• DATVF.ATLPHL
    1.643
    -0.074
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  • DATVF.CHIATL
    1.951
    0.018
    0.9%
  • DATVF.DALLAX
    0.880
    0.015
    1.7%
  • DATVF.LAXDAL
    1.501
    0.007
    0.5%
  • DATVF.SEALAX
    0.966
    -0.092
    -8.7%
  • DATVF.PHLCHI
    0.929
    -0.038
    -3.9%
  • DATVF.LAXSEA
    2.005
    0.035
    1.8%
  • DATVF.VEU
    1.508
    -0.031
    -2%
  • DATVF.VNU
    1.395
    -0.016
    -1.1%
  • DATVF.VSU
    1.191
    0.011
    0.9%
  • DATVF.VWU
    1.486
    -0.028
    -1.8%
  • ITVI.USA
    9,836.710
    -180.070
    -1.8%
  • OTRI.USA
    4.790
    0.100
    2.1%
  • OTVI.USA
    9,831.280
    -180.470
    -1.8%
  • TLT.USA
    2.410
    -0.010
    -0.4%
  • WAIT.USA
    150.000
    0.000
    0%
  • DATVF.ATLPHL
    1.643
    -0.074
    -4.3%
  • DATVF.CHIATL
    1.951
    0.018
    0.9%
  • DATVF.DALLAX
    0.880
    0.015
    1.7%
  • DATVF.LAXDAL
    1.501
    0.007
    0.5%
  • DATVF.SEALAX
    0.966
    -0.092
    -8.7%
  • DATVF.PHLCHI
    0.929
    -0.038
    -3.9%
  • DATVF.LAXSEA
    2.005
    0.035
    1.8%
  • DATVF.VEU
    1.508
    -0.031
    -2%
  • DATVF.VNU
    1.395
    -0.016
    -1.1%
  • DATVF.VSU
    1.191
    0.011
    0.9%
  • DATVF.VWU
    1.486
    -0.028
    -1.8%
  • ITVI.USA
    9,836.710
    -180.070
    -1.8%
  • OTRI.USA
    4.790
    0.100
    2.1%
  • OTVI.USA
    9,831.280
    -180.470
    -1.8%
  • TLT.USA
    2.410
    -0.010
    -0.4%
  • WAIT.USA
    150.000
    0.000
    0%

Redwood Logistics



Chicago-based Redwood Logistics is a next-generation, strategically integrated logistics provider that believes every company’s needs are unique. For more than 15 years, the company has been providing solutions for moving and managing freight and sharing its knowledge across North America. Redwood Logistics is focused on making its customers more successful in their end markets by applying talented and motivated people, proven processes and cutting-edge technologies to optimize their supply chain management efforts. For more information, please visit us on the web at www.redwoodlogistics.com.

  • Migrating from on-premise OTM to the cloud for a more positive bottom line

    Within the trucking industry, there has always been a push to embrace practices and adopt technology that can help fleets improve efficiency by reducing operational costs and automating redundant manual processes, which leads to better customer service levels. Though transportation management tools have been in the ecosystem for quite a while, the storage of collected data and the services being offered were largely on-premise – within the cab. 

    Over the last few years, cloud-based technology has become mainstream across the freight market, helping fleets store data and receive services in real-time over the internet. However, for this to happen, fleets will have to migrate their systems from being Oracle Transportation Management (OTM) on-premise to OTM cloud, which is a process where fleets could make do with some help for transition.

    “In its essence, cloud migration is really about moving from a client-managed Oracle OTM infrastructure and support to an Oracle-managed OTM infrastructure and support,” said Mark Kissell, the vice president of logistics solutions at Eminent Global Logistics, a subsidiary of Redwood Logistics. “But that’s the easy part. Managing and migrating the data from the OTM on-premise to the cloud is where the actual work is.”

    Kissel pointed out that one of the primary reasons for companies to migrate stemmed from their eagerness to reduce their IT infrastructure and support costs. There also exists a functionality gap between on-premise and cloud software, with the latter having a performance edge and much more backend support, thus making it more reliable overall. 

