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IN A BUSINESS BUILT ON RAPID, time-defi nite deliv-ery of critical pharmaceuticals and high-value electronics parts, one might ask: Why would a slot machine represent an increasing growth opportunity for the expedited trucking industry?

The answer not only is indicative of a surging gaming industry across the U.S., but also of the increasingly specialized services expe-dited carriers offer that, combined with an improving economy and tight trucking capacity, are driving growth. Those slot machines, so critical to the profi tability of the Caesars Palaces, Sands Casinos and any number of horse tracks nationwide, require exclusive-use trucks, pads, straps and lift gates. Only members of gaming com-missions can break trailer seals, and shipments with broken seals must be returned.

To meet demand for such enhanced security, visibility and monitoring capabilities, expedited carriers are rolling out new tech-nologies and premium services for shippers of high-value, mission critical and temperature-sensitive goods.

Expedited services are about much more than last-minute, time-defi nite shipments. With lean inventories and integrated sup-ply chains, shippers are turning to expedited carriers for capacity management, better security and a host of other premium solutions, said Jason Frederick, managing director of operations for FedEx Custom Critical.

The FedEx unit, the nation’s largest expedited carrier, notched $375 million in 2011 revenue, up 14 percent year-over-year. Driven by tight capacity and lean inventories, growth is running in the high single-digits this year.

Security is a top priority for many users of expedited transpor-tation services. For shippers moving pharmaceuticals, high-value electronics, key parts and even special releases and rollouts of books, video games and other media products with a high black-market value, security is a priority. Stolen property can result in huge losses, especially if those products can be copied.

For customers in the life sciences, perishable goods, aerospace, arts and fi nance industries, time-defi nite shipments almost always include other premium services. To maximize their scale and vol-ume, some are turning to single providers for all of their expedited freight needs.

“We are fi nding success where customers are looking to single-

source premium services as well as expedite,” said Andy Clarke, president and CEO of Seville, Ohio-based Panther Expedited Ser-vices. Five clients have consigned all of their expedited shipping needs to Panther this year, he said.

The expedited trucking sector is in the midst of a sustained period of growth. Each of the fi ve biggest U.S. expedited carriers recorded healthy revenue increases in 2011. Combined revenue for the top fi ve carriers — including the expedited divisions of UPS and FedEx, the nation’s largest transportation providers — totaled $938 million in 2011, a 9.3 percent increase over 2010.

That’s a far cry from the 22.2 percent year-over-year increase between 2009 and 2010 as companies turned to expedited services as they dug their way out of the recession. Current growth rates, although not as high, are healthy and appear to be more sustainable and lasting. “2009 was a very bad year, so people were still catching up to what they

Expedited carriers capitalize on an improving economy, supply chain shifts and tight capacity to build profi ts

By David Biederman

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used to have,” said Satish Jindel, president of SJ Consulting Services.

Panther is benefi ting from improv-ing light-vehicle sales and a minor renaissance in automotive and general manufacturing in the U.S. and Mexico. “That is driving cross-border and domes-tic expedited shipments,” Clarke said.

Automotive trends bode well for expedited carriers. Light-vehicle produc-tion by Detroit’s Big Three automakers increased 13.2 percent in 2011 to 7.7 mil-lion units. U.S. exports of U.S.-made autos are projected to reach 1.4 million units this year, up from 1.2 million in 2011, according to IHS Automotive.

On the manufacturing side, U.S., Japa-nese and South Korean automakers are set to invest some $2 billion in Mexico over the coming years. Honda is building new plants or expanding existing factories in Alabama, Indiana and Ohio.

The major diversifi ed expedited carriers derive 15 to 30 percent of their business from automotive shipments, Clarke estimates. In addition to automotive parts, agricultural and industrial products are driving U.S.-Mexico cross-border trade.

Automotive shipments account for about 20 percent of revenue for Bolt Express, a medium-sized expedited carrier with annual revenue of about $70 million.

The Toledo, Ohio-based company, which runs about 370 owner-operated trucks, is active in the energy, appliances, agriculture and general manufacturing sectors. Cross-border shipments from Mex-ico also are rising. Prior to 2012, Bolt was

able to operate a scheduled route between the U.S. and Mexico with a single driver. Today it has to run teams.

