251 National Freight Inc Brokerage Broering studied English literature at the University of Dayton, and he moved into transportation brokerage right out of college with CH Robinson. He remembers his transition to NFI. “NFI contacted me about a position, looking for a senior vice president,” Broering recalls. “I might have been too young at thirty-six, so I had to sell myself.” Once hired, his strategy on day one was to assess the business. Broering decided to recreate his model from CH Robertson and American Backhaulers, one he calls an “Antagonistic” Business Model. This model focuses on creating a marketplace through both supply and demand and involves a vested interest in maximizing the profit for the customer. Out of the 170,000 shipments the Brokerage division moved in 2016, no problems occurred for 95% of them. But on 5% of the shipments, despite being the vast exception, there were exceptions—the truck turned over, a shipment was missed, and so on. “In these cases, we solve the problems,” Broering says. “Oftentimes the customer never knows there was a problem. We are the solution and the comfort layer between the customer and the carrier. We advocate for both parties.” Brokerage employees perform 350 cold calls a week, and that number will continue to grow. The primary target customers are small to medium-sized businesses. The largest customers tend to care more about price, but smaller businesses don’t have the necessary people or simply want someone else to help manage the complexity of freight transport. That’s where NFI Brokerage comes in. The vertical industries NFI Brokerage is most heavily involved with are food and beverage, industrial, paper, consumer package goods, and electronics. Some customers come directly to NFI because of a bad experience they had with a carrier or a 3PL provider, while others are attracted by NFI’s positive reputation for excellent customer service—its attention to customers’ needs, commitment
252 Brokerage National Freight Inc to following through, and superior performance during execution. Another way that NFI Brokerage distinguishes itself is that often in the brokerage world the carriers get treated poorly, being viewed as a commodity to be used. At NFI, where all people are valued highly, the Brokerage division ensures that both parties (the customer with the goods and the carrier moving them) are treated like the customer. “Both are really our customers,” Broering says. “It’s a delicate balance but one we do very well.” The division’s success, Broering explains, comes from four places: “Great people, great culture, great organization, and great culture. Yes, I said culture twice. Our dedicated employees are what propel this business daily. Our employees come to work every day ready to give it their all. They work together as teams, finding the best solution for every load and every exception we encounter. This is our culture. This is what defines us.” This business goal to provide reliable execution and a high level of customer service is something average brokers do not provide. The dedication to that service in connection with the culture and teamwork of NFI’s Brokerage group are what continue to propel this division forward. “Whether it’s distribution, dedicated transportation, international logistics, or intermodal clients, Brokerage has the ability to help create a broader service offering for those clients,” says Broering. “We are looking forward to the future and all that it holds for NFI.” We are poised for change −− to develop the best practices to support the changing industry of transportation, and to ensure our customers are provided with excellence. −− David Broering, President, North America Non-Assets
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WE ARE OPPORTUNISTIC REGARDING KEY STRATEGIC LAND ACQUISITIONS THAT BENEFIT OUR EXISTING AND POTENTIAL CUSTOMERS. WE WILL CONTINUE TO SUPPORT THE STRATEGIC GROWTH OF NFI DISTRIBUTION CENTERS THROUGHOUT NORTH AMERICA AND POTENTIALLY IN OTHER GLOBAL MARKETS. —— Jeff Brown
255 National Freight Inc Real Estate CHAPTER 36 Real Estate NFI is in the real estate industry because it owns some of its terminals and one-third of its warehouse space. But NFI Real Estate has blossomed into a development company, building third party warehouses, office buildings, and other structures for its customers. The division built on a foundation laid by Bernard Brown’s penchant for buying properties. Dan Folcher, Vice President of Real Estate, remembers the early days: “Bernard Brown had over a hundred properties ranging from warehouses, to terminals, to stores in Vineland. He operated his real estate entities as Vineland Construction Company and owned all the real estate. He rented the properties back to NFI as the landlord and served as the property manager.” Folcher recalls how Bernard would frequently return from trips with the comment, “I just bought a property there.” He would then sell it off a few years later at a profit. This happened frequently, in multiple states, but Bernard was never casual about buying. He studied all aspects of each property thoroughly and considered the ramifications of the purchase and the likelihood of a profit. One of his key strategies was to buy as much contiguous property as he could, advice he passed along to his sons as one part of a general strategy for growth. They needed to grow the business, he told them, or it wouldn’t survive. “He was extremely thorough and cordial,” Folcher says, remembering his job interview with Bernard. “He put you at ease and was enjoyable to talk with. He offered me the job after the second interview, but we still had a few other talks after that. He told me, ‘Well, you going to take the offer or not?’ I didn’t know there was an offer.”
