Market Overview

For Transport Start-Ups, The Shoots Have Never Been Greener

For Transport Start-Ups, The Shoots Have Never Been Greener

Start-ups your engines!

The bad news about being a transportation start-up is, as with any start-up, it involves brutally hard work and no shortage of hard knocks. The good news about being a transportation start-up is there may not be a better time in the industry's history to be one.

A near $1 trillion market that still operates on legacy systems presents a remarkable opportunity for start-ups to become big players in very short periods of time, according to three panelists who are veterans of the transport and logistics wars. Their comments closed the first day of the MarketWaves18 conference in Dallas yesterday.

"There are major inefficiencies in the core processes of every transportation company—asset-based and non-asset based," said Robert Farrell, chairman and CEO of Phoenix-based broker GlobalTranz Enterprises, Inc., whose 15-year-old company was acquired in June by private equity firm The Jordan Co. Those who bridge the transition from babies to bigness will succeed in pushing out the benefits of nascent technologies to their customers and their customers' customer, Farrell said.

Mark Yeager, CEO of Chicago-based 3PL Redwood Logistics, said he was impressed with "how many bright, determined people are getting into the business" as well as with the passion they exhibit. One of the challenges of being so gung-ho, he added, is that it is easy to lose focus on the primary task while trying to accomplish so much at once.

Chris Hines, founder of Atipical Holdings LLC, a Dallas-based consultancy, said start-ups inherently "get a little heavy on the development side of the business." Start-ups must balance the natural desire to push development with the need to focus on functions such as sales and marketing, Hines said. "The first customers we bring in are so important," said Hines, hinting that keeping those customers sticky is a key ingredient for sustained success.

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The panelists outlined the universal challenges that transport start-ups are hardly immune from. One challenge is the easier-said-than-done task of positioning the business so it is ahead of the growth curve that could take it to the next level. Thus, the business is ready to manage the growth when it arrives.

On another front, Farrell said capital allocation strategies to support a new growth phase should emphasize hiring and retaining the right people. "It's a difficult talent market," he said, adding that it is difficult to not only build a strong team, but to make changes on a dime if some members are not aligned with the business model or if the business model changes.

Executing acquisitions to bridge the gap between start-up and established player is fraught with challenges. Yeager said a combination needs to "be a cultural fit" or else it is unlikely to succeed. Farrell, whose company has been acquisitive in its own right, advised companies to "think integration before acquisitions."

For all the potential pitfalls that come with taking a start-up business to the next level, the consensus among the panelists is that the landscape has never been more fertile. Folks growing their business are asking questions about transportation from an IT perspective, behavior that is becoming more commonplace. In addition, the power of advanced technology allows a small, nimble group of folks to contribute to the industry's transformation.

"It really amazes me how much a few great people can accomplish at a small company," said Farrell.

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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