    Before the advent of the cloud-based OTM, the on-premise OTM was an enterprise transportation management system tool that was mainly used by Fortune 500 companies, because the costs associated with IT infrastructure and support were not affordable for small- and mid-tier businesses. 

    “When Oracle came out with its cloud OTM platform, it was met with skepticism by the on-premise client base, who believed that the cloud couldn’t handle what they were doing, or simply thought it was too new to trust,” said Kissel. “But that opinion turned in a year or two of the cloud, and with the conversations I’ve had with clients in the past year, they seem to realize that they’re now getting left behind.”

    Large companies are making the shift, with cloud migration now becoming a business strategy. Fortune 500 companies view this as an opportunity to reduce their IT infrastructure and support costs, with Kissel mentioning that Redwood Logistics saw a 50 percent increase in cloud migrations since the last quarter of 2018. 

    Redwood Logistics helps its clients to cement a strategy that figures out the best approach to cloud migration. “We initially come in with strategy discussions, timing discussions and then ease into the details around the differences between on-premise and cloud, while identifying what they may need to change. Every client is a little different with how they utilize OTM,” said Kissel. 

    Kissel explained that Eminent’s clients could handle a major part of the migration, because they employ skilled individuals who understand how the environment works and what to do with their OTM. Company’s stake in the migration process is about figuring out a way to augment the strategies that its clients have set in place.

    “If, for instance, they want to scale fast, they might need some additional resources. But if they want to go a little slower, then their resources could probably handle a bit more,” said Kissel. “I see these larger clients to be very connected to Oracle, and Oracle is now looking at them and assuring them that the cloud OTM is now ready for use. This acts as a catalyst for the large on-premise customers to start looking at migrating to the cloud for good.”

  • LoadRunner, the pricing and digital freight matching engine at the center of the Redwood – Strive brokerage operation

    In February, Chicago-based Redwood Logistics announced its acquisition of Strive Logistics, a freight brokerage with offices in Chicago and Austin, Texas, placing the combined entity in the top 15 North American freight brokerages with a combined $1 billion of freight under management.

    Commenting on the deal, Redwood CEO Mark Yeager pointed out that Strive’s LoadRunner, an intelligent platform that uses advanced analytics to drive broker productivity, perfectly complements the customer-facing technology that Redwood had developed.

    We wanted to learn more about LoadRunner, so we spoke to Michael Johnson, Redwood’s new executive vice president of strategy. Before the acquisition, Johnson was most recently Strive’s vice president of strategy; Johnson spent 12 years at Strive, having started on the brokerage floor in the fall of 2007.

    Johnson said that Ben Greene, a veteran of American Backhaulers and C.H. Robinson who founded Strive in 2003, realized early on the advantage that data and automation could bring to a brokerage competing in an industry that was largely dependent on Excel spreadsheets and telephone calls.

    “Two years into learning the business, Ben was expressing to me his vision of creating a technology platform that would allow the company to scale faster and differentiate ourselves in the marketplace,” Johnson said. Johnson’s engineering background gave him the technical skills to sketch out the blueprint of what the platform would look like.

    After two years of development, the technology was ready to go live.

    “We ended up calling it LoadRunner. Our primary goal was to emulate the way high-frequency trading platforms perform in financial markets, specifically how they use data to drive automation and decision-making within their organizations,” Johnson explained.

    In its seven years of operations, LoadRunner has been enhanced by more than one hundred new releases. These refinements were driven by feedback from users, customers, carrier partners, and the company’s dictum that “complacency is not an option.” Johnson said that when LoadRunner was launched, fully 90% of the capacity it matched freight to was sourced from public loadboards; one year later, that number was down to 30%.

    “As recently as the end of last year,” Johnson said, “less than 10% of our total freight is moved by carriers we’ve booked from public load boards. LoadRunner has allowed us to change how we’re managing our own carrier networks, and our matching algorithms allow the freight we have coming in to match up to our own liquidity, in our own private marketplace.”

    We had questions about those matching algorithms—what are the algos looking for? What is the engine optimizing for? In other words, what are the attributes of a load and a carrier that cause LoadRunner to match them?