256 Real Estate National Freight Inc Michael Landsburg, Vice President of Real Estate, likewise remembers conversations with Bernard, particularly one that took place after Michael’s first six months on the job. “He called me up, and he said, ‘Michael, you’ve been here for six months and you haven’t made a mistake. If you’re not making mistakes, then you should be making mistakes. We want you to make mistakes and learn from them.’” In addition to being willing to make mistakes as one tried new things, Bernard had more specific strategies when it came to real estate. For example, if a neighboring property comes up for sale, buy it. Do your due diligence, and make real estate purchases strategically. In the late 1970s, New Jersey took on the gambling industry in Atlantic City, and the state purchased a building there in order to retrofit it to serve the Gambling Enforcement Agency. Bernard later acquired this property. Then in 1987, just prior to when Folcher came on board, Bernard negotiated six contracts with the State of New Jersey for facilities for the New Jersey State Police that included offices and housing. Over the years, the company’s real estate holdings gradually grew. Bernard was in charge of the real estate operations until the mid-1990s, when the time came for Sid to step in. SID TAKES THE WHEEL Sid’s approach to real estate was different than his father’s. For one thing, Sid employed a more technological approach in running the business. Bernard did have computers, but Sid was the driving force in updating the technology to current standards. Also, Bernard was much more hands-on, while Sid provided less oversight and more flexibility. If an assignment was given, he was interested in the result, not the nuts and bolts of how it was accomplished like Bernard was. In the mid-1990s, Sid also went into commercial business development with shopping centers. From 1997–2004 he developed four major shopping strip centers with clients such as Wal-Mart and other major food chains, mostly in Pennsylvania and New Jersey. The strategy was first to find an anchor tenant, then build, then find other brick and mortar tenants. Sid had a marketing arm whose job was to find other tenants. These properties were then sold at a healthy profit. Most of the real estate was for NFI warehousing operations. Jeff also did work to develop this business, as did Ike, who was instrumental in the acquisition of property in California. In the years leading up to the economic collapse of 2008, NFI bought vast tracts of real estate for its planned expansion into additional warehousing and distribution. Until this time, the majority of NFI real estate was for customers’ warehousing needs as a third party logistics provider. Despite the tight real estate market in the early to mid-2000s, NFI assembled a massive tract of raw land around Florence Park, New Jersey, from 2003 to 2008, betting on the company’s continued warehousing expansion. This was a gamble—they were “betting on the come,” as they say in poker—positioning themselves for future business not yet arrived. NFI’s sights were set on Kimberly Clark in 2007, which would provide a major customer that could utilize the purchased real estate. Negotiations started, and things looked promising, but Kimberly Clark eventually declined, deciding they did not want the operator, NFI, to be the landlord, as they thought they would lose flexibility and leverage. Williams Sonoma was approached to make use of the land, and they loved the NFI concept, but from an HR perspective the location was too far away for their employees. Making matters worse, the country’s financial infrastructure took a heavy blow with the economic collapse of 2008. NFI had cash in the ground, but there was no immediate way to use it. These were tough times, and the fear was that the sites would never prove profitable or even usable.
257 National Freight Inc Real Estate JEFF LEADS REAL ESTATE J eff took the helm of NFI Real Estate in 2008, and although it was obviously a precarious time, he viewed the delicate situation as a new opportunity. He had confidence that his talents in sales could turn that huge swath of idle dirt in Florence Park into a profitable distribution center… if only he could secure a large customer. Jeff got to work. With the state of the economy, and many companies struggling just to survive, much less expand, it took some time. An official Real Estate division was created in 2010. And then in 2012 Jeff landed Subaru for the Florence Park location. The tipping-point component of this winning strategy was that NFI offered to move Subaru at no charge using NFI trucks—a key differentiator for NFI. Subaru’s facility was later expanded to 700,000 square feet. Soon after that, NFI secured a small piece of business with Five Below—to store old Halloween inventory until the next Halloween season. Although not a major account initially, it was a proven strategy by this point: get NFI’s foot in the door, and once the company’s teams had a chance to impress the customer, more business would follow. Jeff found out later that Five Below’s existing distribution center in New Castle, Delaware, was only eleven miles from NFI’s Pedricktown site. Now that a strong relationship was established, Jeff worked with them on a plan to build a new distribution center, and his engineering team developed a proposal to build it in the most optimal location. The team selected NFI’s Pedricktown location because the people at Five Below wanted to retain the majority of their work force. It made sense and served the best interests of everyone involved, a sure sign of a good deal. Florence Park continued to serve more customers with the additions of Express Scripts, Quality Packaging Specialists International, and Oki Electric Industry. Following the partnership with Five Below, NFI began talks We have built up a unique expertise in both land acquisition and development. −− Jeff Brown, President NFI Real Estate Future NFI headquarters, Camden, New Jersey
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259 National Freight Inc Real Estate with Rent-a-Center (RAC), which was looking to reconfigure its supply chain. RAC wanted to provide better service to its 3,000+ retail locations. The company was growing through acquisition and lacked visibility within its supply chain, and the leadership wanted a single provider that could revamp their network. NFI faced competition from Penske, Ryder, New Breed, JB Hunt, OHL, Kuehne + Nagel, and Genco—but NFI won the business due to its engineered comprehensive solutions, ability to seamlessly execute multiple services, and real estate capabilities. Chino, California campus Chino, California
260 Real Estate National Freight Inc “NFI is a proven organization and one we have a lot of confidence in,” said Robert Davis, former CEO, Rent-A-Center. “Leveraging a third-party expert like NFI is a big win in our whole transformation process.” At the time, RAC had limited control of inventory delivery timing to its retail locations. Delivery windows were set by suppliers and required lead times of up to six weeks. RAC was purchasing inventory in smaller quantities, causing supply chain costs to be very expensive, in addition to suppliers handling logistics. To address this situation, within five months NFI delivered an integrated supply chain solution consisting of dedicated fleets, five strategically located distribution centers (in Texas, Georgia, California, Ohio, and New Jersey), and transportation management. NFI provided single source visibility to all transportation and warehousing data. As a result of these efforts, RAC quickly estimated an annual supply chain cost savings of $40 million. Additionally, delivery windows to RAC retail locations were reduced from six weeks to a few days. “We knew by selecting NFI in this process, they would help us avoid some of the missteps we might not see coming,” said Jonathan Parks, VP Logistics/Distribution, RAC. “So, when we selected NFI, we were confident they would be nimble, reactive, and flexible to our business needs.” Another large real estate deal during this period was NFI’s new relationship with Aryzta, a global leader in the specialty frozen bakery sector. Trader Joe’s decided to build its own distribution center, vacating a large NFI distribution center in Bolingbrook, Illinois, and Jeff saw this as an opportunity to meet the needs of a new customer. Jeff and his team went to work quickly and soon landed Aryzta on a fifteen-year lease, replacing the Trader Joe’s revenue with a longer-term deal. Yet another major win occurred with a substantial expansion of NFI’s business with Five Below. Using NFI’s skilled engineering resources, they developed a plan whereby NFI agreed to build a facility of one million square feet, based on
