A Question for Express-1 Contractors

[ATeam]

Below is text from an Nov. 29, 2011, XPO investor presentation script in which Express-1 is discussed. My question to Express-1 contractors is, what, if anything, do you see happening on the ground? What real-world changes have you seen in the company in the last 12 months?

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Next is our expedited division, called Express-1. It’s currently our largest division, out of Buchanan, Michigan. Expedited truck brokerage services focus on urgent shipments that need to be picked up and delivered within a small window. It’s an owner-operator model, so it’s very relationship-driven. Express-1 is a nearly $90 million business operating in a market that’s roughly $5 billion. Even though we’re one of the top five expediters in the United States, there’s a lot of room to grow.

Our growth plan for Express-1 centers on our owner operators. Right now we have sufficient owner operators to move our current level of freight, but we believe we can be of greater service to these owner operators, and help them to be more efficient in the way they manage their routes. We believe that if we add capacity, we can capture the sales to fill the trucks.

Another opportunity for Express-1 is within its current landscape. We believe there are two verticals that represent a lot of untapped opportunity for us: temperature-controlled loads and defense-related shipments. We have a presence in both verticals, and we’re actively looking at ways to grow our footprint. We think these two sectors could generate big business for us.

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(Full disclosure: Diane and I own shares of XPO)

 

[OntarioVanMan]

Our growth plan for Express-1 centers on our owner operators. Right now we have sufficient owner operators to move our current level of freight, but we believe we can be of greater service to these owner operators, and help them to be more efficient in the way they manage their routes. We believe that if we add capacity, we can capture the sales to fill the trucks.

Manage their routes? huh?
and IF you add capacity and can not find the sales? so what comes first? capacity or sales...and what do these new O/O's do in the mean time whilst you find these sales?

 

[westmicher]

Certainly, there is a much greater focus on tractor-trailer freight, including more owner-operators of tractors, of course. That probably means more regular freight with express freight. Straight trucks seem to be a focus too, with rates going up slightly recently. We don't see any less focus on Sprinters, and we are doing well, although Express-1 seems to be holding off hiring more Sprinters right now. Teams have always been more desirable in all classes and probably always will be.

There is a conference call scheduled for Saturday where we should learn more. But we don't see anything to be afraid of right now. Express-1 continues to make good profits and smart owners can make some money too. However, we like to manage our own routes . . .

 

[OntarioVanMan]

Certainly, there is a much greater focus on tractor-trailer freight, including more owner-operators of tractors, of course. That probably means more regular freight with express freight. Straight trucks seem to be a focus too, with rates going up slightly recently. We don't see any less focus on Sprinters, and we are doing well, although Express-1 seems to be holding off hiring more Sprinters right now. Teams have always been more desirable in all classes and probably always will be.

There is a conference call scheduled for Saturday where we should learn more. But we don't see anything to be afraid of right now. Express-1 continues to make good profits and smart owners can make some money too. However, we like to manage our own routes . . .

Define routes....

 

[Steady Eddie]

Define routes....

Ups has Routes
Big Boy FedEx has Routes
Postal workers have Routes
Trash fellars have Routes
Express-1 has Routes

I just came off of my Route

And- I just got through drinking a Coke.

Full disclosure: I own stock in Coca-Cola

And-And- I leaned today that I had a nightmare. I learned this by sitting up in bed and saying- "WOW, I just had a Nightmare...."

 

[scottm4211]

Lol Eddie.

 

[Steady Eddie]

Lol Eddie.

Route on baby! lol

 

[davekc]

I don't know about the "route" business but E1 like other carriers will struggle to expand that side of the business unless they have a huge increase in rates. Folks would be looking at a 200k truck and the ability to purchase one. Very few can even get the financing and the numbers for ROI are pretty dismal. Pretty much why no dealers stock them.
DOD candidates may be tougher as well just because of the qualifications. Tough place for any carrier to gain a lot of traction.

 

[Steady Eddie]

One thing I can say, Express-1 adapts very well to changing trends in this business. Some of those changes are not very welcome, some are. Incentives, rate increase for your investments, will grow the needed fleet in their overall plan.

I have been in the transportation business in all forms but Rail for over 37 years. I have been there during deregulation of the Airlines, Trucks and Water Ways. In 1978 when the Airlines were deregulated, I said in a few years we will have about 5 Airlines left. We’re almost there, it did take a little longer than I first thought. Continental will be the next “Name” change.

I guess my point is, that those that did not adapt, did not last. If Express-1 decides to go into a new market, they will find a way. Others are doing it, they too adapted.

 

[davekc]

One thing I can say, Express-1 adapts very well to changing trends in this business. Some of those changes are not very welcome, some are. Incentives, rate increase for your investments, will grow the needed fleet in their overall plan.

I have been in the transportation business in all forms but Rail for over 37 years. I have been there during deregulation of the Airlines, Trucks and Water Ways. In 1978 when the Airlines were deregulated, I said in a few years we will have about 5 Airlines left. We’re almost there, it did take a little longer than I first thought. Continental will be the next “Name” change.

I guess my point is, that those that did not adapt, did not last. If Express-1 decides to go into a new market, they will find a way. Others are doing it, they too adapted.

Probably true but this is a different animal because they aren't the ones doing the investing in equipment as they are basically a asset based company. Its all about return on investment and the rates have to be at a point to achieve that. Time will tell if that changes, but it will be a slow go at those current numbers.

 

[Steady Eddie]

Probably true but this is a different animal because they aren't the ones doing the investing in equipment as they are basically a asset based company. Its all about return on investment and the rates have to be at a point to achieve that. Time will tell if that changes, but it will be a slow go at those current numbers.

