Chicago’s third-party logistics companies are expanding so rapidly, it’s not surprising some think they’ve got a secret formula. Coyote Logistics and Echo Global Logistics each went from startup to more than $500 million in revenue within five years and are racing toward the $1 billion-a-year mark.
That growth is remarkable, but not entirely unusual in the logistics and brokerage business. It’s an industry with plenty of space for expansion, and a huge revenue gap between the largest player, C.H. Robinson Worldwide, and the next tier of non-asset freight brokers, said Coyote Logistics co-founder and CEO Jeff Silver. “When we (Paul Loeb and Silver) sold American Backhaulers to C.H. Robinson in 1999, it was about a $300 million company and Robinson a $2.7 billion company,” Silver said. When he got back into brokerage in 2006, “Robinson had grown into an $8 billion company, with maybe $6 billion in gross truckload revenue,” he said. “The next biggest truckload brokerage after that was maybe TQL (Total Quality Logistics of Cincinnati) with maybe half a billion dollars (in annual revenue) at the time. That’s a weird dynamic — what other industry is so lopsided? Customers didn’t have a great choice.”
Companies such as Coyote, Echo Global and TQL have been striving to fill some of that gap through organic growth and, in the case of Echo, acquisition. Echo acquired California-based Sharp Freight Systems and New England’s Plum Logistics in 2012 and Advantage Transport in 2011, gaining new expedited, refrigerated and intermodal capabilities.
Load Delivered Logistics has a long way to go before it rivals its larger neighbors in terms of revenue, CEO Robert Nathan said. “Hopefully, one day Load Delivered will be that big,” he said. Still, his company, founded in 2008, is on track to bring in about $65 million in revenue this year.
Nathan said some of the logistics growth in Chicago is due to access to the latest technology and a highly motivated, Generation Y work force. “I see technology, especially mobile technology, playing a bigger role in logistics every day,” he said. “A lot of antiquated processes need to be automated. The landscape is becoming more sophisticated.”
Chicago itself is an ingredient in Nathan’s logistics recipe. “When people ask me what’s the Chicago magic, I think the difference really has to do with culture,” he said. “All the Chicago logistics companies understand the value of what they’re building, and they’re very proud of that. And it’s a fast-paced environment. The brokerage industry depends on that.”