261 National Freight Inc Real Estate Five Below’s five-year plan. Five Below would take space for 600,000 square feet—their present needs—and NFI agreed to build an additional 400,000 square feet to meet their five-year plan. This plan ensured the flexibility their customer needed and exhibited the partnering risk NFI was willing to take, demonstrating once again what a true partner does. Tom Vellios, CEO of Five Below, commented: “This has been a great partnership. We see them as an extension of the Five Below family, more than just a partner.” Gene Rosadino, SVP Supply Chain for Five Below, agreed: “The added benefit to Five Below was working with a partner, NFI, that we had a lot of confidence in.” These significant successes with large customers fed the operations side of the business and allowed the teams to further leverage NFI’s expertise. Others took notice, and many more deals followed, leading to new relationships and opportunities across NFI’s array of service offerings. Jeff Brown feels strongly that this dedication to meeting a customer’s needs—which secures large projects from major clients—is the right approach, and it serves the needs of the entire company. “From my perspective, these big projects not only benefit NFI Real Estate, but they’re also beneficial to NFI as a whole. Whether it’s a truck terminal or a warehouse, we go to great lengths to find the amenities that will best meet the needs of our customers.” In 2007, 90 percent of NFI real estate revenue was from intra-company warehousing needs. Ten years later, in 2017, internal NFI operations needs account for only 30 percent of the revenue. The business is profitable and a standalone growth engine for NFI, and Jeff continues to lead NFI Real Estate to greater heights. Over the next five years, the plan is for NFI Real Estate to continue to maximize its existing portfolio, consider new opportunities, and build up the pipeline of upcoming projects. “Overall, our pipeline is strong, and we have high hopes for the future,” Jeff says. “NFI Real Estate will continue to strengthen its internal structure to further support the needs of NFI as we continue to grow.” Enesco warehouse in Lebanon, Indiana
262 Real Estate National Freight Inc Subaru
263 National Freight Inc Real Estate Rendering of new Camden, New Jersey headquarters
265 National Freight Inc On the Cutting Edge: Technology Upgrades CHAPTER 37 On the Cutting Edge: Technology Upgrades Many aspects of NFI have remained steadfast through the years, such as its core values, professionalism, and family-led stewardship. As the years have passed, these aspects have matured with time but have not fundamentally changed. Technology, thankfully, is not cut from the same cloth—every year, NFI reconsiders how it can update and employ this powerful tool most effectively. New advancements continually appear with the potential to improve operations or allow NFI to deliver an even higher-quality service to its customers. With each development, NFI leadership must decide whether it is worth the cost and effort to upgrade. In many cases, the answer is a resounding ‘yes.’ The relevant teams must then evaluate all possible options and select the technology that best serves the company and its customers’ needs. ‘High-tech’ or ‘cutting edge’ did not always describe the company, of course. Gary Galati remembers a key punch system back in 1971, in which employees punched in information for the end of week report, and the system as a whole was less than perfect. “We looked for trailers that were dormant, no revenue generated by that trailer,” he says. “We would then look at the old trailers without activity. Then take the ten oldest… five to six months without activity… and find them. Almost always they were at the customer where they delivered the goods. We forgot to go get it, and the terminal manager didn’t know
266 On the Cutting Edge: Technology Upgrades National Freight Inc about it. The customers might be storing materials on it or using it for some other reason, and our person would have to drive to the yard and check into it to get it back.” This kind of system lacked the efficiency offered by later electronic systems that could track every unit at every moment of the day. Although the company’s systems have been gradually updated and improved many times over the years, the big shift occurred in 1990 when everything was computerized. At the time, computer skills in the industry were not exactly common. “I became a special projects guy,” David Austin recalls. “I was handling sharp shooting for the implementation of the new systems, primarily because I could type.” Computerization, although it presented a steep learning curve, eventually offered huge gains in productivity and efficiency across the company, impacting everything from dispatch to billing. For many years, a relatively uncomplicated software system met the needs of the company, sufficiently coordinating business deals that were themselves mostly simple. As the company grew and evolved, and as its business operations grew increasingly complex to offer customers an array of services, the software needed to address these operations had to upgrade as well. Optimum technology would not only provide a competitive advantage, but would align all systems for future growth. Therefore, NFI began embarking on a multi-year initiative to review and upgrade its operating platform and technology solutions, in order to create the best 3PL solutions available. In 2012 the company used thirteen operating systems to support its business—six Transportation Management Systems (TMS) and seven Warehouse Management Systems (WMS) for Distribution. This multitude of systems was proving unwieldy and ineffective. “The need is to consolidate these systems down to a single operating platform for each of the business units,” Scott Benton, former CIO, wrote at the time. “This will allow NFI to standardize and streamline processes across all operations. After consolidating these primary operating systems, NFI will be able to identify and execute operations synergies across all customers much more efficiently than we can now.” This multi-year initiative began the year before with NFI’s TMS. It was determined that an “Enterprise Solution” for Transportation Management—by which everything is managed and executed using a single program—was the answer to many of the challenges presented by the need to coordinate numerous complex moving parts. The new system needed to be flexible enough to work for all of the transportation services that NFI provides, and the Enterprise Solution needed to automate as many items as possible, providing a unified and more efficient way of doing business. This would allow Dedicated Fleet, Transportation Management, Brokerage, Freight Forwarding / Global, Intermodal, and Cross-Dock to be managed in one system with a focus on functionality and enhancement. The cross functional team went through an exhaustive process to determine the current and future transportation technology requirements. They identified the system that best met NFI’s needs: TMW, an industry leading transportation management provider with existing partners across the globe, including North America, Europe, Asia, and Latin America. TMW was selected because its software and services help companies take better advantage of market opportunities, improve asset productivity, and gain a better return on information. Its applications for NFI were nearly endless—a sampling of its functionalities following roll-out include Order Entry, Dispatch, Qualcomm Communication, Rating, Dedicated Billing, Settlements Processing, Imaging, Reporting, Accounting Interfaces, and Driver Payroll Interfaces. Dedicated and non-dedicated resources from IT, Operations, Finance, HR, and Fleet Services worked together
267 National Freight Inc On the Cutting Edge: Technology Upgrades to ensure a seamless transition. “TMW is a state-of-the-art transportation management system,” said David Fledderman, Sr., Operations Support Manager. “It organizes transportation operations by automating the workflow. This technology will help NFI make the most out of available capacity while bringing workflow automation and business intelligence to logistics operations and fleet management.” With the TMS initiative on track, it was time for NFI to turn to its warehouse management system (WMS). A similar process was undertaken to identify the best system to meet the company’s distribution needs. A team of key IT, Engineering, and Operations resources selected the new WMS, which was offered by Manhattan Associates. This new WMS Fleet Operations, Cherry Hill, New Jersey was phased in, and together with the new TMS, these systems also created the foundation for other new technologies: business intelligence, event management, mobile computing, and dashboards, just to name a few. Taken together, all of these upgrades allowed NFI to be on a strategic platform that supported future growth. At every turn, NFI strives to meet or exceed its customers’ expectations, both internal and external. This value of customer service is certainly one motivator that is driving all of these technology initiatives. While they require significant capital and resources investment, they are essential to ensure NFI has the most advanced technology in place to keep up with the company’s growth and its customers’ needs.
