Transplace Site Visit
Lowell, Arkansas USA
February 15, 2005
Dr. Jun-Sheng Li, Chairman & CEO
Thomas Sanderson, President & COO
George Abernathy, EVP Sales and Marketing
Frank Williams, Sr. VP Contract Logistics
Roy Cashman, CTO
Frank Armstrong, EVP Logistics
David Saylor, VP Operations
Scott Coleman, Director Sales Administration
Transplace is a non-asset based domestic transportation management 3PL founded in 2000 by the merger of logistics business units from six of the nation’s largest publicly held truckload carriers. The founding carriers were Covenant Transport, J.B. Hunt Transport, M.S. Carriers, Swift Transportation, U.S. Xpress, and Werner Enterprises. The backbone for its operations comes from a transportation management systems (TMS) platform—dubbed “Dense Network Efficiency system” (DNE)—with proprietary optimization technology developed by its Chairman and CEO Dr. Jun-Sheng Li.
Transplace managed $1.6 billion in transportation in 2004 and had gross revenues of $655 million. We estimate its net revenues at just under 60 million. Transplace has approximately 625 employees. New leadership, including President and COO Thomas Sanderson, has helped restore its profitability and has revitalized its vision.
The Transplace service portfolio includes freight brokerage, intermodal, dedicated transportation capacity, and network transportation management services. The main focus of Transplace has been the pooling of domestic customers shipments to fuel Transplace’s Dense Network Efficiency system. DNE users include AutoZone, Grainger, Office Depot, U.S. Gypsum, Sunny Delight and Unisource. The various components of the DNE are shown in the figure below.
Figure 1—DNES Platform Transportation Execution Components
Using thousands of daily shipments processed from all relationship levels, the DNE “Scenario Pro Technology– Strategic Supply Chain Design and Optimization” program optimizes customers’ domestic transportation mainly by converting higher cost ground less-than-truckload (LTL) shipments to truckload shipments and creating continuous moves. Transplace managed nearly $2 billion in transportation in 2004 and handled approximately 2 million shipments through the DNE.
Transplace sells it services based upon its level of involvement in a customer’s day-to-day transportation management operations. The Transplace “Automated Load Control Center” sell involves minimal support from Transplace personnel. It basically provides a customer with the DNE and for example in the case of USG , a small number of people to work out any exceptions. Another example of a base systems sell is P&G who is using Transplace’s “FAM-Freight Allocation Management” system to manage carrier relationships. FAM offers online routing and a secondary load bid/auction capabilities for adding additional carrier capacity. For many of their retail customers, Transplace designs and operates cross-docking capabilities that increase product to shelf velocity. Beyond this base sell, Transplace adds additional “hands-on” transportation management capabilities as requested by customers.
Transplace views freight brokerage as a service spectrum with multiple service levels. This is shown in the figure below.
Figure 2—Transportation Brokerage-Management Service Spectrum
“Move a Shipment”—focuses on a one call, one price transactional transportation brokerage service with reliable coverage using thousands of qualified carriers. Shippers can be provided with a simplified routing guide. Professional handling of problem freight and 24/7- 365 accessibility is also stressed.
“Core Carrier Program”—focuses on having trained and experienced transportation professionals for managing shippers’ transportation needs. Transportation rates and charges are often fixed contractually.
“Single Source Coverage”—focuses on having a dedicated trained and experienced team for managing a shipper’s transportation needs. These teams provide customers with contracted rates and manage carrier capacity needs. These teams use Transplace’s transportation optimization software in performing load consolidations and building multi-stop truckloads and performing transportation execution functions.
In summary, Transplace has learned some lessons and is back on track. New management and a revitalized vision will allow it to profitably grow its domestic transportation management business and continue as a top transportation management 3PL.
Sources: A&A Primary Research, http://www.transplace.com/