Access America Transport’s Growth Trajectory

Chattanooga, Tennessee USA Site Visit

January 17, 2013

By

Kurt Baumann

Key Personnel:

Ted Alling, CEO

Barry Large, CFO

Allan Davis, COO

Chad Eichelberger, President

Access America Transport’s Formation: Built from Bricks

Access America Transport (“AAT”) was established in 2002 by Ted Alling and Barry Large to provide transportation services to Key-James Brick & Supply. Key-James support was critical to getting the business off the ground and provided Access America with its first actual customer and a consistent revenue stream. AAT primarily handled the inbound flow of product from brick manufacturers to three Key-James facilities in Tennessee and Georgia and local delivery to the end users. This freight was almost entirely flatbed and is how Access America initially cut its teeth with flatbed freight. AAT immediately began to diversify into other commodities, expand operations, and put itself on a growth trajectory. AAT has grown rapidly from managing its first loads in 2002. This year, AAT’s 10th anniversary, it achieved gross revenue of $385 million and net revenue of $57 million. With a solid base and strategy in place, AAT has $1 billion in gross revenue in its sights.

AAT diversified to handle all modes, including truckload, less-than-truckload (LTL), intermodal and specialized freight. It provides domestic transportation management services to 8,000 customers in North America. Most of AAT’s shipments are full truckload (80%), while 15% are LTL and 5% are specialized loads. Within truckload, AAT’s volume shifted from a focus on flatbed, which is now 30%, to dry van, which is now 45% of volume. Refrigerated truckloads account for 25% of volume and is the fastest growing segment and impetus for adding an office in San Antonio TX, which was established to focus on fresh produce and frozen goods.

Revenue Growth & Key Milestones

Expanding Domestic Transportation Services & Niches

DTM 3PL Services: Access America has continuously strived to expand services within and beyond freight brokerage, as well as to develop niches. AAT is a full-service domestic transportation management provider with 14 DTM accounts and $24 million in freight under management, which is expected to double in 2013.

Heavy Haul & Multimodal Services:  AAT found a niche in heavy haul and combines it with rail service to provide an end-to-end, turn-key solution for over-sized equipment hauls.  For Komatsu, AAT leverages its transload facility in Birmingham, AL.  AAT has volume pricing with all major North American railroads, as well as transload facilities coast-to-coast to move heavy equipment from the plant to the end user.

Government Services: In 2005, Access America started the Government Services division. The division began hauling freight for the U.S. Department of Defense (DOD). In some cases, sensitive freight is handled by approved team-drivers. Access America soon diversified into other government agencies. It is an approved vendor with DOD, General Services Administration (GSA) and the Federal Emergency Management Agency (FEMA). AAT is PowerTrack equipped for transportation payment processing, which collects shipment and financial data from both shippers and carriers in a single electronic document and makes data available over the Internet to all parties. It also complies with Global Transportation Network (GTN) reporting requirements.

FEMA and Hurricane Sandy Relief: Access America Transport is an approved transportation provider for FEMA providing critical assistance and support to disaster relief missions across the United States. AAT places an emergency response team on stand-by in the event of a natural disaster or relief mission. Teams at AAT continue to provide 24×7 support to companies and government agencies in the Northeast to ensure critical supplies such as tarps, water, ice, generators, and meals are being delivered to those areas most affected by the devastating storm. Access America mobilized more than 950 truckloads to the Northeast.

Connecting Sales & Carrier Procurement to Improve Service Quality

Access America’s growth was driven by a commitment to find a truck for every load and an aggressive strategy of capturing market share through intensive direct phone sales. Operationally, AAT’s freight consultants (brokers) are cross-functionally trained to handle sales, carrier assignment and tracking. AAT believes that merging these roles provides a service advantage in that the person booking the load is also the person tendering it and making sure that it arrives on time without problems. When the customer has a problem with a load, there’s no internal finger pointing…the freight consultant solves the problem.

Organic Growth Driven by Performance and Opportunity

AAT’s leadership prides itself on creating a company culture that is focused on performance and rewards it with opportunity. AAT has a defined set of daily performance metrics which are critical to customer service quality and growth, including new customer setups, on-time pick-up/delivery, goal attainment, and quality metrics. The metrics focus the freight consultants on the tasks required to achieve success. They are also published internally and updated continuously to make everyone aware of where they stand among peers and what they need to do to be successful. It’s a competitive environment that rewards success. Chad Eichelberger is the best example. Chad joined AAT at the start, serving Key-James, and rose through the organization to become president in 2010. AAT picks leaders to start-up new offices from among the top performers, such as Erik Scott, a national account manager in Minneapolis, who was recently given the opportunity to lead Access America’s new operation in Denver.