“We are seeing growth from all sec-tors, especially manufacturing,” said Ben Bauman, Bolt’s president and CEO. “We have some little niches coming in and out of Mexico that are very strong for us.”

Tightening capacity also is helping to drive growth as customers increasingly turn to expedited carriers for options and ideas. “They are coming to us and asking for help with capacity issues, to make sure trucks are available,” Bauman said.

UPS delivers expedited ground services through its freight and supply chain services businesses. UPS Express Critical offers a broad range of time-critical and value-added services to customers worldwide, drawing on the company’s global reach and air, ground and multimodal capabilities. Services include door-to-door expedited shipments throughout the U.S. and into Canada and Mexico.

UPS Freight’s expedited services group

provides expedited and value-added services to UPS’s less-than-truckload customers. The group’s LTL Urgent option offers same-day, next-day or time-defi nite delivery to all 50 states, Canada, Mexico and Puerto Rico.

LTL shippers try to avoid pay-ing a premium for expedited freight, but there’s no avoiding it completely, whether because of low inventory, a store opening, broken equipment or a special sale. UPS’s regular LTL cus-tomers usually call three or four times a year in need of expedited services. “We

want to provide that service without them having to fi nd another provider,” said Cor-nell Howard, UPS Freight’s vice president of expedited freight services.

Expedited volumes are climbing steadily even among highly price-sensitive custom-ers. To keep them happy, the expedited group offers a variety of delivery times and pricing options. “Even with that, we have seen steady growth in expedited division volume,” Howard said.

Expedited carriers, along with the entire U.S. trucking industry, struggle to fi nd enough drivers. Industry observers say hundreds of thousands of drivers will be needed to meet projected freight demand. Demographic trends such as an aging work force shrink the driver pool, while the Fed-eral Motor Carrier Safety Administration’s CSA safety initiative and hours-of-service rules are driving some from the profession, as are high fuel, tire and equipment costs.

To attract and retain drivers, Panther last year rolled out a tiered rewards program that

“WE ARE SEEING GROWTH FROM ALL SECTORS, ESPECIALLY MANUFACTURING.”

TOP 5 EXPEDITED CARRIERS

■ Revenue, in millions of dollars.

REVENUE Y-O-Y CARRIER NAME 2010 2011 % CHANGE

FEDEX CUSTOM CRITICAL $329 $375 14.0%

PANTHER EXPEDITED $200 $210 5.0%

UPS EXPRESS CRITICAL $132 $135 2.3%

LANDSTAR EXPRESS AMERICA $120 $132 10.0%

EXPRESS-1 $77 $86 11.7%

TOTAL TOP 5 CARRIERS $858 $938 9.3%

Prepared by SJ Consulting Group

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©2012 Panther Expedited Services, Inc. • Panther® is a registered trademark of Panther Expedited Services, Inc. • www.pantherexpedite.com

We’ll reduce your spend. We’ll reduce your risk. And your freight will arrive on time. We’ll keep these promises with complete transparency and real-time visibility, beginning with our price and service options and ending with secure delivery of your freight. We call it Premium Logistics®. Turn your supply chain into a strategic advantage. Call (800) 685-0657.

©2012 Panther Expedited Services, Inc. • Panther® is a registered trademark of Panther Expedited Services, Inc. • www.pantherexpedite.com

Stop Calling Around for Answers

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Clarke said is similar to airlines’ frequent fl yer programs. The more loads and miles drivers accept, the more they generate rewards such as higher pay rates and vouchers for hotel stays. “Drivers want to feel part of a good organiza-tion that values their services,” Clarke said.

FedEx Custom Critical views its contract drivers as professionals and pays them fairly and on time. “We don’t have issues about not paying them on time,” Frederick said. “We do what we say we will do.”

The company caps the amount driv-ers pay for diesel fuel at $1.25 a gallon and pays the balance. It also has implemented a quarterly recognition program that rewards drivers with paid vacations and other bonuses, and provides its approximately 2,500 drivers with discounts for a variety of services throughout North America.

“Even though they’re independent, we want our contractors to feel like they’re part of the organization,” Frederick said. “We are seeing positive gains on the reten-tion side.”

Bolt Express’s driver recruitment and retention program includes expanded back-offi ce support for drivers and improved tools for better communication and smoother, more effi cient operations.

