Transplace Solidifies its North American Service Offering
Frisco, Texas USA Site Visit
March 31, 2016
Tom Sanderson – Chief Executive Officer
Frank McGuigan – President & Chief Operating Officer
Mike Dieter – Chief Technology Officer
Matt Menner – Senior Vice President of Strategy
John Kelly – Senior Vice President, Operations
Troy Ryley – Senior Vice President, TM Services, Mexico
John Colbern – Vice President – Engineering & Consulting
Ben Cubitt – Senior Vice President, Consulting & Engineering
Barry Gasaway – Vice President, Lean Six Sigma
Sheila Hewitt – Vice President, International Logistics
Jennifer Cortez – Director, Marketing Communications
John Lower – Director, Strategic Carrier Management
Michelle Posadas – Solution Designer, Transportation Management
Transplace provides non-asset based transportation management services to the North American Third-Party Logistics (3PL) Market. With 1,205 associates operating in 16 centers of excellence, Transplace finished 2015 with $1.6 billion in gross revenue and $170 million in net revenue. From its founding 16 years ago, Transplace has rapidly developed into one of the leading North American transportation managers. It has approximately 80 long-term contractual customers including: AutoZone, BorgWarner, Campbell’s, Cummins, Kohl’s, Monsanto, Nestle Waters, Phillips, Welch’s, and USG.
In 2013, its ownership changed as Greenbriar Equity Partners and Transplace Management bought out private equity group CI Capital Partners in a highly publicized acquisition. Greenbriar focuses on supply chain companies and Transplace proved a good fit for its portfolio. Transplace itself has been strategically acquiring companies over the past five years.
In April 2011, Transplace bought SCO Logistics adding chemicals industry expertise to Transplace’s service offering. The SCO Logistics acquisition also provided Transplace a key geographic operations center in the Northeast.
Six months later, in October 2011, Transplace made another strategic move and announced it acquired intermodal marketing company Celtic International, creating a stand-alone operating business unit.
In December 2012, Transplace acquired Torus Freight Systems, a Canada based 3PL provider focused on Canadian cross-border and intra-Canada transportation management services.
The company acquired St. Louis based Logistics Management Solutions (LMS) in November 2014 to further bolster its transportation management offering for customers in the chemical and industrial industry segments. Monsanto was the largest LMS customer with an onsite transportation management operation of more than 40 employees.
Greensboro, NC based M33 Integrated Logistics is Transplace’s most recent acquisition. M33 was a solid mid-market network transportation manager with approximately $500 million in freight under management. It is now Transplace’s Southeastern Center of Excellence and operates as part of the company’s transportation management business, which is led by Frank McGuigan.
In tandem, Transplace’s six strategic additions substantively increased the company’s North American operating footprint, overall operational capabilities, vertical industries served, freight under management, and net revenue. Transplace now has $6.5 billion in freight under management, is managing just over 15 million shipments annually, in addition to having a contract carrier base in excess of 35,000.
Its service portfolio has also expanded significantly over the past few years via strategic acquisitions and organic growth. The core Transplace solutions set includes:
- Managed Transportation Services
- Freight Brokerage
- Mexico/Canada Transportation Management
- Import/Export Solutions
- Supply Chain Consulting
- SaaS TMS
- Cross-border Trade Management
Celtic International – Transplace’s Intermodal Transportation Solution
Celtic International leverages its staff of 95 in addition to its agent network to provide customers with North American intermodal rail and highway (freight brokerage) transportation management services. Celtic’s network includes operations in Tinley Park, IL; Santa Ana, CA; Lowell, AR; Mexico City, MX, and Napa, CA.
Celtic partners with the BNSF, CSX, Ferromex, Norfolk Southern, and Union Pacific railroads for the majority of its dedicated capacity of 80,000 intermodal containers. In 2015, Celtic managed more than 110,000 loads. Of which, it is managing approximately 150 Mexican cross-border intermodal shipments per month and 200 Canadian cross-border intermodal shipments per month.
It customer base of 650 primarily come from automotive, consumer packaged goods, food, high-tech, and retail industries and includes AT&T, Dial, Ford, Nestle, Ricoh, and Yamaha. Celtic assigns customers to a specific operations/customer service team. Each team is charged with understanding its customer’s business practices and service needs. The team’s performance in meeting customer needs is reviewed each quarter.
Celtic International/Transplace’s Mexico Cross-border Services
Since its inception into Transplace, Celtic has worked with the Mexico operations team to develop an integrated North and Southbound cross-border intermodal rail service. The basic flow is detailed in the figure below.
Transplace/Celtic Mexico – U.S. Cross-border Intermodal Rail Service Network
The basic Northbound traffic flow starts with Transplace processing shipment documentation (shippers provide the commercial invoice, cargo manifest, and the NAFTA certificate of origin) and arranging for dray transportation from a customer’s operation to a rail ramp within Mexico. Prior to the loading of an intermodal shipment on the Mexican railroad, Transplace prepares and files exportation documentation (pedimento de exportación) with Mexican Customs and receives a U.S. entry number. Transplace also prepares the U.S. Inward Cargo Manifest (also known as the Carrier’s Certificate). The Inward Cargo Manifest is the main document used to import merchandise into the U.S.
At the destination rail ramp, the pedimento and Inward Cargo Manifest are presented to the drayman hauling the shipment across the border. Transfer of these documents usually occurs at Transplace’s nearby broker’s office. At the Mexico/U.S. border, the pedimento is closed and Transplace electronically files the shipment with U.S. Customs. Once the shipment clears customs, the container is then drayed and loaded on a U.S. railroad. From there, Celtic manages the rail shipment to final delivery.
