Sunteck Transport Group and TTS Holdings recently merged to create what they say will be one of the largest multimodal, agent-based freight management service providers in the U.S.

We talked to Ken Forster, CEO of Sunteck, who will serve as the president and CEO of the new company, and Andy Cole, president and CEO of TTS, who will be chairman of the board, about the merger and how technology is changing the industry.

This interview has been lightly edited for length and clarity.

HDT: Could each of you tell me a little bit about your company, its strengths, and what made it unique prior to the merger?

Cole: We started TTS in the fall of 2005. A number of us had been through several iterations of companies that were based on the same premise as TTS: they were agent based. They did have some employee components which traditionally had created some conflicts, when you’ve got an agent base on one side and an employee base on the other. They’re both out here pursuing revenue. At the last company that a number of us who started TTS were with, it just became very evident that there was an opportunity to create a pure agent-based model that were very few in the industry, especially in the 3PL non asset business.

We moved our first shipment in January of 2006 and did all the traditional non-asset modes, full truckload, dry van, refrigerated, flatbed, we did some high and wide stuff, and the reason for that is we had people who knew how to do those. We did intermodal, we did LTL, so we got off to a very fast start and our assumptions were correct. We did $126 million in our first year. The second year we did about $176 million, and it’s just kind of grown from there.

I would say the thing we did in 2005 was we looked around at the technology and where we thought technology was going both for the customer, for the agents and for the carriers we did business with, the railroads. We put our heads together and came up with a really nice technology play which I think really catapulted us at the very beginning because it attracted some really talented agents to come join us.

We define them as agent, an independent contractor that has a contract with TTS. They service the customer on a day to day basis, they solicit freight and business from that customer, they quote rates, when they receive a tender, an order, they’re responsible for sourcing that capacity, finding a truck for that. Brokerage is just one of the things they do. Our role is to support them. We contract with the underlying carriers, with the railroads, we do all of the settlement, the receivables, the credit. The agents in other companies were responsible for everything, everything got pushed down to them, the collections, getting invoices sent, and we realized there was a better way to do that. And we brought all that non revenue producing functionality into our corporate office. We felt that coupled with our technology play, we could enhance the agents’ productivity substantially and allow them to growth their business unencumbered with all that minutia.

We also have agents that are carriers as well, a group called Progressive Transportation, our asset light model, and about 11 agents in that that run 650 trucks companies and each one of those are individual businesses that are signed on to Progressive, which is a TTS company. It has its own motor carrier authority, its own insurance, and we provide a lot of the same back end support.

Forster: Sunteck operates under the exact same model as TTS in terms of what we do, in terms of an agent based network and the asset light capacity model as well as brokerage services. The company was started by Harry Wachtel about 15, 20 years ago. It didn’t grow nearly as fast as TTS, but it grew consistently and was taken public. in 2013, private equity took the company private, and I became CEO in late 2014. Based in Jacksonville, Florida, we’re more of an East Coast based firm.

We do the same thing Andy does. The difference is our agents tend to service smaller shippers, small to medium size businesses, where TTS tends to work with larger customers, national accounts. So it’s a really good fit, geographically and serving different segments of customers.

HDT: What were the factors driving this merger?

Forster: The two companies have been talking to each other for several years, had a very good relationship. You know 2016 has not been a particularly stellar year for transportation, and in a slow market it was a good opportunity for us to embark on integration of these two companies. while things were a little slower and we could focus on this internally. The opportunities and synergies became clearer and clearer to us and we felt the time was right.

Cole: The fit is just about as perfect as you can come up with. One of the things we felt very compatible with was the culture at Sunteck. They believe in the agent model, they believe in how to grow it, what the right ways are to support it. We’ll be able to put these companies tougher in relatively short order just because we do things so similarly.

HDT: What does this mean for our readers, who are primarily trucking fleets of 5 trucks up to thousands?

Cole: We’re one of those guys. We’ve got about 650 trucks on the Progressive side and on the Sunteck side they’ve got about 1,200. We now become a sizable trucking company as well. We’re a freight management company, so to speak, so we represent those customers out in the marketplace and we do it both with our own assets and also with the other players in the industry. Some of our success is attributable to our relationships with those trucking companies.