I think they are a non-asset based company? You are correct in saying they aren't the ones investing in equipment. We are the ones who have the risk and if our return on net asset applied is not there then O/O will not be there. Like I always say.."Don't put your money in a Bank to make money....buy the Bank and you will make a lot of money."

Yes it will be a slow go at current numbers- Adapt?

 

[davekc]

I think they are a non-asset based company? You are correct in saying they aren't the ones investing in equipment. We are the ones who have the risk and if our return on net asset applied is not there then O/O will not be there. Like I always say.."Don't put your money in a Bank to make money....buy the Bank and you will make a lot of money."

Yes it will be a slow go at current numbers- Adapt?

Your right. I forgot the "non" when typing.

 

[BIG DOG 122]

Ups has Routes
Big Boy FedEx has Routes
Postal workers have Routes
Trash fellars have Routes
Express-1 has Routes

I just came off of my Route

And- I just got through drinking a Coke.

Full disclosure: I own stock in Coca-Cola

And-And- I leaned today that I had a nightmare. I learned this by sitting up in bed and saying- "WOW, I just had a Nightmare...."

Now that's funny !!!

 

[greg334]

Seeing this is an investment question and there is a lot of left out information, the value of the company in the form of the stock does not necessarily reflect the reality.

The problem is with the revenue of $90m in any statement like this raises a few questions.

1 - how much of that revenue is reaching the O/O?

2 - how much of that revenue is part of a sales/broker relationship?

3 - top five?

 

[Steady Eddie]

Seeing this is an investment question and there is a lot of left out information, the value of the company in the form of the stock does not necessarily reflect the reality.

The problem is with the revenue of $90m in any statement like this raises a few questions.

1 - how much of that revenue is reaching the O/O?

2 - how much of that revenue is part of a sales/broker relationship?

3 - top five?

$759,000 was the net for 2011, down from $4.9 Million- OP- That is some change in the last 12 months.

Here Greg- Read and see if your answers are here. Not sure what you mean by "Top 5"

http://www.businesswire.com/news/ho...PO-Logistics-Reports-Fourth-Quarter-Full-Year

 

[greg334]

I did and that's why the questions.

 

[Steady Eddie]

I did and that's why the questions.

Well, you know what everyone else knows then. Express-1, I think, is the only Expedite company that has their numbers out there as a open book. If you have those questions, you might want to address them to those that can answer them, if, you cann't see them in the reports. Remember, It's all about revenue as far as Wall Strret is concerned. Their line of business should answer your #2. question. Question #1. is enbeded in the 15 million line. #3 still don't know what you are looking for there.

Full disclosure: I own stoc......ahhh no ones business if own stock or not.

 

[lugnut1]

Seeing this is an investment question and there is a lot of left out information, the value of the company in the form of the stock does not necessarily reflect the reality.

The problem is with the revenue of $90m in any statement like this raises a few questions.

1 - how much of that revenue is reaching the O/O?

2 - how much of that revenue is part of a sales/broker relationship?

3 - top five?

The bigger question about XPO is what they can offer to shippers that other freight service providers cannot. Over the past 5 to 10 years the integration of technology, expanding freight capacity and maintaining a high quality of drivers has been the only areas of improving the experience for shippers by most broker/carriers to attain company growth. But, what can they offer now to shippers to grow their companies? Would rate changes work for them for growth? How about a better sales force?

I have looked at the XPO financials and would not invest in them based on those filings. In particular the preferred stock issuance is in essence selling the company out from under the common shareholders. With a zero EPS you only have the word of company management that they are a great investment.

 

[E-OneDog]

I will admit I'm lost as to what to expect from E-1, having a past history with Bradley Jacobs I thought his involvment with E-1 would turn some business but that hasn't been my experience at all. I started with E-1 around the first of October, 2009 and ran about 15k miles a month unless we took time off. However since August 2011 we have seen that drop to less than 10k. My fleet owner is going toward T/T's and really has stopped bugging us about our miles, before he would push drivers out that ran less than 12k(all teams). Since they don't seem to push E-1 as much to keep the trucks running our miles have sufferred.

We have a great truck and never have to worry about pay, don't have to go to Canada(yea) so I would hate to switch but even thought its not about the money we get very bored setting around. I also can't get infomation from the Fleet Manager about how other trucks are doing like I used to so that leaves me in the dark about how the over climate is.

Overall I would say a lot has changed since Jacobs took over and none of it has been good for us!

 

[ATeam]

I will admit I'm lost as to what to expect from E-1, having a past history with Bradley Jacobs I thought his involvment with E-1 would turn some business but that hasn't been my experience at all.

Stay tuned, E-OneDog. I think you will be very interested in what I have to report, just as I am very interested in what you have to report.

I am working now on a story about Express-1; specifically, about what has changed and has not changed since Jacobs took over the company last year. If you or any other E-1 drivers
have views to offer on this topic, I am all ears.

I spoke by telephone today with both Bradley Jacobs, CEO, XPO Logistics, Inc. and Jeff Curry, President, Express-1, and asked questions similar to yours. I'm not at liberty to say more until the article goes to press. I'll be interviewing E-1 drivers tomorrow to round out the piece and remain very interested to hear what any and all E-1 drivers may have to say in this thread or in private.

Watch for the article in the next issue of Expedite NOW. If you do not already subscribe, you can sign up to have free copies of the print edition mailed to your home. Subscribe here.

(Full disclosure: Diane and I own shares of XPO.)