268 On the Cutting Edge: Technology Upgrades National Freight Inc NFI JOINS THE WORLD OF E-COMMERCE E-commerce is quickly becoming the most popular way to buy and sell goods to a large, widespread customer base. With online retailers like Amazon.com and Alibaba, merchandise is available to be purchased on a global scale, and shopping is convenient with websites running twenty-four hours a day. This huge change in the way goods are being sold means a lot to logistics, transportation, and distribution companies like NFI. Initially a worrying task for most third-party logistics providers, NFI threw all e-commerce doubt aside in 2014 when taking on the challenge of managing operations for the biggest e-retailer in North America, Amazon. NFI completed two start-up facilities for Amazon in a six-week time frame during the summer of 2014. The distribution centers, located in Orlando, Florida, and Kutztown, Pennsylvania, handle inbound warehousing and the outbound shipment of non-conveyable products. The non-conveyable products that NFI distributes on behalf of Amazon are large or unusually shaped items that don’t fit in a typical sized box and cannot be put on an automated sortation system. Some examples of non-conveyable items include ladders, hot tubs, furniture, shovels, or home improvement supplies like bathroom fixtures or building materials. The storage and handling of these types of items is not a core competency of Amazon, who excel at storing and shipping smaller, easily conveyed packages. NFI has the experience and talent in managing distribution centers for these large items that need to be moved with pallet jacks and forklifts. The main challenge of distributing non-conveyable items is the complexity and diversity of the products. When so many different items are being stored, racking needs to change to fit products, and outgoing orders need to be analyzed to find out what the best way to ship them is. NFI works closely with Amazon when there is a need to reconfigure. With experience outside the world of e-commerce, NFI can be flexible with adapting new modifications. Teamwork from cross-functional groups was also crucial for these start-ups. With hands-on representatives from IT, HR, Loss Prevention, Engineering, and Operations working together, the project had a core group of decision makers driving each process. Each representative involved was enthusiastic, committed, and knowledgeable about the business. These start-up teams determined what the processes should be and then actually went into the field to implement them with their colleagues. NFI prides itself on a continuous improvement focus. When we began work in e-commerce, we knew that this piece of strategy would be crucial to our success in an area that is quickly evolving. The implementation of the Manhattan system, a warehouse management system (WMS) being used at both Amazon locations, helped NFI maintain a high-level of excellence. With this new WMS all orders are fulfilled efficiently and strategically. Jodi Lavender, the General Manager for NFI’s Amazon operation in Orlando, has a great analogy for how NFI has kick-started e-commerce operations. “It’s like taking that first dive into a pool after a long winter,” he says. NFI was prepared for the jump, and made the leap. Hitting the water was cold, but once we made it in the pool, it felt comfortable. NFI took on e-commerce headfirst this year, and we’re proud to say that moving forward, we’re up for the challenge.
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JUST LIKE ANY GREAT SPORTS TEAM OR BUSINESS, WE WILL CONTINUE TO TWEAK OUR STRATEGY AND ADJUST TO THE CHANGING ENVIRONMENT. —— Sid Brown, CEO
271 National Freight Inc More than a Tactic: Strategy CHAPTER 38 More than a Tactic: Strategy F or the Brown family, strategy is more than a calculated approach to making money or smoothly running business operations. Strategy isn’t just the latest fad, a new corporate buzzword, or the bandwagon every other company seems to be jumping on. It means more than a clever tactic. At NFI, strategy is an intentional approach to doing business in a way that honors, reinforces, and daily lives out the core principles that drive the company. NFI’s four strategic pillars define this company and differentiate it from the competition. These four areas highlight NFI’s strategy and represent the priorities that all NFI employees need to focus on to maintain, improve, and grow this customer-centric business. “Organizations without a strategy often lose their competitive advantage. With a clearly defined strategy, we at NFI can prioritize how we invest our time and money, highlight characteristics that differentiate us from our competition, and, most importantly, focus on how we can best serve our customers.” Sid stresses the importance of communicating NFI’s strategy and principles to everyone in the organization so that all NFI employees can pull in the same direction and support the strategy that is going to fuel the company’s success going forward. He also points out that this concerted effort to highlight NFI’s strategy fosters a recognition of all the ways that talented NFI associates already embody the strategy and live it out every day.