HDT: With the merger, how would you say you are now positioned in the market compared to the competition? Who would you say are your main competitors?

Forster: I think in terms of bringing a wide variety of services we really compete in two areas — we compete with the C.H. Robinsons of the world, the Coyote Logistics of the world, and we compete with other agent based models such as Landstar and Mode Transportation, which is a subsidiary of the Hub Group.

With these two companies coming together and having a national footprint, and also having an asset light division, we feel we are incredibly competitive. We’ve got scale, we’ve got a wide breadth of services, we think we’re going to be well positioned. Our goal is to become the new home for people who are looking to ship freight or for agents who are looking to move to a platform with scale, resources, technology, and a wide breadth of services. By combining our capabilities and our footprint, we’re going to be very well positioned in the market.

HDT: Tell me a little about the new structure. Is one of you going to be the head of the new company? Are there co-CEOs?

Cole: I’m going to be the chairman and I’m going to be Ken Forster’s biggest cheerleader. We are both very strong leaders and I think we feed off of each other real well. Ken’s strengths, which is the day to day running of the company, and my role is going to be to help grow the company and find revenue sources and potential acquisitions. We’re going to mesh really well in the leadership of the company and we’ve both got long experience with it.

HDT: Is the name going to be Sunteck/TTS Holdings or will you come up with a name for the combined business?

Forster: We’re going to go to market as SunteckTTS; our agents for the time being will continue to operate under their respective brands. Over time we will bring those things together, starting with integrating the back office functions. We’re going to be very careful and deliberate about not disrupting our agents’ ability to go to market and interface with their customers. There’s not a plan set in stone right now to rebrand from an agent standpoint. We haven’t thought of a great name yet.

Cole: I like ‘Ken and Andy’s Big Adventure.' [laughs]

HDT: What trends do you see looking ahead when it comes to various parts of your business?

Forster: Continued sophistication and use of technology, both from the broker standpoint as well as shipper standpoint, as well as how it’s going to affect the capacity side. Like the ELD mandate and how the data from those units is going to be used in our back office as well as by shippers. The deluge of opportunities as it relates to technology, matching shippers with capacity, the amount of data available for analytics.

It think that an industry that has probably been on the slow end of adoption of technology in general is going to face some challenges and opportunities as things progress over the next couple of years. And now at a greater scale as a bigger company with more money to look at that technology, it puts is in a really good spot. I think the smaller guys without the resources to invest in technology are going to struggle. It’s going to be the haves and have nots, and if you can’t keep up…

Cole: … call us.

HDT: Speaking of technology... what effect do you think what’s called the “Uberization of Trucking” will have on the industry and on your business?

Cole: I think it’s going to have its place, especially for the small shipper. But I don’t see [making] a couple clicks and all of a sudden you have a truck scheduled. There’s a whole bunch required to do business with the customers; it’s not just reach out and find a truck on I-35 and have them come pick up a load.

Forster: There’s sort of a general but unspoken belief that the innovation as it relates to this matching technology has to come from a new entrant. You’ve got some companies out there, i would consider us to be one, who are forward thinking and have a lot of experience, but most importantly have lot of relationships with a lot of different carriers. That … is not something that is easily attained [by a new entrant.]

Cole: A lot of details get glossed over.

Forster: It’s easy to sit there with a white board and figure out how to match a shipper with a truck. If you think of why Uber has been so successful, it’s massively capitalized. They’ve stubbed their toe massively many times but they persevered and got through. It’s going to happen; someone said to me once that things take twice as long as you think but happen twice as fast. So we have to keep an eye on it and position ourselves and our agents to respond appropriately.

Cole: I think he who owns the data and the technology is going to continue to be cutting edge. I think technology is going to win the day. and I’m not talking about ELDs or things of that nature. I think the big data play is going to be very important and I think being cutting edge of technology will be front and center for us as we put the two companies together. I think customers and carriers alike want good data, and as regulation comes into play data is going to become more important to manage that productivity and squeeze as much productivity out as you can through technology and analytics.