater interest in growing Express-1 internally. He noted that owner-operators are not “sticky.” An expedite carrier can be purchased but there is no guarantee that the independent contractors will stick around. In a recent quarterly earnings conference call, Jacobs said he can build an owner-operator fleet with less money by paying signing bonuses than by buying a competing carrier.
While Jacobs is new to expediting, he became quickly schooled in the challenges carriers face with driver recruiting and retention. He says that he does not know how to solve the industry-wide driver shortage problem, and that Express-1 will address it by turning the company into “the preferred place for owner-operators to work.”
Expedite NOW has been talking with Express-1 owner-operators since Jacobs came on the scene. From their vantage point on the road, drivers have seen few changes at the company. They report that the office people are the same and it has been business as usual in recent months.
Expediters are continually concerned about freight volume and rates, how their carrier of choice is treating them and what the future may bring. Jacobs and Curry spoke to those topics in a telephone conference call with Expedite NOW in late February.
EN: You have talked about building a single IT platform for all three companies. Is Express-1 going to get an IT makeover and if so, what changes will the owner-operators see?
Curry: We have a much more powerful technology group at our disposal now. … We are looking at doing a lot more things in the cab, into expanding and enhancing our scanning capabilities within the cab….
We look at some of our enhanced ability in technology as a way that’s going to help our drivers … [by linking] all of our [XPO] cold start and acquisition locations … together better through technology….
Our cold start location in Phoenix was already talking to me about what can we do; what can we do to help to load trucks when they’re out west? So I see a lot of that, I think, that’s gonna play really significantly in the future; not in the next week or two weeks, but soon.
EN: How long is it going to be before your owner-operators start bumping loading docks they have not bumped before because of the cross selling between XPO companies?
Curry: They’re already seeing it now. They don’t necessarily know when they see it because they don’t know exactly where the load came from. But we’re already doing well over a million a year through Bounce and CGL locations. I get a report every Monday from the different CGL locations telling me how many loads and how much business they provided us from the week prior. … Roughly five percent, maybe, of the load count comes from cross selling. So it’s happening now. But I think it is going to grow tremendously, obviously, as we expand the locations out there in the country.
EN: How does that five percent compare to a year ago?
Curry: It’s growing like crazy. I think the reason it’s growing is because we’ve got so much more horsepower now, so many more people involved the company. … We had a joint sales meeting that Brad attended down in Orlando when we were all there for the Sylectus annual meeting and everybody was there. The CGL group was there.
Most of those stations are independently owned so those people are business owners and sales minded, sales oriented. A couple of them are directly compensated by Express-1 as independent sales agents for us. And they do a pretty darn-good job.
One of them is down in San Antonio. That’s not necessarily a location where we would have feet on the street for Express-1, now we do. Another one is in Denver, Colorado. That’s not a location where Express-1 would normally have feet on the street but now we do. All through the CGL network, that’s only going to get stronger and better for our drivers as we move along.
EN: What are you doing exactly to turn Express-1 into a preferred place for owner-operators to work?
Jacobs: Look, the main thing we’re doing is making sure we get more miles to trucks. Owner-operators need miles. We want to make sure that we’ve got the right size fleet and the right size customer base … to keep the drivers busy.
So we’re balancing how many we want to recruit versus giving more miles to the loyal owner-operators we already have in the system. That’s one of the things we’re doing with the IT, is to get ourselves better and bett
er organized to … get more miles.
Curry: We’re doing some things right now that are paying off in the moment and I think are going to pay off hugely as we move down the road … We’re [asking questions] now here at Express-1 better than we ever have; and I think that’s one of the reasons why our participation in our driver conference call this past Saturday was so high; because we ask questions.
I asked three simple questions: What can we fix to make your life better? What have you seen another carrier do that you like that maybe Express-1 should consider? And what is your number one organizational tip? … [I asked] what do they do to organize themselves better to make more efficient use of time and make their business better?
Those are powerful questions with some really tremendous answers that I got back, and I got a ton of feedback. I think that when we involve the owner-operator more that way, we get stronger. They’re a bigger part of the organization too and hopefully feel that way.
I think we’re learning too that the driver that’s in orientation this week was last week’s turnover statistic somewhere else. And why? Why is that? Why were you last week’s turnover statistic? And so we need to sit down with that owner-operator and really figure out what it is he’s expecting and what it is he got somewhere else last week that made him leave, and see if we can overcome that.
There are two other things that we’re doing that might seem counterintuitive but really aren’t. We’re working to build our brokerage capability within Express-1 … to meet our customers’ expectations. … If we don’t have a truck in the right spot … we still need to say yes. … We’re expanding our ability to say yes so the customer who we brokered this load for, who then calls back next time, we may not broker that load. That might go on our truck. … That helps our owner-operators.
We just started [a new inside sales process] in January … We’re having tremendous success, and those additional loads that we garnered from our new inside sales effort go to provide additional miles to our trucks.
Part of what that inside sales group is going to do too, is keep an eye on where are our owner-operators and what’s their last available hours statistic? How long have they been sitting? And if they’ve been sitting too long … then we’re going to make some proactive calls to move them out of the location they’re in. Part of those calls will involve, in the near future, calling our brokerage locations. What can you do to move this truck that’s in Sasquatch Kansas or wherever?
EN ended the interview by asking, what’s the point in an owner-operator coming over?
Jacobs: Number one, we’re paying competitively; number two, we’re giving necessary miles; number three, we really care. And we have a culture that is genuinely responsive to the … driver community.
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Full Disclosure: Phil Madsen owns shares of XPO stock
