By Jay Devers
The recent acquisition of RXO by C.H. Robinson is another defining moment in our industry. For us at Bestway International, it’s a timely opportunity to look at the overall market and work to understand where we fit.
Size and scope represent one form of strength, and this deal certainly has that. Personal connection and business continuity represent a different form. I wouldn’t be surprised if a good number of shippers re-examine their affiliations because they value the latter.
Bestway is coming up on 40 years of serving shippers and working with carriers to ensure our customers’ freight arrives safely and on time to its destinations. Much of that history was just a handful of folks servicing about the same number of shippers. Our recent growth takes us toward 50 smart, nice team members. We strive for those personal relationships with every shipper we serve and every carrier we deploy, because we are vested in their successes.
Many believe RXO was spun out of XPO for this exact outcome, and I’ve seen the term “mega-broker” pop up in industry publications. It will be interesting to see the valuation at which RXO shareholders become CHR shareholders when that day comes in 2027.
Without question, there is certainly room in the industry for players of varying sizes, as the enormous amount of start-up/high-growth 3PLs indicates – although it seems many of them are just trading market share with each other as they explore the boundaries of their non-competes and other prior agreements.
Size and Scope – Pros and Cons
The appeal of size and scope is real. Buyers are promised access to extensive resources, expansion of strategic options and tons of flashy tech. This transaction is a precedent for many more to come that will create bigger brokers with broader customer bases. These providers ultimately occupy a place in the market that allows them to say, “We have the resources. We have the capacity.”
It could be tempting to look at a competitor like that and think, “We have to get bigger so we can compete with them!” I’m not convinced that strategy fits what our shippers value in this moment.
We abhor the idea that any of our customers would ever feel like they’re not valued by us. That’s because we know them personally and we strive to make sure we never let them get that impression. Thsee customers are comfortable telling us what’s on their mind because they know it matters to us, and they know that anything they tell us will get prompt attention and prompt action.
The Best Role for Technology
Investing in technology to help you do your job better is important, and we are engaged in that heartily. But we don’t use technology as a way of reducing our personnel costs, because we can’t have our customers questioning whether they can still count on that prompt attention and effective problem-solving action that distinguishes us.
I spend a good amount of time looking at technologies that are typically deployed by freight-forwarders, brokers and 3PLs. For the most part, they are all off-the-shelf TMS platforms. They are slightly customized, but overall almost everyone is using a fundamentally similar platform. When one of the big players boasts about having a technology edge, the boast is almost always overblown, especially when it doesn’t create daily operational value to the shipper.
What really makes the difference is when an unanticipated issue arises, and that’s when the TMS can’t solve the problem. The best it can do is provide information to the people who are there to solve it.
Choosing a Competitive Position Based On What We Do Best
Our team members and our customers know each other well. They talk regularly. They understand on a human level – not just with metrics and algorithms – what our customers care about and how they like things done.
We are having fun deploying the tools that help bring all that to the table, but not as a substitute for thinking or caring or taking action.
There are natural events that have the potential to destabilize these relationships, and massive mergers and acquisitions are among the big ones. Without naming names, some of parties at the table of this particular deal have already earned a name for themselves using technology to replace people.
What you risk when you deprioritize that personal connection in favor of automation and efficiency is too high a price for us to pay, and it’s not who we are. Simply put, there will be shippers who don’t appreciate being a trading chip in a multi-billion-dollar Fortune 100 cash/stock deal.
I’m not sure if this moment teaches us, or simply reaffirms, that we need to remember who our type of shippers are – and that we need to deploy almost all of our resources toward supporting those types of shippers.
I wish everyone in this industry success, because all the shippers, carriers and the entire supply chain need our industry to do its job well. Whether it’s this merger or the next of a seemingly unending series of disruptions, some shippers are going to question just how valued they are.
What they do in response is the great thing about how markets work, which is as it should be.