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273 National Freight Inc More than a Tactic: Strategy The foundation of NFI’s strategy is built on four main pillars, which all revolve around the customer (both internal and external). As Sid Brown points out, “The reasoning for customer focus is simple: if we do not listen and adapt to our customer’s needs, they will choose another provider. Whether you are a forklift operator, driver, customer service rep, or accountant, we need to think about the customer in everything we do. By listening to our customers, we will understand their complex issues, and in turn come up with creative solutions to solve problems. These solutions will spur our growth and drive our success.” PILLAR 1: CUSTOMER INTIMACY The first part of NFI’s strategy is to grow its business by fostering enduring customer relationships, which will thrive upon NFI’s willingness to respond to the customer’s complex challenges in an efficient, customer friendly, and entrepreneurial way. This investment is gladly made in exchange for long-term customer commitment. By being close to the customer, developing a complete understanding of their supply chain needs, and responding quickly, NFI is able to create new opportunities with its partners. NFI employees are asked: How well do you know your internal or external customer? Do you create a feeling of trust and partnership with them? Do you know what your customer’s pain points are? NFI employees focus on customer intimacy by treating customers with care and respect; developing deep relationships with customers that foster trust and open dialogue; creating a sense of camaraderie by responding quickly to customer needs; focusing on integrated solutions to complex business problems; promoting an ease of doing business with NFI; and adding value to operations by working closely with other teams to efficiently serve the external customer. PILLAR 2: END-TO-END CAPABILITIES The second part of NFI’s strategy is to continue expanding its service offerings to its customers, enhancing cross-selling opportunities, and offering extensive end-to-end capabilities where customers can pick and choose services that best meet their goals and requirements. “We will not be everything to everybody, but we will have a suite of services to meet our customer demands,” Jeff Brown says. “Our expansion into the non-asset business can be seen as a reflection of this.” NFI has the capability to perform multiple services for its customers. NFI employees are encouraged to take the time to get to know all of NFI’s capabilities, and then to make connections that will lead to more of a customer’s needs being met. If a customer has variable transportation capacity needs, this means connecting them with the U.S. or Canadian brokerage team. If a warehousing customer is looking to build additional space, it means reaching out to the real estate team. When a customer has international shipping needs, is storing goods abroad, or is bringing containers to the U.S. or Canada, the global teams should be contacted. By fostering these relationships and contact points, NFI will better serve its customers and will continue to grow in the process.
274 More than a Tactic: Strategy National Freight Inc PILLAR 3: ENGINEERED SOLUTIONS The third part of NFI’s strategy is to provide consultative-engineered solutions by addressing more than the specific problem that the customer presents. These solutions prove NFI’s value to its customers and differentiate NFI from those that sell a standard service. “By looking at issues differently, NFI is able to further establish itself as a trusted partner and a go-to problem solver,” Sid Brown says. For NFI, this means investing in enhanced engineered solution teams, evaluating and redesigning facilities and transportation networks, integrating solutions across service offerings, and identifying improvement and collaboration opportunities. NFI works with customers to come up with creative, individualized supply chain solutions that can help them save money and optimize operations. By providing supply chain analyses, special solutions can be developed to improve productivity or add value to the customer. NFI employees are asked: Do you have a creative solution in mind that can solve an operational problem? How can we re-engineer operations to increase customer satisfaction? How can we collaborate with other business lines to identify a solution that addresses more than just the problem at hand? How can we work with customers to reconfigure current processes to be more efficient and sustainable? NFI is at its best when the company can cross-over solutions and collaborate with the customer. By proposing new, creative ideas that can improve productivity and customer satisfaction, and by being proactive when customer needs come up, NFI will continue to engineer unique and powerful solutions for its customers. PILLAR 4: CONTINUOUS IMPROVEMENT The fourth part of NFI’s strategy is to create a culture of continuous improvement throughout the organization in order to be efficient and competitive in the marketplace. This focus on finding what is valuable to customers and eliminating waste helps NFI to be better organized, more fiscally responsible, and better time managers. “Continuous improvement is an attitude and way of thinking that there is always a better and more efficient way to get things done,” Ike Brown says. “We do not accept the status quo—we are change agents.” NFI employees are asked: Do your tasks add value your customer? What have you done today to improve your daily processes? Is there a more efficient way of getting your job done? As part of their commitment to apply continuous improvement on a daily basis, NFI employees identify tasks in their day that can be improved with some changes; redefine their work processes to prevent errors; create a plan for the week to ensure all expectations are being met; and organize their workspaces to help productivity. By engraining continuous improvement into not just a strategy but the company culture as a whole, NFI continues to push itself to loftier heights.
275 National Freight Inc More than a Tactic: Strategy THE INVESTMENT WITH THE GREATEST RETURN This culture and these strategies have always been present at NFI, but in 2014, the company’s leadership made the decision to be proactive and intentional about ensuring they pervaded the organization from top to bottom and were communicated clearly to every person in the ranks. “In 2014 we took a step back,” says Steve Grabell, CFO. “This was our investment year. We invested in new customer engagements, in local systems, and in global systems. We took a risk in paying for these investments, and it paid off.” One of the company’s biggest investments in 2014 involved the creation of a performance excellence program, one that invested in NFI’s greatest asset: its people. “We were strategic to create a culture of continuous improvement in which everyone had the tools and desire to advance. Now there were no excuses.” Grabell and others reviewed NFI’s operations, talked with customers to get their input, hired specialists to fine-tune the focus, and implemented the tools needed to further enhance the organization and its culture. Like any sound investment, they calculated the cost and the potential return; when they quantified the ROI, they anticipated an impressive 3:1 return. If they invested $100,000, they could expect a cost savings of $300,000 in the first year. It was clearly the best way forward. “The old way was ‘my way or the highway,’” says Grabell. “No one knew any different or saw there was a better way. But now everyone can rally around this new strategy because things are done right. We’re hiring the right talent for the right job for the future. We’re finding big picture thinkers, and we’re enhancing the entrepreneurial spirit throughout our ranks. As we demonstrate success, people get excited. They are catching the vision.” On NFI’s “Strategy Wheel,” the four pillars surround the key component—the customer—and are themselves encircled by five important traits: Entrepreneurial, Talented, Motivated, Empowered, and Passionate. The overall strategy is intended to address growth, costs, complexity, and innovation. If asked what truly differentiates NFI, even with its robust strategy, Sid responds: “It is our people. That is why our framework is encircled with personal traits of NFI employees. We are proud to have the most talented, motivated, passionate, empowered, and entrepreneurial employees.” These employees work together to provide the best services for NFI’s customers. Whether a forklift operator, truck driver, mechanic, or office employee, these employees’ contributions to NFI’s strategy will ensure ongoing success for themselves, NFI, and its customers. “We take great pride in encouraging our associates to run this business like it is their own,” Sid says. “We have a culture that empowers our managers to make decisions, ownership that continues to invest and reinvent the business, and leadership that is fully vested in our success.”