    LoadRunner’s carrier selection algorithms make probabilistic bets on which carriers can offer customers the best value and are most likely to accept the load. LoadRunner’s algorithms are dynamic in that as new information enters the system, the outcomes and suggested carriers change in real time.

    “The reason that’s important,” Johnson said, “is that just in our private marketplace alone, there are hundreds of thousands of available trucks we have visibility into. Especially on high volume lanes, like Dallas to Houston, we might have more than 60 carriers who would haul that lane, so what we need to do for our operators to help make decisions is weave in the order that those carriers should be contacted. We’re asking ourselves, how do we take data and provide recommendation engines to our team as to which carriers should be called and in which order, which dramatically increases the velocity of freight booking.”

    Apart from the technology itself, both LoadRunner and RedwoodConnect, Redwood’s proprietary integration middleware, will benefit from the increased scale achieved by combining the companies’ data, customers, and carrier networks. Load matching is a mathematical problem governed by Metcalfe’s Law, which states that network effects are proportional to the square of the number of connected users in the system. Greater scale gives brokerages an exponential, not a linear advantage over their smaller competitors.

    Another way to think of the network effects derived from increased scale is liquidity in a marketplace: It is now easier for Redwood to match a load, and to do so at a higher productivity. Shippers’ costs go down and carriers are also afforded better rates. Scale makes it easier to service valued customers’ freight with the highest quality carriers and help trusted carrier partners optimize the utilization of their assets.

    “We’re coming together from two very complementary positions in the market,” Johnson concluded. “Strive and Redwood are thought leaders when it comes to technology. Redwood has the best customer-facing technology, and Strive has spent the last ten years building the internal horsepower. The technology is at the forefront of the industry and it makes us more effective in every way. It’s the combination of these tools and our people that creates the real magic for our customers.”

    How to keep shippers happy

    In April 2017 World’s Finest Chocolates (WFC), a Chicago manufacturer, hired Redwood Logistics, a third-party logistics (3PL) company also based in Chicago, to build a transportation management system (TMS) connecting its warehouses with core business operations. The project was completed successfully on a tight timeline. So in 2018, when a trucking crunch hit the market, raising spot rates for WFC by as much as 20 percent and causing capacity challenges out of Chicago, the chocolate maker once again turned to Redwood for assistance.

    The 3PL came through. By tapping into its customer network and leveraging backhaul capacity, Redwood’s multimodal division was able to procure consistent capacity in many lanes while bringing WFC’s truckload rates down by around 10 percent. WFC responded by moving more of its carrier business over to Redwood, and the logistics provider now handles $1 million of WFC’s carrier expenditures.

    “It makes us not worry about having to be trucking experts in moving our product,” said Todd Peterson, director of logistics for WFC. The company is now working with Redwood on another project, a bid for less-than-truckload freight. “Redwood has been able to step into many of the challenges we face,” Peterson said.

    That WFC is looking to a 3PL to help address a variety of logistics issues is not so surprising.

    Just a few years ago, manufacturers and retailers were riding a wave of low transportation rates, and didn’t feel the need for outside logistics assistance. But in 2018, the market shifted and transportation costs started eating into shippers’ bottom lines. Even now, as capacity starts to loosen up, shippers are looking to 3PLs to help them make more proactive business decisions, said Erin Breen, Redwood’s senior vice president for strategic sales.

    “They’re saying, ‘hey, I don’t want to be caught where I was in 2018 when we were scrambling,’” Breen explained. As automation, driver shortages and e-commerce trends continue to upend the supply chain, 3PLs can assist shippers with everything from implementing new software platforms like a TMS to providing industry insights and macroeconomic analysis. “It’s less about selling an individual service and more about figuring out and solving specific customer problems,” said Breen.

    Basically, 3PLs and (many) shippers are now looking to build relationships that are less transactional and more strategic. That requires a shift in thinking on the part of everyone involved, as both parties have to pay attention to a broader set of concerns than spot and contract rates.

    Providers, for example, need to know as much as possible about the industry sectors in which their customers operate. Redwood accomplishes this in part by leveraging insights from third parties – e.g., Morgan Stanley indexes, purchasing FreightWaves SONAR licenses for customers – as well as its diverse client base of retailers, food businesses and manufacturers.

