Logistics Q&A: Greatwide’s Suggs provides overview of 3PL-shipper collaboration

At this week’s eyefortransport 3PL Summit in Atlanta, LM Group News Editor Jeff Berman conducted an on-stage interview with Leo Suggs, Chairman of the Board and CEO of Greatwide Logistics. The theme of the interview was “3PL Leadership for the Economic Recovery.” Berman and Suggs discussed various aspects of the 3PL sector, including shipper-3PL collaborations, how shippers can best leverage 3PL services, and the importance of a strong balance sheet, among other topics. An edited transcript of the interview is below.

LM: For those in the audience not familiar with Greatwide, can you please provide a brief overview of the company and the services it offers to shippers?

Suggs: Greatwide is not a household name. It is a composite of [18] different acquisitions that took place over a period of time. And the Greatwide function until recently was that of a holding company. All of these various acquisitions operated in individual silos. The company was acquired by a number of investors, the largest being Centerbridge Partners, a private equity firm, back in early 2009. For the past year and a half, we have been focused on converting the holding company to an operating company. The purpose being to find ways to enjoy synergies internally and also to increase the value we can provide to customers.

Today the company offers an integrated platform of services. The largest single part of our operation is our dedicated fleet. In total, we operate—for trucking and dedicated—about 5,000 vehicles, with about 80 percent of them being owner-operated and the other being company drivers. Our dedicated operation, according to the Transport Topics’ rankings, is the second largest.

From the refrigerated side, we are probably the largest temperature-controlled dedicated provider in the country. We also have an agent-based truckload operation, with about 230 agents employed nationwide focusing on van business, flatbed business, and heavy-haul business. We have a full-service brokerage operation that includes both overflow brokerage and pure play brokerage. A lot of the focus in the brokerage area has been associated with produce and the grocery industry and temperature-controlled and fast and we are expanding that into all areas of transportation. We recently rolled out MTS (Managed Transportation Services) for customers, which is focused on the mid-market customer, and we find that this coupled with our brokerage operation and our distribution operation can really be a game-changer for the mid-tier customers. Finally, we have distribution and warehousing. This particular operation is focused mainly on value-added services; we have some light manufacturing that is involved and other fulfillment processes in this particular operation.

LM: With customer service demands at an all time high, can you explain what Greatwide is doing in this regard to work best with shippers and gain new business
in a highly competitive 3PL marketplace? In other words, how do you think the company is leveraging its strengths?

Suggs: This is certainly a competitive business. Providing value to our customers is our number one focus, as it is for most all 3PLs. You have to look at a lot of parameters to constitute value, and it is not the same for all customers. One of the things we think gives us an advantage is the fact that we are a low-cost provider in terms of the actual dedicated and transportation [services Greatwide provides]. We are asset-light, and that fact that about 80 percent of our trucking operations are owner-operators provides a cost advantage to the customers. When we go to customers, we give them the option. We normally make two proposals: one of them is an asset-based and one is a non-asset based and we let the customer make the decision. And in most cases, they find the owner-operator or asset-light or non-asset based operation certainly gives them cost savings and flexibility that you don’t get with an asset-based fleet. We are continuing to build our service offerings…certainly by bundling service offerings we provide additional value to customers.

LM: Now that we are seeing some clear signs of an economic recovery, can you explain in what ways 3PLs have-or need-to differentiate themselves?

Suggs: When you can bundle services, more is better. Not only can you provide better value to the customer but you can also increase the customer’s leverage. If you have a customer that is a major player in the dedicated part of the operation but seldom utilized pure play brokerage services—and they are dealing with two separate organizations—they are going to do fine on the dedicated side. But they really are not going to get the most value on the brokerage side. So to the extent that you can bundle services together you can certainly allow the customer to create more leverage in terms of negotiating their costs and also from a company standpoint you do get economies of scale…that is a “win-win” situation.

Technology is also a big driver of value today, and today we look at it mostly in terms of visibility and data interchange. We are beginning to develop some pretty sophisticated models from the standpoint of operational optimization and dynamic models that can extract costs from the transaction. Technology is something that should be part of every 3PL’s operation in terms of planning ahead and seeing this as a priority in terms of keeping up with the pack and also differentiating oneself. Another thing is reliability. In today’s marketplace, we are experiencing an anomaly we have not seen in a while and that is a shortage of capacity—supply and demand. Those involved in brokerage operations are seeing it as much as any other facet of a 3PL business. What is happening is supply and demand is shifting, and you are seeing providers that are jumping at these current opportunities. I think that the successful companies in the future will be the ones who are loyal to their customers. If you make a deal with a customer, you live with that deal regardless of the temptations that come down the pipes. Those items are successful and want to differentiate yourself in the long term.

LM: As capacity tightens and shipping rates rise, how can shippers benefit from working and collaborating with 3PLs?

Suggs: Look at dedicated as an example. In a dedicated contract, the customer has reliable service at a reasonable price. It is an insurance policy long-term, and in a market like today there are substantial savings with dedicated compared to spot pricing and the crazy things related to supply and demand. I think reliability and service capabilities of dedicated are very important to the customer. When you talk about capacity and working with a dedicated fleet, especially a non-asset or asset-light fleet, compared to a company fleet or an asset-based fleet, you have a tremendous amount of flexibility. It has been my experience that is a company operates its own fleet it has to provide resources to handle the end of the month, the end of the week, the end of the quarter—the peaks within their organization. Whereby with an asset-light dedicated approach, there is a lot of flexibility not only of terms of being able to increase the capacity very rapidly or reduce the capacity without the ongoing depreciation…by utilizing fleets across various operations you can level the peaks and valleys to some degree. I think that is an important attribute that you can provide. And financial stability is a critical factor, not only from a standpoint of trying to be sure your provider is still in business a year from now but also from a standpoint of if you are really going to commit yourself to your customer’s needs, a lot of times you will find capital investments are necessary for things like creating and adapting technology. In some other cases, it is in specialized equipment as a way of meeting needs.

LM: In your opinion, what do you think are the biggest changes in the freight transportation/logistics landscape since your time at Overnite/UPS Freight to now at Greatwide? What stands out the most?

Suggs: I have been in the transportation business—primarily the LTL business—for a long, long time. And I thought I knew something about the transportation industry, not necessarily because I felt I was a smart guy, as I have made some of the same mistakes three or four times. I am more informed on what you don’t do than what you do. But I have found that the situation with logistics-oriented businesses are a lot different. The main difference is that this is an engineered, tailored solution to an individual customer as opposed to a transactional business that is sort of a cookie cutter concept. In fact, there is a consultive nature to the sales process as opposed to a transactional sale. So from a standpoint of being part of the organization and management, I find that you have to have a lot more patience because it takes a lot more time to unfold your solution to the customer and get the operation going as opposed to a transactional deal, where you may sell to a customer in the morning and pick up his shipment in the afternoon. That is probably one of the biggest changes I have seen. Industry-wise, the biggest change we have seen has been the impact of the economic downturn. It certainly has put a lot more pressure on efficiency and cost management and what has happened with rates. The silver lining of this is that the companies that survive will…be much more efficient in the future. They will have looked at all elements of their operation and will have extracted waste from their operation and will have reinforced the value of their sales proposition. The ones that do survive will be better companies in the future. Certainly, the importance of being well-financed in this particular part of the business was not as much of an issue in the past. We were a public company and finally became a part of UPS. A strong balance sheet and financial wherewithal are key.