277 National Freight Inc Ever Growing: NFI Acquires CalCartage CHAPTER 39 Ever Growing: NFI Acquires CalCartage I n October 2017, a new chapter began for NFI with the consummation of a transformative deal that is propelling the company into its next phase of growth. This deal builds upon decades of business development and the creation of a highly respected and successful organization, one capable of operating competitively at the very pinnacle of its industry. With this new step, NFI has become the largest family-owned, vertically integrated 3PL in North America with top ten service offerings in dedicated transportation, distribution, and drayage. On October 2, 2017, NFI announced the acquisition of California Cartage (CalCartage) and its affiliated companies. CalCartage, headquartered in Long Beach, California, is the premier US port logistics provider and one of the largest port services providers in North America, serving many of the biggest companies on the continent. Founded in California in 1944 by the Curry family and remaining privately held, the company has operated at the country’s busiest ports for more than seventy years, including Savannah, Charleston, Norfolk, Houston, Seattle, Oakland, Chicago, and others. Many leading retailers, manufacturers, and steamship lines rely on CalCartage to provide best-in-class port and distribution services. At the same time, CalCartage has grown into the largest drayage and transloading operator in the ports of Los Angeles and Long Beach, California. In addition to drayage and port services, its capabilities include warehousing and distribution, customs examination, and brokerage. The agreement between CalCartage and NFI had its roots in a relationship between the Brown family and the Curry family that dates back decades ago. CalCartage’s COO, Luke Lynch, likewise had a relationship with the Brown family, and in early 2017 he spoke with Ike Brown to gauge NFI’s interest in acquiring CalCartage. Ike found out that, for some time, the Curry family, headed by CalCartage’s founder Bob Curry Sr., had been considering whether to sell the company. They had been holding discussions with three generations of family members involved in CalCartage, and they came to an agreement to investigate the possibility of finding an appropriate and beneficial partner. The search began, and NFI was at the very top of the list, so Luke reached out. Ike Brown, Sid Brown, and TJ Lynch flew out to visit with Luke to discuss the potential. They also spoke with Bob Curry, the family patriarch, owner, and chairman of CalCartage. Bob made his intentions very clear by telling the Browns, “Look, I’m very selective about whom I might sell to, and it’s not going to be just any company. I’ve heard good things about NFI—your culture, your people, and your ability to serve your customers so well. So, if you are interested, we’ll open up the books. Then make me an offer. If you hit the mark, we’ll move forward.” Bob Curry revealed that he was most concerned about his people and how they would be
278 Ever Growing: NFI Acquires CalCartage National Freight Inc treated after the acquisition. He was quickly reassured that they would be well taken care of. The lengthy due diligence began—a thorough review of the financials, sites, people, processes, operations, laws, and culture fit. When all of this was concluded, it was apparent that the acquisition would be beneficial for both companies. NFI proposed a figure that hit the mark, and Bob Curry and the CalCartage team accepted. Then both companies worked to finalize the acquisition. “NFI is a perfect cultural fit for the CalCartage family and is why we sought them out since the beginning,” said Bob Curry. “Our people have built up this company over its long history, and NFI is an ideal organization to grow with and provide more opportunities for our employees, independent contractor partners, and customers.” NFI was likewise impressed with everything that they saw from CalCartage. TJ Lynch commented, “Systems integration with CalCartage is not a big concern. CalCartage is a highly efficient organization that runs extremely well. This opportunity is all about growth.”
