CTSI - The Little Company That Could

Memphis, Tennessee USA

June 30, 2008

By

Richard Armstrong

Key Personnel:

J. Kenneth Hazen, President and CEO

Brian Scott, Vice President of Transportation, Management and Consulting

Clifford F. Lynch, Executive Vice President

Larry Watts, Vice President of Freight Payment Operations

Josh Miller, TMS Product Manager

Ken Hazen grew up with an entrepreneurial bent that pushed him to do business his way. A Memphis native, he earned a BA from the local university and then went into sales. For five years he was the top salesperson for the Paslode Company, a division of Signode. Not satisfied with working for someone else and equipped with solid sales skills, he started a logistics consulting company in 1981. A year later, he purchased a well known name brand, Continental Traffic Service, Inc. (CTSI). At the time, CTSl was a one man freight bill payment company generating $30,000 in revenue. The company processed 40,000 bills a year from a 220 square foot office. Hazen bought CTSI for $5,000 down and $15,000 later.

Hazen built CTSI up quickly and won a Memphis Business Journal Small Business of the Year award in 1985. In 1988, CTSI was in Inc. magazine’s list of the 500 Fastest Growing Companies.

A decade later, CTSI had become one of the largest freight bill payment companies. By 1999, Hazen had 220 employees and CTSI was processing 25 million freight bills a year. At a time when the freight bill payment business was undergoing big changes, Hazen was setting the stage for a paradigm shift and a geometric growth in volume.

A key IT employee, Aakur Narasimhan, and Hazen developed a new IT system which was deployed in 1999. This new web-based transportation management system (TMS) allowed CTSI to move to a new level of production.

CTSI has about the same number of employees today as it did in 1999. There are 150 in the US, 60 in India, 6 in Ireland and 6 in China. Operations run on a 24 hour basis. All locations help to create the freight bill database. India works on shipment images scanned in Memphis and electronic data interchange (EDI) exception entries.

System wide, CTSI now does ten times the freight bill volume it did in 1999. Expanded IT, integrated AS 400 and web-based capabilities allowed it to handle freight bills processing. Ninety-five percent of the freight bills are received via EDI, 2% (≈50,000 bills a day) are received on paper and are scanned via optical character recognition (OCR) into the database, 2% are scanned in for processing in India and 1% are entered online by small carriers.

As CTSI grew, it added more "household work” companies. It has about 400 freight bill payment customers – 25 are Fortune 500 companies.

This customer base is a natural for cross selling and the logical service to cross sell is transportation management. CTSI TMS, a high quality web-based solution, does it well.

Basic Features of CTSI TMS

CTSI TMS has 75 customers. Customers pay a relatively small, upfront fee for the modules they want and then pay a fee per transaction. This “easy entry” approach has made this TMS accessible to small 3PLs as well as shippers. Microsoft .NET is the programming language and Sequel Servers handle the underlying data processing. Additional, large database processing is done on an AS 400 box which is processing two million transactions a day.

CTSI Your Link to Supply Chain Solutions

We demoed the TMS. It is easy on the eyes, quick to learn and has broad capabilities. Individual functions move quickly. The user can configure it extensively. To a large extent, the TMS is a logical process extension of the very tight IT freight bill payment system.

CTSI Data and Transaction Flowchart

Hazen and his team plan to move CTSI to the next level with significant expansion of transportation management over the next five years. From what we have seen, we wouldn’t bet against them.

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