The road is shifting for Roadrunner Transportation and other less-than-truckload carriers diversifying to capture more of their customers’ freight.
Roadrunner in January became the second LTL carrier within a year to move into intermodal with the $20 million acquisition of drayage operator Morgan Southern.
|Southeastern LTL carrier Averitt Express launched an intermodal division last April, bundling intermodal marketing with its traditional LTL and truckload services.
Roadrunner won’t be an intermodal marketer but will handle drayage for intermodal marketing companies, direct shippers, steamship lines and other truckers, said Mark DiBlasi, president and CEO of the Cudahy, Wis.-based carrier.
“A lot of freight that used to be on trucks has moved to rails in recent years,” he said. “We want to be able to participate in the movement of that freight. We’re going to grow at the expense of our competitors.”
The drayage industry, he notes, is highly fragmented, providing an opening for Morgan Southern, a $60 million company.
Other LTL carriers, including FedEx Freight, plan to tweak operations to make greater use of intermodal rail, a testament to improvements in rail service and intermodal’s long-haul cost advantage. Intermodal traffic rose 14.7 percent in 2010, according to the Intermodal Association of North America.
Railroads are looking to keep that business growing by spreading out the customer base, looking for more trucking customers and pitching intermodal service to freight brokers that traditionally stick to truck transport.
“Intermodal is growing, and the projection over the next several years is that it’s going to continue to grow,” DiBlasi said.
Based in Conley, Ga., Morgan Southern operates 24 terminals throughout the U.S.
Drayage will complement Roadrunner’s truckload, brokerage and LTL services. “We’re LTL in our core, but we’re also doing a lot of truckload and transportation management services, much more than we used to,” DiBlasi said. In 2010, LTL trucking accounted for about 59 percent of Roadrunner’s $632 million in revenue, with truckload at 31 percent and TMS 10 percent.
“We see (drayage) as an extension of our existing services. It will help our LTL business” by funneling more freight toward its network, DiBlasi said.
Roadrunner is a nontraditional, long-haul LTL carrier, using a dedicated network of owner-operators and brokerage fleets to haul LTL and truckload freight. That non-asset-based model may make it easier for Roadrunner to diversify.
“Five years ago you could be a single-focus carrier and that would be more than enough to provide a good stable environment and jobs. Now companies realize they have to diversify,” he said. “If all you can do is one thing, you’ll be shut out. We don’t want to be shut out.”
Contact William B. Cassidy at firstname.lastname@example.org.