Monday, May 4, 1998

Matching cargoes and carriers

By Henry J. Holcomb

Inquirer Staff Writer

Bill Tucker's company works for shippers and for about 2,000 truck companies it has under contract.

His Cherry Hill firm helps shippers buy freight service on a schedule and at a rate that fits their, particular needs, no matter how complicated or specialized the task might be. It offers carriers a "cafeteria" where they can select the cargo that they can handle most efficiently.

"I can go to a shipper," Tucker said," "and say, 'Every time you call me, you'll get good trucking service. It won't always be the same trucker, but I'll always get your goods hauled and I'll give you a report every month documenting our on-time performance.' "

The Tucker Co. has some Fortune 500 customers, but it mostly helps small-to-medium-size companies get the expertise in supply-chain management they need to compete with the big guys.

"The big players are looking for very large accounts... They turn their noses up at $100,000 to $300,000," said John E. "Gene" Tyworth, a professor of business logistics at Pennsylvania State University.

Tucker, on the other hand, is happy with a customer that has a $100,000 annual freight bill.

The Tucker Co. started 37 years ago as a truck-freight brokerage firm, bringing shippers and truckers together.

Now, it is a third-party logistics company. Such firms are known in the trade as 3PLs, and they manage planning, financing and transportation chores related to getting raw materials to manufacturers and goods to market. They are one of the fastest-growing segments of the transportation industry.

Most 3PLs own major rail or truck fleets or warehouses and offer logistics management to gain business.

The big national firms are "doing it on a grand scale," Tyworth said, taking on supply-chain design, light manufacturing and assembly operations, and connecting trading partners. With their favorable interest rates, big 3PLs are even buying goods for customers and owning them until delivery is made.

All this means stiffer-than-ever competition for regional independent companies. Tucker says he's wary, but not worried.

"I'm going to leave [the big 3PLs] in the dust on my accounts," he said. "We tap into the country's tremendous supply of very savvy drivers and equipment...smaller carriers that have special areas of expertise, niches where they leave the big guys behind 80 percent of the time, in service and pricing."

Tucker won't name his customers. They must remain confident, he said, that the information about their shipments will remain secret. Knowing what and when a firm ships would be valuable;e to rivals.

The use of 3PLs is skyrocketing. In 1996, 58 percent of Fortune 500 companies used third-party logistics firms. Last year, an all-time high of 69 percent used them, according to a study by Robert Lieb of Northeastern University, Melvyn Peters of Cranfield University and Hugh Randall of Mercer Management Consulting.

They estimate that 84 percent of the 500 largest manufacturing firms in Europe also are using 3PLs.

The trend toward such out-sourcing, turning over functions not related to a company's core business to other firms, has been the driving force behind this growth.

But there are other factors, Tucker and others say.

"There are so many different shapes and sizes of companies that need special service, that need information and expertise. Changes are coming faster and faster, and the faster things move, the more the need for a specialist, the ability to reach out to the right party at the right time," Tucker said.

Even the biggest companies have needs that arise too infrequently to justify keeping the required expertise on board. A major national retail chain, for example, hires Tucker to distribution of point-of-sale promotion displays that have to be delivered to hundreds of stores on the same day.

Other big firms have turned to Tucker to manage shipments related to store openings and closings.

This need for niches of expertise favors privately held companies like his, Tucker said.

When you grow rapidly, as publicly traded companies are under constant pressure to do, "you very seriously dilute the quality of expertise and service," he said.

"We believe in longevity. We want to build the very best team we can and keep it," Tucker said.

Tucker's firm is nestled in the second floor of a tree-shaded street building a block from the Cherry Hill Mall that it purchased two years ago. With 23 inside employees and eight traveling salespeople, it handles more than $10 million worth of freight billings annually.

It has only four stockholders­Tucker, his wife, and sons Jeff and Jim, both of whom work for the company­"so I don't have to ship a bag of money out of here every quarter to keep investors I don't know happy."

Tucker's father, the late Jacob A. Tucker, founded the company in 1961 after years of working for others in the transportation business. His father and mother sold their house and moved into an apartment to get the money to start the firm. "I didn't find out until after my dad died how skinny those first couple of years were," Tucker said.

During those early years, Tucker was off on his own adventure, serving in the Philippines as one of the nation's early Peace Corps volunteers.

Tucker had no thoughts of following his father into transportation. He came home to became an early-day computer whiz, going to Temple University nights to earn an MBA degree in information science. He was working as a computer consultant when his father died in 1971.

Unable to find a buyer for the company, Tucker wound up buying it himself, and going back to night school to study transportation.

The industry was still deeply regulated then. His father had built the business around his own expertise in moving heavy and oversized equipment, "things like huge turbines and water-purification systems for atomic energy plants­anything big and clumsy and ugly."

Ten years later, in the early 1980s, the rail and trucking industries were deregulated. Since then, the number of U.S. trucking companies has swelled from 27,000 to more than 80,000, creating vast new opportunities for 3PLs.

Tucker's has grown from a simple operation with handwritten orders and logs to sophisticated computers that quote rates in a flash, track shipments with precision, give drivers directions to pickup and delivery points, and monitor the performance of trucking firms.

Though he came into the transportation industry reluctantly, Tucker's now "hooked on it."

With letter-writing campaigns and testimony at public hearings, laced with words such as "balderdash," Tucker has emerged as one of the industry's most outspoken people. He has become a persistent critic of government regulation and of moves by big companies to control rates and reduce the number of freight haulers.

With the nation's annual freight-warehousing bill at $750 billion, Tucker said, "There is room for everybody. And the more opportunity you have for more people to serve, the more options shippers have, the more productivity you have."