279 National Freight Inc Ever Growing: NFI Acquires CalCartage at a new level to our blue chip customer base.” The instant growth this acquisition affords is substantial, as it expands NFI’s North American distribution footprint to 41.5 million square feet, a portfolio comprised of warehousing, e-commerce, automated, cross-dock, transloading, and customs examination facilities. As well, NFI’s dedicated transportation and drayage network is boosted to almost 4,000 tractors and its brokerage and transportation management capacity expands to nearly 30,000 carrier partners. With CalCartage’s expertise, NFI can deliver increased specialization in the retail, e-commerce, footwear, and apparel sectors. The CalCartage group will continue to operate as a separate division of NFI, and the company’s longtime chief operating officer, Luke Lynch, will lead it. Members of the multi-generational Curry family are still involved and excited about the future with the combined companies. Meanwhile, the former owner, Bob Curry Sr., will retire at the age of eighty-six after a long and distinguished career, entrusting one family business to another. At present, NFI now employs nearly 10,000 associates throughout its more than 250 offices, warehouses, and transportation locations. With ongoing determination to expand its service offerings to better meet customer needs, NFI stays true to the principles the company was founded on. This addition of CalCartage further reinforces NFI’s position as a best-in-class provider of global supply chain solutions. A SUPPLY CHAIN POWERHOUSE “ Ports are a critical part of the supply chain,” Sid Brown said. “This positions us as one of the largest players in the market going forward.” “Since CalCartage was not a direct competitor, and their company had capabilities that NFI did not, it made sense to join companies to expand both companies’ capabilities into each other’s markets and customers,” added TJ Lynch. As one of its business strategies, NFI looks to buy companies that have different services from NFI and then provide these services to NFI’s customers. The acquisition of CalCartage provides particularly effective strategic alignment. For example, the deal gives NFI access to knowledge and systems that can be put to use in the company’s warehouses, automating processes to provide e-commerce fulfillment services for major retailers. NFI’s revenue prior to the acquisition was an impressive $1.3 billion. However, by bringing together these two well-respected industry veterans, the combined company is expected to generate approximately $2 billion in annual revenue in 2018. With the acquisition of CalCartage, NFI expands its port drayage, transloading, deconsolidation, customs examination, and warehousing solutions. Now possessing a significant presence at nearly every major US port, the acquisition enables NFI to service shippers in the seamless transition of goods from import to port to final destination in North America. “I am excited to welcome CalCartage’s employees and customers to our NFI family,” said Sid Brown. “Together, we will expand our capabilities, better connect our domestic and international platforms, and create true end-to-end solutions. With our employees’ collective expertise and shared commitment to exceptional customer service, NFI becomes a supply chain powerhouse that can deliver value Ports are a critical part of the supply chain. This positions us as one of the largest players in the market. −− Sid Brown
WE HAVE EMPLOYEES WHO TREAT THIS COMPANY LIKE IT’S THEIR OWN AND EXHIBIT AN ENTREPRENEURIAL SPIRIT, ONE THAT KEEPS THE CUSTOMER’S SUCCESS IN MIND…. THEY BLEED BLUE. —— Jeff Brown
281 National Freight Inc The Present: A Legacy to Be Continued CHAPTER 40 The Present: A Legacy to Be Continued F rom 2010 to 2016, a solid 80 percent of the company was effectively recreated, and NFI services spread worldwide. From 2001 to 2016, revenue increased an astounding twelve times over, from $100 million to $1.3 billion: $500 million from asset-based trucking, $300 million from non-asset based, and $500 million from warehousing and distribution. The fleet’s tractors more than doubled from 900 to 2,300, while its number of trailers rose from 2,700 to 7,000. The number of NFI employees grew by a multiple of five, rising from 1,500 to 8,100. Today, NFI maintains a strong culture, has outstanding leadership, is financially on solid ground, and owns a long history of success on which to build upon and expand. The future promises to be exceedingly bright for NFI. Now, the challenge is to keep the momentum going. Sidney Brown, reflecting on the current state of affairs, Some companies can do what we do, but no company has the people, the reach, the entrepreneurial spirit and innovative passion that we do. −− Sid Brown says that he is pleased with “who we are and who we have become. Some companies can do what we do, but no company has the people, the reach, the entrepreneurial spirit and innovative passion that we do.” The success of any enterprise is only as strong as the character and diligence of its people, and if there has been a consistent theme throughout this story, it’s that NFI has built its business and reputation around talented and dedicated employees who passionately respond to their customers’ needs as only they can. For example, rather than focusing on short-term returns, NFI prioritizes long-term relationships with customers and vendors by being flexible to their needs. Because of this, it’s clear that the sky is the limit for NFI, and it all can be traced back to the core of the company… one that will certainly be preserved and carried on.
282 The Present: A Legacy to Be Continued National Freight Inc AT THE CORE F rom a single truck, the Browns’ family-owned business has become one of the top five family-owned 3PL companies in the nation and also one of the fastest growing. And it is only going to continue to expand. This growth is not the result of self-centered actions, greed, or even an inward focus. If that had been at the company’s core, it would have collapsed long ago. Instead, the family’s business has thrived because of its focus on continuously finding ways to do more for the people it serves. As the leadership team likes to say, “The only inherent value of our company is when we continuously add more value to our customers.” This outward focus—asking, “What can I do for others?”— is at the heart of the company’s culture, and there’s no better representation than NFI’s “Bleed Blue Award.” One year it was given to an employee who had cancer and wanted to continue working while in treatment, ultimately missing only a few days and keeping a positive mental attitude while serving his customers. What a powerful message to his customers that they mattered—and that, whatever the situation, the future should be faced with courage, commitment, and optimism. Of course, a hearty dose of business acumen is needed, as well. And Ike, Sid, and Jeff received a solid foundation in these from Bernard as they were growing up. “Our relationship with our father was more about business fundamentals than about catching a baseball or throwing a football,” Jeff reflects. Jeff remembers how Bernard was out the door by 7:30 a.m., while his mother raised him and his siblings. Bernard would return home at 6:00 and they would all eat dinner as a family. “At dinner, it was always about what was going on with the business,” Jeff says. “The business was all-encompassing.” The family business may have dominated Bernard’s relationship with his children, but it prepared them well for their years at the helm of NFI—a responsibility that Ike, Sid, and Jeff take very seriously to this day, but also enjoy immensely. “Here’s why I love this job so much,” Jeff says. “We do business with so many companies that we get to work with a diversified customer base, in a plethora of industries, and we help solve their problems. You never get bored with one customer, one industry, one problem.” The Browns, and every employee at NFI, realize that this makes a significant difference in the world… one industry, one company, and one person at a time. This is what NFI’s impact amounts to on the global stage, and this encapsulates the family legacy of which the Browns are rightfully proud. “We help companies adapt in rapidly changing environments,” Jeff Brown says. “And solving problems effectuates real change.” As the years and miles roll by, one thing is sure—NFI will continue to add to this legacy, honoring its past and preserving its core, while making a difference in the lives of countless people along the way.
