DC Velocity - June 2014

BY MARK B. SOLOMON, SENIOR EDITOR

MOTOR FREIGHT

IN EARLY 2008, MICHAEL FEIG, A TRADER AT THE then-investment firm Bear Stearns & Co., ditched his long Wall Street career. The move was prescient, as Bear soon thereafter went into a death spiral that led to its failure and subsequent sale to J.P. Morgan Chase & Co.

Feig decided he’d had enough of the financial rat race. The following year, he cofounded a property brokerage firm to arrange for the hauling of produce off the West Coast for large grocery chains.

Today, Feig’s company, White Plains, N.Y.-based Capital Logistics, grosses about $20 million a year and is profitable. The job has the usual hassles associated with running a brokerage outfit, not to mention the time zone challenges that arise from Feig’s being on the East Coast and his business 3,000 miles away. Still, Feig says he would never return to Wall Street. More to the point, he discovered that the skills he honed during years of securities trading were ideally suited to his new role.

Three years before Feig joined the brokerage business, Jeff Silver returned to it. Silver was a pioneer in post-deregulation brokerage, getting in on the ground floor of a new firm called American Backhaulers in 1984. Backhaulers would come to revolutionize the brokerage business by providing automated visibility to all participants.

After Backhaulers was sold in 1999 to giant C.H. Robinson Worldwide Inc. for $136 million, Silver left the industry to pursue an M.B.A. from the University of Michigan and a master’s of engineering and logistics degree from the Massachusetts Institute of Technology.

In 2006, he and his wife, Marianne, founded Chicago-
based Coyote Logistics LLC. Rather than follow a
traditional model of having each team of employees
work with both shippers and carriers,
Silver set up two teams. One would
procure loads. The other would find
trucks. And the teams would communicate freely with
each other.

This approach, labeled “Chicago-school” brokerage by Robert Voltmann, president of the Transportation Intermediaries Association (TIA), after the city’s aggressive, high-energy financial trading culture, has been a smash. Coyote’s first-quarter revenue soared 35 percent over the prior quarter’s, making it by best estimates a $1.4 billion-a-year company in gross revenue, or revenue before the costs of purchased transportation. (Privately held Coyote will only disclose full-year gross revenue figures.) In March, Coyote acquired rival Access America Transport for an undisclosed sum. The move creates a $2 billion-a-year broker, a large fish in an ocean of minnows.

Feig, 38, and Silver, 51, are different breeds of brokers. They weren’t born into the business (though Silver started the day after he graduated from college). They didn’t inherit it from mom and dad. They have become the sweet spot of the broker demographic. TIA is casting a wide net for these types, and if appearances are any indication, it’s succeeding. Several attendees at its annual conference in April remarked that the membership seemed to be getting younger and was full of new ideas, problems other old-line transportation groups would love to have.