    Technology solutions require a similar holistic approach. Automation alone isn’t going to provide insights into what a given business requires, Breen said. Whether it’s a TMS or another software platform, “you need to understand the customer’s data and the customer’s network.”

    Shippers are looking for “continuous engagement,” he added. “If we’ve implemented a technology solution, we don’t want them to come back in two years and say it’s outdated. It’s about staying ahead of the curve.”

    For their part, shippers need to be willing to share data about their business operations – everything from production schedules to promotional strategies, said John Langley, a professor at Penn State University and a co-author of the 2019 22nd Annual Third-Party Logistics Study.

    “The more 3PLs know about their customers, the more successful the relationship is going to be, and the more they can trust each other if there are problems to be resolved,” Langley said. (A simple non-disclosure agreement can alleviate customer unease about sharing proprietary information with a 3PL.) Langley echoed Breen’s comment about 3PLs drawing on their rich client base to solve problems – if one customer has a problem, the 3PL can probably expect a similar problem with another client.

    Another big factor in the success of shipper-3PL relationships is related to the development of clear objectives, Langley said. “When the customer puts the business out to bid, the customer needs to say ‘here’s what we want.”

    That’s exactly what WFC did. The chocolate maker decided to keep growing its relationship with Redwood, Peterson said, because the logistics company was willing to start off with one small project, and then slowly find additional ways of adding value.

    “We found that Redwood and its approach was strikingly different than other logistics companies that wanted to immediate try and bundle other projects together,” Peterson said. “The Redwood team was the only one that said ‘Let’s focus on the TMS, and as we grow together, we’ll find other opportunities.’”

    “That has been very prophetic,” Peterson said.

  • How can you effectively navigate Mexico’s complex supply chain maze?

    Shipping to and from Mexico is never easy, but this year a perfect storm of market conditions is putting a crimp in rates and capacity.

    “An imbalance of trade means there’s much more northbound capacity coming out of Mexico than inbound entering the country”, said Troy Ryley, president of Redwood Mexico, a division of Redwood Logistics, a third-party logistics (3PL) provider based in Chicago.

    The electronic logging device (ELD) mandate has also made U.S. carriers more conscious of lost productivity when their trailers are stuck offloading at the border. As a result, many of those carriers are pulling their trailer equipment out of Mexico “because they get a higher return in the U.S.,” Ryley said. (In January, U.S. Xpress sold its cross-border operation.)

    Redwood Logistics has operated in the Mexico market for years and last summer launched Redwood Mexico as an expansion of its existing cross-border supply chain solutions services. The company offers expert freight constancy, not just transactional truck brokerage solutions. “We’re attacking the market as an integrated logistics provider with some asset capability,” Ryley said.

    That perspective allows Redwood Mexico to take a more strategic approach to solving client issues, saving them headaches and money in the long-term.

    And in 2019, headaches abound.

    In addition to the previously mentioned macroeconomic and technology factors, several “never before seen” challenges are popping up south of the border, said Redwood Logistics president Todd Berger. A teachers’ strike in January shut down the Puerta Mexico rail ramp in Toluca for several weeks, wreaking havoc on inbound and outbound intermodal traffic and putting more pressure on truck capacity. A gasoline shortage is causing lines of several hours at the pumps.

    Add to that the ramp-up to peak produce season – which starts in May – and shippers in 2019 should expect a challenging year. To weather the storm, Redwood executives said, shippers should be open to multiple logistics modes, useage of alternative border crossing points and avoid trying to lock in spot rates.

    “We’ve told [clients] there is a time to be on the spot market and a time not to be,” said Ryley. During the first and second quarters of this year, shippers will be making a big mistake if they focus on price alone, he warned, as those who do will see capacity evaporate. “They will be the first ones to lose.”

    The good news is that later in the year, things should cool down. “We are positioning clients for the fourth quarter to take advantage of spot opportunities for additional savings,” Ryley said.