283 National Freight Inc The Present: A Legacy to Be Continued
WE ARE ENORMOUSLY CONFIDENT IN OUR COMPANY’S FUTURE, AND PROUD OF THE CHARACTER OF OUR PEOPLE. WE HAVE GROWN AND MATURED, DEVELOPED BEST PRACTICES, AND ADVANCED NFI ON ALL FRONTS. OUR FUTURE POTENTIAL IS UNLIMITED. —— Ike, Sidney, and Jeff Brown
285 National Freight Inc Conclusion: Looking to the Future CHAPTER 41 Conclusion: Looking to the Future Every chapter of NFI’s history is tied together by the central theme of doing what is right for its employees and customers. That was the story when NFI started; now three generations later, the Brown family, along with a strong group of managers and employees, have just begun writing the latest chapter. Their story is one that will surely continue for years as the company surpasses one milestone after another. The company’s vision for the future is to take NFI’s proven template for success in the United States and Canada and continue to expand globally with strategic partners in Asia, Europe, and South America. There are no guarantees for continued success in the years to come, but what the stakeholders and customers can count on is that the company will be forward-looking, continue developing innovative solutions, adapt to change in a timely and responsive manner, and seek to excel through continuous, aggressive improvements. Now and in the future, NFI will be known for its leading-edge, customized solutions and world-class customer service. The effectiveness of its operating principles and the value of delivering a single point of contact to its customers will continue to make NFI the go-to provider, and its customers will gain a competitive advantage from a transparent supply chain that strives to be frictionless. NFI’s leadership intends to keep the company on the vanguard of responsible growth by continuing to develop its employees, expand its service lines, advance key business components, and pioneer industrychanging technology and processes. NFI’s EODB (Ease Of Doing Business) system will continue to create tailored solutions for its customers’ ever-evolving business models. The company will deliver real-time visibility and trackability of its clients’ products as they move through the supply chain. NFI’s unwavering commitment to supply chain excellence will be executed by talented, motivated, and well-prepared employees. Its recognition for service excellence and top-tier performance will be the hallmark of NFI, with “best place to work” recognition honoring its people-and-culture platform, from which all of its success will continue to be launched. “Our customers can trust us,” Jeff Brown says. “We are flexible, even nimble, and we have a long-range plan.” As important as services and company growth are, this long-range plan revolves around people, as NFI’s core strategies always have. The plan is to continue to invest in a management team so that the burden of leadership isn’t carried solely by the Brown family, and to continue hiring the most highly-qualified individuals. “We’ll hire top-shelf people because we need to invest in the future,” says Steve Grabell, CFO. Moving forward, aspects of the business strategy involve being opportunistic, growing the non-asset business, upgrading the client base, being smart and prudent, trying new things, and leveraging the professional management team through the transition to the next generation of the Brown family—a generation that, like the one that came before, is proving its worth by its commitment and contributions. “We will be training the next generation as they continue in the company, Grabell says. “There are no privileged people, only those who work hard and are passionate about the business.”
286 Conclusion: Looking to the Future National Freight Inc THE ROAD AHEAD While keeping their eyes on the miles rolling by, NFI’s leadership remains focused on the future. Todd Holt, President of NFI Transportation, notes that one consequence of major growth is the need for structure to ensure the growth is sustainable and financially sound. “Now that the growth has occurred, we need processes and procedures in order to make it efficient and profitable, and we need people to continue to grow it profitably,” Holt says. While profit is important, he also comments on the advantage of having senior management that allows others the flexibility of running the business, adding, “It’s all about reacting to market changes and doing the right thing for the business and the customers.” Looking ahead, Holt sees the importance of taking what NFI is doing now as an organization—the thought process of being entrepreneurial, talented, motivated, empowered, and passionate—and driving it down to every employee in the company. It’s critical to make sure everyone comprehends the significance of his or her role and the immense value it adds. “To understand the customer’s needs, we meet with them. We talk with them. We share creative ideas to save them money,” Holt says. “And we win the business. Our goal is to partner with them, so they can improve their business to be more successful. Customers are looking for value, and we are looking for a long-term partnership.” Of course, although Holt is focused on the transportation side of the business, all of this applies equally to other facets of NFI, such as distribution and real estate. In these areas, as with others, there is no better barometer of customers’ satisfaction and sense of long-term partnership than to listen to what customers have to say. Tom Vellios, CEO of Five Below, comments on the partnership this way: “NFI has helped us tremendously in our distribution capabilities to date, and will be leading the charge from here forward in building not only this facility but many more to come as we continue to build our footprint across America.” In a similar vein, Beth Berna, Warehouse Logistics Manager for Ocean Spray, says: “NFI has always been there for us. They are the folks that come to us with solutions, which is so different from a lot of other business partnerships.” Considering the future of the industry in the next five years, Todd Holt sees technology as a tool to lower the barrier of age and experience needed for drivers, though NFI will continue to seek the most skilled and qualified people for its fleet. “Avoidance and spatial systems will make the transportation industry very safe. Meanwhile, we’ll be able to build more capacity into the trailers.” Similarly, NFI will continue to grow its real estate holdings and its distribution capabilities, across the country and beyond. This will lead to new opportunities, expanded offerings, and enhanced abilities to meet the specific needs of each customer—whatever those might be. “NFI did a fantastic job,” says William Brezsnky, Director of Operations for Fresenius Medical Care. “NFI should be the model for the rest of the real estate development industry.” From transportation to distribution, and from global logistics to real estate, the prediction is simple: “NFI will continue to grow, diversify in our service offerings, and win business cross-functionally. This will make NFI one of the leading companies in North America.” —Sid Brown The Brown family and the company as a whole look forward to the challenging and exciting times ahead. The company-wide emphasis on valuing people and excellence will ensure NFI’s growth for years to come as it continues to expand its geographic footprint and service offerings. And, one day—far into the future—long-serving employees will relate the rest of the story.
287 National Freight Inc Conclusion: Looking to the Future After eighty-five years of helping thousands of customers and employees achieve their goals, the NFI tradition of strong leadership and excellence inspires us to reach even higher. −− The Brown Family
BLEED BLUE