ProTrans International – Shared Consolidation for NAFTA Logistics
June 11, 2013
Craig Roeder, CEO
Matthew Long, CCO
Shawn Masters, VP Operations
Lisa Doerner, VP Finance
John Woods, EVP Sales
Allen Phelps, CIO
Core Strength in Freight Consolidation
In 1993, ProTrans International’s founder, Craig Roeder, created and began to evolve a business model for shared consolidation, dynamic capacity management and value-added logistics services. From a base of operations in Indianapolis, ProTrans provided freight consolidation services primarily to suppliers in the automotive industry. Automotive remains a key customer vertical for ProTrans, accounting for 85% of its $210 million in gross revenue for 2012, but it is adding non-automotive customers at an increasing rate. The shift in automobile assembly toward Mexico led ProTrans to add facilities along the border and within Mexico.
ProTrans de Mexico was established in 1999. The company incorporated “Supplier Mall” services in cross-dock facilities to store customer materials and provide JIT (just-in-time) replenishment to assembly plants. In 2011, ProTrans Canada was established to serve NAFTA (North American Free Trade Agreement) automobile production from a facility in Brantford. In the same year, the company added 3PL (third-party logistics) services. While freight consolidation remains the core service, accounting for 50% of gross revenue, ProTrans is experiencing rapid growth in transportation management services and freight brokerage services which have risen to 20% and 10% of gross revenue respectively. The primary freight mode is LTL (less-than-truckload) at 60%, followed by truckload (dry van) at 27%, with small package and intermodal. Leveraging its ability to access carrier capacity at preferred rates for 3PL agent agreements and freight brokerage services, ProTrans manages $350 million in customer freight spend.
ProTrans International’s Key Milestones
ProTrans North American Facilities Network
Over the past two decades, ProTrans International has grown to employ a workforce of 850 associates across 27 facilities in North America with total square footage of 1.5 million square feet. Facilities range in size from 30,000 to 200,000 square feet and primarily function as cross docks. Key border locations, like Laredo, have larger warehouses to accommodate storage and JIT replenishment (Supplier Malls). Value-added warehousing and distribution services accounted for 15% of revenue in 2012.
At the start of the customer on-boarding process, ProTrans uses modeling software to optimize shipments and determine the most efficient network configuration. Facilities are strategically located and concentrate in three general areas, including the vicinity of its customer base in the Midwest, along the border at key crossing locations, and within close proximity to customer plants and distribution centers within Mexico.
Cost Savings through Shared Consolidation & Dynamic Routing
ProTrans primarily creates value by maximizing trailer utilization and sharing the cost savings with customers. It seems pretty simple. But, there are a number of key factors in the formula that make it work. First, ProTrans dynamically prioritizes customer shipments and optimizes routings to maximize capacity using proprietary IT systems. It leverages significant volume across a network of facilities to create more linehauls with full trailers. ProTrans utilizes a carrier network of specialized trailers that support load bar decking and airbags that allows it to achieve greater space utilization of trailers than a standard dry van. Its freight purchasing power ensures capacity availability and competitive rates. The value proposition is based on utilizing fewer trailers and sharing linehaul costs in which customers pay for the actual space used. Based on the success of the model and ProTrans’ ability to optimize shipper networks, it frequently will guarantee minimal savings of least 5% on freight costs. Typically, freight savings average 10% for shipments to Mexico.
A well-known automation equipment manufacturer shared the following: “We were doing our own consolidation to supply facilities along the border and in Mexico. But, we didn’t have the volume from U.S. plants and suppliers to fill linehauls. LTL charges were killing us. We started using ProTrans last summer and saved a half million by year-end on freight costs alone. Currently, we are working on plans to fully implement ProTrans across all facilities, and it will be one of our major accomplishments in transportation for 2013.”
Border crossing is a critical link in the logistics supply chain between the U.S. and Mexico that introduces the risk of time delays. ProTrans has taken several steps to mitigate the risk and enable the efficient flow of freight. It introduced U.S. Customs Brokerage services in 2002, which accounted for the balance of 2012 revenue. ProTrans coordinates with its customers’ Mexican customs brokers to clear shipments on a timely basis. It manages the goods at a part number and quantity validation for efficient and accurate crossings.
ProTrans is a licensed NVOCC (non-vessel-operating common carrier) since 2005, and achieved certification in C-TPAT (Customs-Trade Partnership Against Terrorism) and FAST (Free and Secure Trade). C-TPAT is a certification program for shippers, carriers and brokers which allows them to establish recognized, good standing as law-abiding importers. FAST provides qualified drivers with identification cards that allow for much quicker crossing approval.
In 2008, ProTrans implemented a program called “ProMex Direct” that allows customer freight to move into Mexico without stopping for unloading, additional handling or verification. The efficiency of border crossing is improved by providing advanced verification in ProTrans’ northern facilities and supplying customs brokerage paperwork during a specified window of time while the truck is moving southbound. In combination with advanced transportation planning, ProTrans typically clears shipments in two hours or less, which results in virtually non-stop delivery of goods to customers in Mexico.
IT for Optimization and Execution
Currently, ProTrans uses i2 Transportation Modeler for (static) network analysis to improve utilization of shipping related assets such as warehouses, trucks, and containers, as well as to optimize transportation strategies and modes. ProTrans has developed an integrated suite of IT systems for transportation planning and execution, called Optimiz TMS. Optimiz references the Jaguar rate database for all buy and sell freight pricing structures. FreshStart is real-time optimization software that dynamically routes daily orders for the lowest cost solution based on delivery service level and dimensions.
- Automatically generate and manage loads based on plans.
- Build and manage custom loads immediately.
- Helps synchronize supplier, warehouse, and carrier data.
- Data feeds in to Business Intelligence Reporting to analyze ROI.
- Carriers inform us of their capacity via Tender Management.
- Location information is synced through EDI or manual entry.
Global Inventory Visibility System
- Track material to the part number level.
- Access and print Bills of Lading and Packing Slips.
- Track and Trace all loads / shipments arriving to and departing from your location.
- Request to add, change, or cancel loads or shipments.
Customer Portal for Business Intelligence
- Proprietary Software Used for Data Warehousing & Custom Reporting
- Ability to “drill down” for information to track level
- Imports & Exports to / from Multiple Platforms
- Integrates With 3rd Party Data Sources
- ProTrans Celebrating 20 years in Business
In 2013, ProTrans is celebrating 20 years in business and expects to achieve gross revenue of $240 million. Freight consolidation shipment volume is projected to reach 8,500 by year-end on tonnage of 17 million. 3PL service revenue is expected to grow by 200% based on ProTrans’ leverage of truckload volume. It recently invested in asset-based trucking services to provide a more stable supply of capacity for linehauls. ProTrans has created an efficient model to service NAFTA logistics and is broadening its customer base into complementary customer industries for manufacturing replenishment and finished goods distribution.
Sources: A&A Primary Research, http://www.protrans.com/