In addition to its integrated intermodal rail offering with Celtic, Transplace’s Mexico solutions also offer customers cross-border and intra-Mexico over-the-road transportation management, U.S. and Mexico customs brokerage, border processing, warehousing and distribution, secure products transportation management, ocean and air freight transportation management, technology solutions (TMS), and consulting services.
With the ongoing nearshoring of manufacturing activity from Asia and a growing base of more than 250 active customers across its spectrum of services, Transplace’s Mexico operation has grown quickly and now generates annual gross revenue of $135 million and net revenue of approximately $12 million. Transplace’s Mexico staff of approximately 180 are based at its headquarters in Monterrey, Mexico and operations in Mexico City and Queretaro, Mexico, and El Paso and Laredo, Texas. The growing operation is led by its Managing Director Troy Ryley.
Transplace is working with approximately 100 Mexican carriers to provide capacity for intra-Mexico shipments. Its shipment volumes have been growing steadily, and Transplace is currently managing over 1,000 intra-Mexico shipments per month. In addition, the company is managing 2,000 cross-border loads per month and its operations have received Custom-Trade Partnership Against Terrorism (C-TPAT) certification for supply chain security.
For systems in Mexico, Transplace utilizes the Transplace TMS with recently developed Mexico market capabilities, ICON’s web-native warehouse management system and CargoWise for international (import and export) transportation management. In addition, Transplace recently on-boarded a new customs portal to improve the efficiency of its Mexico customs filings.
While approximately half of Transplace’s growth in Mexico has been derived from existing U.S. customers, an increasing amount of Mexico based accounts are being developed. Its customers now include a mix of U.S. and Mexico based companies including ABB Mexico, AutoZone, Carhartt, Cummins, Daltile, Hershey’s, Pace Industries, The Home Depot and USG.
Mexico Operating Network
Transplace’s Mexico warehousing and distribution operations include 190,000 square feet of space in Laredo, TX; 40,000 square feet in Monterrey and 25,000 square feet in Mexico City.
Transplace’s Laredo Center of Excellence functions as its main U.S./Mexico cross-border operation. It recently expanded its footprint by 50,000 square feet to handle an increase in cross-docking business and now has two warehouses totaling 190,000 square feet. In tandem, the Laredo facilities have food grade warehouse space, and bonded and hazardous materials storage areas.
Transplace Laredo, Texas
Inside Laredo Warehouse “Building 1”
Established in 1982 as Torus Freight Systems, Transplace’s Canada solutions focus on managing cross-border and domestic Canadian truckload and intermodal rail shipments. With a staff of 30, it has annual gross revenue of $26 million. The operation is led by 23-year industry veteran John Kelly who joined Transplace in January 2015. John was most recently the president of Wheels Clipper prior to its acquisition by Radiant Logistics. Transplace’s Canadian headquarters is in Richmond Hill, Ontario, and it has opened offices in Montreal, Quebec and Calgary, Alberta last year.
Cooperative U.S. and Canada accounts generate approximately 85% of Transplace’s revenue in Canada and include PaperWorks, Rock-Tenn and USG. To manage these integrated North American transportation solutions, Transplace’s Canada operations team works with customers’ North American and country specific operations teams to coordinate holistic transportation management programs. As a result of this collaboration, monthly truckload volumes have increased from just over 20 in January 2013 to approximately 200 loads per month today. Transplace’s Canada operation has also been adding new Canadian customers and to support growth, it on-boarded 100 new carriers in 2015, increasing its contracted carrier base to more than 400. Transplace’s Canada operation uses multiple criteria in evaluating carriers and is running at on-time delivery performance of 98.6%.
Ongoing Lean Six Sigma Continuous Improvement Transformation
Starting in 2005, Transplace adopted and began instilling a Lean Six Sigma process improvement culture throughout its organization. Lean Six Sigma (LSS) training at Transplace works to increase overall customer satisfaction via enhanced service performance and reduced costs from continuous process improvement efforts. It focuses on eliminating non-value-added activities and increasing process capability and reliability.
Under the Transplace model, 15 to 20 Green Belts are selected each year from across the organization to receive Lean Six Sigma Black Belt training. After training, the candidates have the opportunity to spend one to two years working on LSS process improvement projects across company functions and in conjunction with customers with the goal of becoming certified Black Belts. Of the initial core training group, a select few will attain the Black Belt certification and return to lead various Transplace operations and departments, and perform LSS training.
Green Belt training is performed by Transplace Black Belts using Accenture material that has been tailored to Transplace. Once trained, the Green Belts continue to work in their respective functional areas while they engage on Lean Six Sigma projects in other operating areas. To date, Transplace’s program has produced 80 Green Belts and 16 certified Black Belts.
Transplace initially started its LSS efforts focusing on large DMAIC (Define, Measure, Analyze, Improve and Control) process improvement projects. First, the focus was on improving Transplace’s internal processes. Next, it expanded process improvements to customer and multi-company processes. Now it has increased its focus on frontline operational improvement efforts and has identified and developed a larger target LSS project list. Black Belts are spending time with teams helping to identify “Quick Wins” to produce almost immediate process improvement results. In 2014, Transplace estimates that its LSS process improvement efforts generated savings of $3.6 million for customers and $1.2 million for Transplace. Through September 2015, it had generated LSS improvement savings of $2.7 million for customers and $1.7 million in savings for Transplace.
Transplace has expanded its transportation management service offering and geographic coverage. It now has a significant integrated North American network for multi-modal transportation management. Its cross-border services are providing Transplace with key operations to take advantage of the nearshoring manufacturing trend and its Lean Six Sigma approach is taking out waste and generating savings for Transplace and its customers.
Sources: A&A Primary Research, http://www.transplace.com/