    Transloading – the process of transferring a shipment from one kind of transportation to another – is a good option this year. Many clients are hesitant to go with the intermodal model because they don’t want people’s hands on their freight, Ryley said. “But if you have a fairly standard load, it’s an extremely effective way to mitigate cost increases, and ensure capacity.”

    Redwood, which operates its own transload border facility in Laredo, recently put together a competitive transload program for a large baking ingredients client that provided reliable capacity at its plants in Mexico and dedicated capacity for its U.S. deliveries.

    The 3PL has helped other companies navigate the Mexican logistics maze that has been made all the more sticky this year. During the teachers’ strike that shut down the Toluca ramp, Redwood helped one client switch to alternative ramps in Mexico to ensure were no interruptions with its supply chain.

    Agile solutions like this and an open-minded approach to logistics will continue to be keys moving forward if shippers hope to continue running their cross-border operations without a hitch.

    Finding value with the right approach to technology deployment

    The deployment of technology solutions requires many steps, but using a provider that offers an open systems architecture approach can help ease the transition, eliminating both time and cost. ( Photo: Shutterstock )

    The value of adopting open system architecture solutions has often been debated. On the plus side, it opens doors to more innovation. On the downside, though, is the risk of arming competition with access to all those same innovations. Increasingly, the supply chain has been moving to an open architecture approach and that is creating value for enterprises up and down the chain while also reducing costs.

    Your operation may already be running on an open architecture system, although there is still a significant portion of the industry that is not. The Business Dictionary defines open architecture systems as “vendor-independent, non-proprietary, computer system or device design based on official and/or popular standards. It allows all vendors (in competition with one another) to create add-on products that increase a system’s (or device’s) flexibility, functionality, interoperability, potential use, and useful life.”

    In essence, it allows a single solution to bring together the value and power of many systems.

    If you are not running such a system, you could be losing out on many advantages. Implementing this approach, though, is not as simple as making a software decision. It must consider factors that can alter the value proposition.

    “While generally, there are going to be cost savings, the value proposition we bring to the market is not based only on that cost savings,” explained Dan Gordon, Vice President – Solution Design, for Redwood Supply Chain Solutions. “The value is the flexibility and scalability as well as the speed to delivery. That’s really where it comes into play.”

    Gordon noted that when any customer is looking at adopting a solution – either open or proprietary – the first and most important consideration is whether it solves the business need. At Redwood, an integration resource team made up of experienced industry experts works with clients to find the right solution.

    “Every single person, on our team, really understands the business problem, they’ve experienced it themselves, they understand the pain, and they can implement solutions,” Gordon said.

    This approach sets up customers for success and allows those customers to benefit from disparate systems that are connected through the RedwoodConnect solution. RedwoodConnect, a proprietary integration platform built by Redwood with open architecture principles in mind, streamlines the process of connecting disparate systems.

    The idea, Gordon said, is to bring flexibility to customers by leveraging the technologies they already have installed. This reduces cost and improves efficiencies, but it all comes back to solving the problem at hand.

    “You can make the technology work and still not solve the business problem,” Gordon said. “For example, we are partners with one of the leading TMS providers out there, but using TMS as an example, we believe that that specific product has been commoditized. [Still], customers experience pain when implementing a new TMS or [adding] a customer. We take a lot of that pain away by allowing the customer to use the same patterns they’ve been using and we’ll make the technology match.

    “It’s the practice of adapting the technology to fit the customers’ business versus asking the customer to adapt their business to fit the technology,” Gordon added.

    A significant benefit to this open architecture approach is that customers don’t need coders. “Most integrations fail because there is a significant lift required from a client’s IT department,” Gordon said. “We have built a process where a customer does not have to build their own connections or write any code on their end. They simply repoint their current format to a connection on our end and we handle the rest.”

    Adopting an open architecture approach to software deployment can generate an initial 20 percent savings over paying an IT consultant to handle the integration of systems. “After that, we see exponentially savings on additional integrations because we’ve already [made those connections],” Gordon said.

