Transplace buys chemical logistics provider
Transplace, a non-asset-based third-party logistics provider in Dallas, early this month acquired SCO Logistics, a small Philadelphia-based logistics company that specializes in serving the chemical industry.
The acquisition expands Transplace’s portfolio beyond the manufacturing, consumer packaged goods and retail sectors into chemical logistics, and its geographical presence in the Northeast. It also opens opportunities to cross-sell services across a larger client base, and to offer a new range of services, including bulk truck and rail transportation.
‘We’ve tried for years to crack the chemical space for logistics management,’ said Tom Sanderson, Transplace president and chief executive officer, in an interview. Customers like to see a track record before signing logistics contracts and SCO provides that expertise ‘in a market we haven’t historically been able to serve very well,’ he added.
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Having an office in Philadelphia will also allow the transportation management provider to better serve its core industry verticals in the Northeast, Sanderson said.
Instead of sending representatives to Dallas or the Arkansas office for quarterly business reviews, customers such as Pep Boys will be able to meet Transplace in Philadelphia. Having a presence in the city of Brotherly Love will also help recruit logistics professionals who want to remain in the region, he added.
Transplace has made its mark by developing its own Web-based transportation management system, which it sells to shippers or uses itself to handle carrier selection and transportation execution for customers that prefer to outsource. Its automated systems allow it to optimize and combine freight moves via truckload, less-than-truckload and intermodal carriers in its large network. It also offers supply chain network planning and truck brokerage services.
The 10-year-old company was founded by the six largest publicly trades U.S. truckload carriers to combine their logistics operations into an Internet-based company that coordinates the management and movement of domestic freight shipments. In late 2009, the 3PL was acquired by private equity investment firm CI Capital Partners, which gave it the wherewithal for the first time to make acquisitions.
Transplace has about 650 customers and topped $800 million in revenue last year. It also operates internationally as an non-vessel-operating common carrier on U.S.-inbound and outbound lanes and across the border in Mexico.
SCO, with fewer than 35 employees, will be an operating group within Transplace. It manages more than 40,000 shipments per month that generate about $500 million in transportation spending. Its revenue last year was about $10 million.
Frank McGuigan, president and CEO of SCO Logistics, said the two companies have similar business models based on using information technology to automate freight execution. Transplace will migrate SCO’s proprietary system into its own TMS and keep the functionality that adds to its existing capability, he said.
The combined company plans to augment its technology with a freight payment service and an exception-management service to help customers with non-routine situations that aren’t easily resolved by automation, McGuigan said.
The deal makes sense for SCO, he said, because customers’ needs and supply chains were expanding faster than the company could meet them. Transplace, for example, will be able to help SCO customers manage their freight in Mexico, officials said.
During the next year SCO will transition to become Transplace TMS.
Sanderson said Transplace is still open to doing deals where it can take advantage of its information technology and process management skills, and has its eye on the Canadian market.
‘We’re not looking to buy a lot more companies, but ones that make sense.’
Last year’s was Transplace’s best ever for revenue and profit, according to Sanderson. The company has experienced strong growth in its three-year-old Mexico service because 80 percent of its customers ship goods within Mexico or across the border, he said.
While other companies were laying off people during the economic downturn, Transplace was in a hiring mode. In 2010 it increased its workforce by 10 percent and now has 550 employees. – Eric Kulisch