The food industry teaches logistics executives unique business lessons. For instance, you shouldn’t let cows’ udders drag in the snow.
“They will get dirty, which could lead to sediment contaminating the milk,” says Vincent Gulisano, chief customer officer at Greatwide Logistics. To Greatwide’s shipper customers, contaminated milk is money poured down the drain, which means the tank trailers deployed by Greatwide have no milk to haul — more money lost.
It’s not the type of problem Gulisano came across before joining Dallas-based Greatwide, which serves six of the top 10 U.S. grocery companies as well as food producers with dedicated fleets, brokered capacity and warehousing.
“In-store delivery in grocery is the toughest in the retail industry,” Gulisano said. Perishable food products often require special handling in transit and on-time delivery, with no room for mistakes, he said.
As the economy regains strength, Greatwide is trying to apply the lessons it’s learned to other types of supply chains and new customers, broadening and deepening its shipper base. In particular, the company wants more midsize shippers.
Greatwide’s customers include giants such as Wal-Mart and Target, Kraft Foods and Coca-Cola, grocery chains such as Safeway, Giant, Supervalu and Kroger, and manufacturers such as Alcoa, Charter Steel and General Motors.
“We’ve typically done business with the biggest companies, but we’re working on adding more midsize customers,” Gulisano said. Greatwide defines a midsize company as one with about $700 million to $1.25 billion in annual revenue.
The dedicated contract carriage operations at the core of Greatwide’s operations have performed relatively well amid the economic downturn of the last two years, though competition from trucking firms using dedicated revenue to balance a decline in over-the-road freight has increased.
Brokerage is holding up as well. C.H. Robinson, by far the largest player in the field, saw its overall gross transportation revenue fall 16.2 percent in 2009, but net revenue for its truck brokerage line actually grew 1 percent over 2008. The company said truckload volume grew 13 percent in the fourth quarter, suggesting there is greater demand for help in finding capacity.
“Demand for outsourcing has permeated companies of all sizes, but there’s still a lot of opportunity at the midsize companies,” Gulisano said.
Those opportunities will grow with the economy, he believes, especially as truckload capacity tightens and carriers begin to raise rates. “As rates go up, there could be a bit of a bullwhip effect for some shippers,” he said. Smaller shippers fear their rates may shoot up faster and farther than those paid by larger competitors. “They see it coming,” Gulisano said. “They’re already getting pressure from some of the big truckload carriers.”
Trucking company attempts to raise rates may not be sticking yet, as capacity — which Greatwide defines as drivers, rather than available trucks and trailers — is still abundant. In some places, however, it’s getting harder to find, Gulisano said.
“We’ve been hiring,” he said, “and it’s been a little more difficult to find drivers in certain markets than you’d expect, though at the end of the day we still find them. So it’s starting to tighten up, slightly.”
This month marks the end of Greatwide’s first year under Centerbridge Partners, a private equity firm that purchased the logistics company last February in a debt-for-equity transaction. That brought new leadership in the form of Chairman and CEO Leo Suggs, a former head of Overnite Transportation, now UPS Freight. Suggs became CEO of Greatwide last month, replacing former President and CEO Raymond Greer.
Last week, the company consolidated its four operating divisions into one, combining dedicated fleet services, warehousing, brokerage and transportation management. All four divisions already shared common technology, and the consolidation will further streamline Greatwide’s operations and make it easier to market its services, Gulisano said. Dedicated carriage represents about 65 percent of the company’s business, followed by truck brokerage, warehousing and logistics services.
Last year also brought Greatwide new business, despite the recession, as companies turned to 3PLs for savings. “In terms of adding new customers, last year was one of our strongest years ever,” Gulisano said. “We’re expecting to do 50 percent above that this year. Business is good.”
Among those new customers is Dairy Farmers of America in Portales, N.M. Greatwide recently won a milk-hauling contract with DFA and set up operations in a Portales Industrial Park.
Greatwide is also expanding with existing customers such as LG Electronics, a consumer electronics and appliance manufacturer. Greatwide will provide warehousing and distribution services for LG in Jamesburg, N.J., bringing the number of LG locations Greatwide operates to five.
The acquisition of YRC Worldwide’s dedicated contract carriage operations last year opened doors to industrial freight, he said. “We’re seeing steel shipments picking up,” Gulisano said, lifted in part by infrastructure spending. Its core food business is improving as well. “Grocery didn’t take as big a dive as other industries, and it’s coming back a little slower, but it’s getting stronger,” he said.
Contact William B. Cassidy at email@example.com.