    According to Gordon, while prices vary based on the complexity and unique business case, a TMS implementation quoted at $100,000 can end up costing much more, up to $300,000 or more in some cases, because of integration problems. Deploying a standalone TMS [without integrating] can also limit a customer’s value to less than 50 percent of its capability, he added. An open architecture approach eliminates many of these problems as the solutions are designed to adapt to almost any system, and can easily transition from one system to another, say, from an AS400 ERP to an SAP solution without reintegrating your entire network.

    The other big benefit often overlooked when deploying technology solutions is scalability. With a solution such as RedwoodConnect, scalability is not an issue. This can be important when growing a business either through expanded services or especially through acquisition, when different software systems are part of the package the customer is acquiring.

    In the end, the flexibility an open system architecture can provide opens the doors to ensuring customers are using the right technology solutions for their unique business needs, rather than choosing a financial solution simply because it works well with the dispatching software.

    “Businesses continue to evolve and change,” Gordon said. “Think of how much our world has changed in the last 10 years. Having a scalable architecture that allows for inclusion of new technology allows companies to continue to grow and adapt to the changes ahead.”

  • Redwood Logistics acquires Strive Logistics in significant industry move

    (Photo: Redwood Logistics)

    Redwood Logistics announced its acquisition of Strive Logistics Monday, cementing Redwood’s place as a top-15 truck broker and an emerging multimodal logistics provider with over $1 billion in freight under management.

    The acquisition gives Redwood, a leading Chicago-based brokerage and third-party logistics provider, the scale it needs to compete at the highest level.

    “We think we’ve probably now achieved critical mass on the brokerage side,” Redwood President Todd Berger said. “It allows us to provide a very competitive offering and additional value to customers and our partners.”

    Strive, a provider of non-asset multimodal and third-party logistics solutions, has been an established and growing logistics leader for the past 20 years.

    “A great way for a company to grow quickly is to make acquisitions,” FreightWaves’ Director of Freight Intelligence Zach Strickland said. “This particular acquisition is solid because it combines the wisdom of an experienced company with the flexibility of a younger company.”

    LoadRunner, Strive’s proprietary transportation management system (TMS) and its focus on automation combine with Redwood’s scale and integrated model to create a best-in-class logistics offering.

    “When you look at it, the combined entity is not just bigger, it’s better in fundamental ways that are really exciting,” Redwood CEO Mark Yeager said. “It’s a bigger customer base. It is a bigger carrier base. Collectively, we’re much stronger in the technology department. It hits on all cylinders.”

    LoadRunner, as well as Strive’s technologically savvy pricing and digital freight matching tools, played a big role in Redwood’s decision to acquire the company.

    “They have been very forward-thinking on attacking the pain points within the brokerage operation,” Yeager said. “With LoadRunner, they’ve taken a really thoughtful approach to designing something specifically for the brokerage community. There’s a lot of business intelligence [in the product]. There’s a lot of process automation that makes the job easier and has the potential to make people a lot more productive.”

    While technology played a big role in Redwood’s decision to acquire Strive, the two companies’ culture match was also a critical component.

    “We think this is a fantastic combination for us. It is almost like these two companies were meant to be together,” Yeager said. “They’re very similar culturally. In our travels over the last two years we’ve met a lot of companies, but these guys are definitely uniquely aligned with us.”

    Culture has played a key role in all of Redwood’s acquisitions. A solid cultural fit helps to ensure employees at both companies stay motivated and feel a connection to the combined entity. Berger described Strive’s team as “hungry and ambitious” from top to bottom, much like Redwood’s existing team.

    Strive has offices in Chicago and Austin, Texas. The company’s Austin office offers Redwood a chance to expand its geographical reach, a key component of Redwood’s overall acquisition strategy.

    “We’re really excited to have a significant presence in Austin. It’s not a satellite or a green field; this is a major operation that we’re planning on growing significantly,” Yeager said. “The freight market in Texas is significant. We now have offices in Dallas, Laredo and El Paso and a major operations center in Austin. This is a great market to recruit people and will also bolster our emphasis on cross-border Mexico business. “   

    Redwood’s acquisition strategy has included expanding the company’s geographic reach from the very beginning.

    For example, earlier this year, Redwood announced the acquisition of Atlanta-based LTX Solutions. That acquisition gave Redwood its first major operational presence in the Southeast.