Organizationally, freight consultants are assigned to pods within a branch office. The pod leader participates in the hiring process and might be the person who referred the hire. The pod leader is responsible for training and performance, and works closely with pod members to ensure positive results. Each pod can source leads and focus on particular commodities or verticals or modes, as it wishes. What’s more important is achievement of performance goals.

The base salary is modest, around $35,000. However, a freight consultant that achieves baseline goals can effectively double his or her salary from commissions. Pod leaders earn a higher base and a portion of the pod’s commissions. Hiring is determined by gross profit target attainment. When a pod consistently exceeds its gross profit target, it is a signal that it’s time to hire and split the pod.

AAT is growing rapidly and profitably, roughly doubling gross revenue annually. Most new hires (85%) are recruited directly from college. AAT provides formal training. But, most of the skills required for success are acquired on the job, under the close supervision of pod leaders. AAT hired approximately 200 people in 2012 and has over 425 employees working out of its Chattanooga, TN headquarters and eight branch offices, which include:

1. San Antonio, TX
2. Denver, CO
3. Atlanta, GA
4. Knoxville, TN
5. Columbus, OH
6. Minneapolis, MN
7. Eufaula, AL
8. Birmingham, AL

Managing Carrier Procurement & Risk

The growth in freight volume has had a cumulative effect, providing AAT with access to carrier capacity at advantageous and stable rates that it can pass on to customers, which in turn fuels expansion of its customer base. Like most small third-party logistics providers (3PLs), Access America was initially dependent upon load boards to provide capacity with transactional spot market pricing. According to AAT’s President, Chad Eichelberger, once AAT hit $50 million in gross revenue and achieved significant network density, its freight volume began to shift dramatically toward contracted carriers. Now, over 90% of AAT’s loads are priced based on contracted rates. Its stable of truckload and LTL carriers has expanded to over 45,000. AAT considers 3,500 of them as “core” carriers.

Carrier procurement is managed by a dedicated group of 12 employees in Chattanooga, who are responsible for contracting, CSA/safety ratings and insurance verification, and carrier key performance indicator (KPI) reporting. Carrier vetting is critically important to quality and risk management. Of all the carriers registered, Access America has designated 10% as inactive due to unsatisfactory CSA ratings.

TMS & Customized LTL Selection Interface

Access America started with McLeod’s transportation management system (TMS) from its inception and developed proprietary modifications along the way, such as reporting capabilities and customer interfaces. The technology is cloud-based and used primarily for truckload freight. AAT has an IT staff of 16 people for systems administration and application development.

In 2006, Access America enhanced its technology for managing LTL shipments by adding MercuryGate TMS. AAT used internal IT resources to develop a web-based tool to allow customers to go online, compare pricing, and book freight instantly (screen shots below). It is very similar to Internet travel sites in its ease of use. The software was integrated to work seamlessly with AAT’s load management system. It enables AAT to handle 12,000 LTL shipments per month.

Broad Customer Base & Industry Coverage

AAT has approximately 37 large enterprise accounts, including Anheuser-Busch, Caterpillar and Komatsu. Its top 20 customers account for 24% of AAT’s revenues. Each year, 80% of revenue is generated by new accounts. Enterprise accounts are managed by a “super pod” or groups of pods that roll up under a super pod leader, which provides a single point of contact to manage the full breadth of customer service functions. AAT recently added sales resources to develop national or large corporate accounts.

AAT is well-diversified in terms of revenue generated based on customer vertical industries. Food & Beverage is the leading vertical for Access America, making up 29% of its business. Consumer Products accounts for 18%. Construction Materials is 16%. Government makes up 12% of revenue, followed by Textiles and Specialty Chemicals, each with 7%. Automotive and Aerospace combined represent 6%.

Summary

Access America Transport has grown rapidly since its inception in 2002. It has a strong freight brokerage business model with interesting niche market strategies and emerging DTM services. Access has implemented a structured approach to growth and a performance-based culture that continues to propel its growth. We anticipate that it won’t be long before AAT will reach its $1 billion revenue goal.