ArcBest Corp. deployed its enterprise solutions team last year, putting together a group that would steer the company's drive to become a one-stop provider of logistics solutions for customers.
Chief Executive Officer Judy McReynolds said during last week's second-quarter earnings call that the group remains in the "early innings" of its development, but she believes the added emphasis on getting customers to partake in other services provided by the company is working.
ABF Freight customers who also are doing business with ABF Logistics or Panther Premium Logistics -- two of ArcBest's logistics businesses -- have risen from 18.5 percent to 21 percent in the past year, McReynolds said.
The increase helped ArcBest, which is No. 12 on the Transport Topics 2015 list of largest for-hire transportation companies in North America, produce a record $696.1 million in revenue for the second quarter of 2015.
"Many times when we have a discussion with a customer, they say 'I want a single point of contact,'" McReynolds said. "Our enterprise solutions group, along with our ABF Freight corporate sales folks, make that happen. It's actually turned out to be a very satisfying thing as far as customers go."
The initial success has led ArcBest to increase the financial commitment to those efforts. The company revealed in a June 3 filing with the Securities and Exchange Commission that it was making additional investments in enterprise customer solutions to provide an improved platform for revenue growth and for offering services across multiple business platforms. The result was a $1 million to $2 million increase in corporate costs in the second quarter from the same period in 2014.
ArcBest Chief Financial Officer David Cobb said during a presentation the same day at the 2015 Deutsche Bank Global Industrials and Basic Materials Conference in Chicago that the company believes it has become "well positioned" to fulfill a variety of needs for customers.
"There's more collaboration than ever across our companies as multiple services are being provided to our companies," Cobb said. "There are opportunities to make additional advances in this area in order to more fully develop those relationships."
It's a common theme in the evolving transportation industry, where expanded logistics offerings have become a key source of growth.
J.B. Hunt, which is No. 3 on the Transport Topics list of for-hire carriers, said in its annual report filed with the SEC that its ability to offer multiple services with four business segments and logistics services "represents a competitive advantage." Van Buren-based USA Truck recently rebranded itself by making a slight change to its star and bars logo, adding the phrase "Capacity Solutions Provider" below the company's name to drive growth in its brokerage and logistics businesses.
Brad Delco, a transportation analyst for Stephens Inc. in Little Rock, said offering a variety of services has become the norm for transportation companies.
"Supply chains are becoming increasingly complex therefore transportation service providers have needed to adapt to these changes by taking a holistic approach to servicing the needs of clients," Delco said in an email. "Shippers do not just need a less-than-truckload service provider. They need truckload, rail, airfreight and logistics services as well."
ArcBest has highlighted its market potential in numerous presentations, stating its research showed that $403 billion -- or 46 percent -- of the $873 billion transportation business is available to the company through the services it provides.
The company also believes $255 billion is available through offerings such as less-than-truckload services, freight brokerage and management, premium logistics, expedited transportation, and air and ocean freight forwarding.
ArcBest's goal for ABF Freight, which has been the foundation of the company throughout its existence, is to return to its record levels of profitability. But the company recognizes its opportunity to generate revenue through other businesses. ABF Logistics, Panther Premium, FleetNet and U-Pack accounted for 29 percent of the company's revenue in the second quarter, an increase from 27 percent in 2014.
McReynolds said the number of customer accounts has grown. So has revenue per account, leaving the company to believe retention of accounts increases when ArcBest handles more than one service for a customer.
McReynolds believes the enterprise solutions team, which consists of about 40 workers, will continue to play an important role in the growth by removing obstacles and streamlining the way the company works with customers across all platforms. So she said ArcBest will continue to invest in enterprise solutions to make sure it has the "right people, systems and processes in place that lead to the answers customers want."
"We have a lot of opportunity," McReynolds said. "Customers are responding well to what we're offering them, and we are able to bring about combinations of things that, in the capacity constrained world that we live in now, are valuable to customers."
Business on 08/15/2015