    The acquisition will also bring existing Strive customers an array of new services.

    “Strive’s existing customers are going to get a whole lot of new services. Strive was really deep in the truckload and multimodal brokerage space. They’ve done a tremendous job at that,” Yeager said. “We’re going to be able to bring them a pretty sizable less-than-truckload [LTL] product offering, as well as asset-based trucking and distribution. For Strive’s existing customers, we’re bringing them a full suite of integrated solutions.”

    The companies share very little network overlap, so customers of both companies can expect to benefit from greater lane density.

    The terms of the transaction have not been disclosed.

    How private equity firms are disrupting transportation and logistics

    Image iStock/metamorworks

    Third-party logistics (3PL) companies are attractive investments for private equity firms, enabling new companies in the space to grow faster than ever before. FreightWaves and Redwood Logistics teamed up to host a webinar on how the availability of private equity is shaking up the transportation space.

    The webinar, “Company-Building: How Private Equity Firms Are Disrupting and Transforming Transportation and Logistics,” featured Redwood CEO Mark Yeager.

    Redwood is active in mergers and acquisitions (M&A) and currently boasts $500 million in annual revenue. Yeager attributed much of the company’s success to the private equity backing of CI Capital Partners.

    “There’s nothing new about transformation in our space, and there’s nothing new about mergers and acquisitions in our space,” Yeager said. “When you look at the rail industry, and most of the other industries in the U.S. related to transportation, the consolidation and merger and acquisition activity has been largely beneficial.”

    While private equity did not play a role in the consolidation of the rail industry, Yeager noted that it is not a new force in the transportation industry, and it allows more companies to get in on M&A activity than ever before.

    “Private equity has been involved in our space for quite some time. It is not by any means a new phenomenon,” he said. “The number of firms that are in the space now has changed. We’ve never seen greater activity going on from a private equity perspective, and that is creating significant impacts on the entire industry, particularly when it comes to asset-light and non-asset companies.”

    Not too long ago, the ultimate goal of most companies entering the industry was to go public. This has changed in recent years, but the fact that companies still need access to capital has not.

    “Part of the reason companies don’t want to go public is because it is so expensive, on top of being a significant administrative and regulatory burden,” Yeager said. “Another reason is because there’s an alternative now, and that alternative is private equity.”

    The availability of private equity is transforming the transportation industry, allowing new or relatively small companies to gain access to the capital needed to invest in people, processes and technology. These companies are no longer constrained in their ability to grow the way they may have been a decade ago.

    Yeager said logistics M&A transactions have steadily increased over the last four years, and the average transaction EBITDA multiple is now well ahead of historic norms.

    “When [Redwood] started on this path two years ago, I thought $1 billion was a huge stretch goal, but I’m not so sure anymore,” Yeager said. “The growth opportunities are significant.”

    Private equity firms are attracted to the transportation industry for several reasons, including the fact that it is an enormous, highly fragmented market. Firms are also attracted to the industry because it is an absolute staple of the economy, according to Yeager.

    There are several reasons M&A is attractive to companies and their owners, whether they gained access through private equity backing or not. These include:  

    – Accelerate top and bottom line growth

    – Build scale/critical mass

    – Develop new products and services

    – Access new customer and supplier relationships

    – Add new talent and expertise

    – Diversify away from risk

    Mergers and acquisition are a way to produce growth rapidly, but Yeager said that should not be the sole reason companies pursue it. Getting to critical mass in core offerings is a strategic imperative, and it encourages many companies to pursue M&A.

    M&A can be a huge driver of efficiency and profitability by helping companies create scale, add new services and increase bargaining strength, among other perks.

    “With the advent and convergence of technology, the ability to realize the scale benefits of M&A and get up to critical mass is becoming something that is very achievable,” Yeager said.

    Despite the perks, Yeager acknowledged that M&A activity also comes with its own set of challenges.

    “Mergers and acquisitions can be disruptive to customer relationships, and they can be disruptive to carrier relationships,” he said. “It is important for customers and carriers to think through how they are going to approach the newly combined entity.”