Bolt continues to invest in technology. Its Web-based Transportation Management Sys-tem is a major contributor to the company’s growth. Bolt was recently recognized by INC. Magazine as one of the 5,000 fastest-growing privately owned companies in America. Since 2010, the company has recorded growth of approximately 50 percent and is on track to exceed that this year, Bauman said.

The company’s Border Advantage sys-tem simplifi es U.S.-Mexico border crossings with online confi rmation of each customs-clearance process. Bolt takes ownership of shipments across the border and through customs, proactively managing the move-

ment of freight and information between customers, carriers and brokers.

UPS in April rolled out CrossBorder Connect, a ground freight service between the U.S. and Mexico designed to help com-panies navigate complex brokerage processes and reduce customs delays associated with border regulations, inspections and paper-work. The network incorporates Mexican carrier partners at eight border points: Otay Mesa and Calexico, Calif.; Nogales, Ariz.; and El Paso, Laredo, McAllen, Harlingen and Brownsville, Texas.

Although not strictly an expedited service because it isn’t guaranteed, Cross-Border Connect does expedite cross-border freight. The service was spurred in part by customer surveys that revealed a trend to near-sourcing among high-tech and auto-motive companies, said Steve Flowers,

president of UPS Global Freight Forwarding.Prior to the rollout, cross-border shipping

options for heavy freight were limited to air or conventional LTL movements. Cross-Border Connect offers three- to four-day shipping options between most major U.S. cities and Mexico and bonded movements for faster transit times. “Our research clearly revealed the gaps in service options that exist for today’s customers,” Flowers said.

UPS is targeting the growing North American automotive industry for the ser-vice, which also is expected to have a large component of high tech, industrial manu-facturing and health care companies. “As production ramps up, people need resupply of parts or products,” Flowers said. “CBC is designed as an alternative to air freight.” JOC

Contact David Biederman at inexdb@comcast.net.

WHITE GLOVE TREATMENTJUST ABOUT ANY shipper using FedEx Custom Critical’s White Glove service wants premium security, visibility and monitoring services in addition to time-defi nite delivery.

The key to meeting those demands and improving such premium expedited services is devel-oping and deploying new technology.

SenseAware, an information service combining GPS capabilities with sophisticated sensing technologies and a Web-based collaboration platform for real-time monitoring of high-value, time-sensitive shipments, is an example of that technology. FedEx Customer Critical initially deployed the service for the health care and life sciences industry, but now offers it to customers in aerospace, arts and fi nance.

Developed by FedEx engineers and rolled out in 2009, SenseAware provides all parties to a shipment with real-time information, including precise temperature readings, exact locations and alerts if a shipment is opened or exposed to light.

In addition to premium temperature-controlled services such as constant monitoring, dedi-cated services teams and hard-copy cold chain documentation, Custom Critical also deploys the latest technologies for security of expedited shipments.

The company uses embedded devices to “geofence” designated shipments and routes. As the delivery vehicle travels along a designated route, the vehicle is under constant two-way, on-board satellite monitoring, and instant alerts are issued if the vehicle deviates from the given route.

Custom Critical teams work with FedEx security personnel and U.S. law enforcement author-ities to identify high-theft areas nationwide and build trip routes around those areas. If a vehicle enters or passes through a regional crime geofence, the driver is contacted immediately and instructed to notify the FedEx security command center if stops must be made.

FedEx Custom Critical also has a safe parking program in which trucks with high-value ship-ments that have to stop overnight are guided to FedEx facilities with fenced-in, locked yards and 24-hour surveillance.

The Defense Department has authorized White Glove services to handle sensitive, classifi ed and hazardous shipments including electronics, arms, munitions and explosives. Other autho-rized enhanced security services include on-board alert buttons, security escorts, dual-drivers and constant surveillance.

In response to customer demand for increased visibility of high-value shipments, Panther Expedited Services developed a package-level monitoring service that provides real-time shipment data including location, temperatures, shock and vibrations readings, light levels, baro-metric pressure and humidity. The service, called AccuSage, is Web-based and can be monitored through cellular applications.

The device’s long battery life allows for seamless global tracking regardless of shipping mode. Panther teams monitor data round-the-clock and can intervene instantly if needed.

— David Biederman

“DRIVERS WANT TO FEEL PART

OF A GOOD ORGANIZATION

THAT VALUES THEIR SERVICES.”

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