    Customers should have an open dialogue with the new entity, which includes giving honest feedback. Customers have the chance to establish a commitment to continuity and articulate how they want to do business. They should also seriously consider any new capabilities gained.

    Carriers should take the time to get to know the leadership of the new entity and understand the new company’s goals and priorities. Carriers often have the opportunity to do more, and they should explore ways to align and integrate.

    In any case, there is no doubt that the growing availability of private equity backing will have a measurable impact on M&A activity and the logistics industry as a whole.

    New companies entering the space will now be able to accelerate their growth much quicker than was ever possible previously. This competitive landscape will lead to distinct winners and losers. Not all deals work out, and Yeager predicts technology will be the thing that differentiates the deals that work from the deals that flop.

    One thing is abundantly clear – existing players will need to adapt in order to stay in the game.

    Redwood Logistics gains foothold in Southeast with LTX Solutions acquisition

    (Photo: Shutterstock)

    Redwood Logistics announced its acquisition of Atlanta-based LTX Solutions today, which will allow the growing logistics company to strengthen its core less-than-truckload business and increase its presence across the Southeast.

    Redwood, a leading Chicago-based brokerage and third-party logistics provider, has proven to be a disruptive force in the industry as one of the nation’s fastest growing logistics providers. Outside of traditional logistics solutions, Redwood provides TMS consulting implementation and integration expertise, as well as a proprietary middleware platform called RedwoodConnect.

    CI Capital Partners, which owns Redwood, oversaw its successful 2018 integration with Simplified Logistics. This acquisition of LTX is a continuation of Redwood’s goal of becoming a leading North American 3PL provider.

    LTX currently offers LTL freight management, as well as transportation accounting services and technology solutions. The company is anchored by industry experts and boasts a strong commitment to data-driven services.

    “They (LTX) truly are experts in their domain. We like this level of expertise. For a small organization, they’re very progressive on the data services side,” Redwood President Todd Berger said. “We strive to be a data-driven organization. These folks use this data every day to make smarter decisions for their clients and their carriers, and that’s something we do as well.”

    While Redwood has moved freight in and out of the Southeast for quite some time, this acquisition provides the company with strong operational presence in the region. This geographical expansion is a key component of Redwood’s overall acquisition strategy.

    “This really gives us an operating presence in the LTL sector in the beginning, but in the very near term we’re going to expand to provide the full suite of services, including truckload, LTL, supply chain management services and pretty much everything the company currently provides,” Redwood CEO Mark Yeager said.

    LTX already has a strong customer base in the Southeast, but the company has only been able to offer LTL services to those customers. The Redwood acquisition will offer existing LTX customers the option to take advantage of a wider range of services while also drawing in new customers.

    “We think what we can do is bring our executional capabilities on the truckload and supply chain side to LTX and to their customers. We’re pretty excited about it, and LTX is excited about it,” Yeager said. “They’ve historically been resource-restrained. They’ve never really had the ability to have that intellectual capital and the technology that we can make available to them and to their customers.”

    Yeager emphasized that Redwood pursued LTX not just because of the company’s location and product offerings, but because of the existing team at LTX and the company’s culture.

    LTX shines a spotlight on its energetic, forward-looking culture across its company website. Yeager said the company’s energy and commitment to innovation is already a close match to Redwood’s culture, paving the way for a successful transition.

    “We really like how they service their customers and the energy they bring every day to work. They have shown an ability, with limited resources, to really be able to do a lot of creative things for their customers,” Yeager said. “Their approach is just very similar to our own.”

    Redwood plans to both invest in LTX’s existing team and bring on new players to help fill in knowledge gaps and expand offerings, including truckload and supply chain experts, according to Yeager.

    When Redwood considers acquisitions, they look for options that strengthen the company’s core offering, expand its geographic reach and fit into the existing culture. Yeager said LTX checked off all those boxes, making it an ideal choice.

    “Existing LTX customers can expect a whole lot of the same and a whole lot more,” Berger said. “These guys do a tremendous job for their clients. We don’t fix what’s not broken, so really what we want to bring is bring additions, not changes.”

    The terms of transaction have not been disclosed.