Capitalize. Streamline. Optimize. Geoffrey Davis, CEO of Unified Logistics Holdings in the USA, has spent his career doing these three things with great success. These are more than management buzz words to Davis. He’s a tactical thinker who runs his business using strategies he learned by doing. Someone recently described Davis to me as a “consummate doer.” It’s a good description. He says what he is going to do and then he does it.
Aside from a five-year stint as a police officer, Davis has spent his career working in transportation and logistics. After working for an international air freight company and spending a lot of time in Europe, the Middle East, Africa and Asia, he came back to the United States and earned his MBA in operations research and financial engineering from Rensselaer Polytechnic Institute.
After graduate school he went to work for a Belgian air freight coop and then was recruited as vice president of engineering for TNT Logistics of North America. Today TNT is a part of Exel and DHL.
For DHL, Davis’ team built a supply chain solution for consumer package companies and then built a business unit in health care logistics to help hospitals reduce inventories. He then went to work for Penske, building five spin-off companies, one involving health care logistics and one in online truck rental.
“I’ve been in the logistics business for a long time,” Davis said. While he had always worked for large corporations, Davis is actually an entrepreneur at heart. In 2006 he started looking at the heavy haul trucking industry.
“I started to look at the areas in trucking that make the most money and offer the highest returns on a dollar of revenue,” he said. “Looking at the highest profit margins, heavy haul probably makes the best margins.”
He realized how very specialized the industry is, and he also saw how fragmented heavy hauling has become.
“There are a lot of little providers, mainly family businesses, and as they got bigger and as the owners got older, it was a challenge to continue their success beyond the founders,” he said. “If they had an heir the business would continue, and if they didn’t, maybe the management would try to acquire the company or do some sort of buy out like an ESOP. And if that didn’t happen the company would be sold to a conglomerate and in time the employees would be let go and the business would shut down.”
Davis had the idea to create a holding company that could offer these companies continued success. After raising “a bunch of capital on Wall Street” Davis founded Unified Logistics Holdings.
The concept for Unified was developed in 2006 with the investment in Silk Road Transport and Benchmark Logistics. In 2009 Silk Road Translink, a project management company, was enlarged with an acquisition. In 2001 Great Lakes Heavy Haul was acquired, and in 2012 McTyre Trucking was added to the family of companies.
In 2016 Unified divested Benchmark Logistics.
“Since 2006 we’ve had five acquisitions and one divestiture,” he said. “We are currently looking at additional investments all over the country.”
The crux of Unified’s strategy is to look for owners who are looking to recapitalize their company and that want to continue working in the company and their management team wants to stay on, too.
“These companies have good customers and incredibly good employees and they provide a great service,” said Davis. “These are our criteria.”
By nature, Davis is an engaging person who is known as uplifting and encouraging. I thought he was a fitting interview for this issue, which features our ACT Transport 50 list of top specialized transportation companies.
What distinguishes Unified Logistics in the markets it serves?
Unified Logistics operates as a family of companies, but each of our companies may be a specialist or expert in a certain industry. Silk Road Transport is a top company in the transport of transit rail cars, street trollies and other people movers. Silk Road also focuses on moving brewery tanks, another heavy vessel that requires a certain expertise. When they aren’t moving these things, they use their trucks and trailers to perform general heavy hauling in the Mid-Atlantic and upstate New York region.
McTyre Trucking started out as a regional company very strong in hauling construction elements like precast bridge components, steel, large structures and power grid equipment. Over time they diversified and added national capabilities. Today McTyre moves construction components for civil and commercial construction projects as well as for marine, port, electric power generation and nuclear power projects. Great Lakes used to specialize in the automotive arena. Today they haul a lot of tool and die equipment, which is time sensitive work. They do construction equipment hauling and move construction components, bridges, walkways and other steel structures plus machines inside manufacturing plants. Great Lakes has also developed a core competency in moving medical equipment in and around hospitals. It’s a niche market; you have to have strong expertise to know how to transload a MRI machine and other fragile and expensive medical devices.The businesses we are invested in have a sound business, and yet they also have the ability to spread their wings and pursue additional niche markets.
How do the companies under the Unified umbrella work separately and together?
It’s not uncommon that someone at Silk Road will be called by a customer to move something that is larger than the equipment they have in their fleet. McTyre has the larger equipment and so in that case both teams will provide the move for the customer together. Sometimes we will have rail cars or componentry that has to be moved in the Southeastern U.S. and the Silk Road team will work with the McTyre team to handle the work in that region. It’s the same thing with Great Lakes and Silk Road. It’s not uncommon that they can rely on each other’s fleets and expertise. Another thing we’ve done is to develop a proprietary heavy haul operations computer system and technologies so that when a new company joins the Unified family, everyone talks the same language. Record keeping is similar and information is available in the same way every place. Operations, dispatch, customer needs and histories are available centrally. We also share and optimize our working capital. Our central working capital is used to cover payroll. That way our employees and owners never have to worry about getting paid when work levels slow down. All the stress goes away. Owners can go on working with customers and selling their services. We work projects together, sell together, share contacts, share best practices and buy equipment together. We share capital and risk together.
Do you envision further acquisitions?
We are currently looking at seven mid-term to longer term acquisitions. We are in direct discussions with these owners. But I don’t like to call them acquisitions. I see them as investments in companies. Many of the owners we invest in retain some equity in Unified. We are all eating out of the same pot. We basically equitize family businesses and they all work together. We are a holding company of specialized companies that operate independently but work together. We are looking at companies with very long-term histories; they have exceptional reputations. They are good service providers. They are strong financial managers.
What is the biggest challenge specialized carriers face today?
The challenge is increased volatility in our markets and economies. For example, up until 2009 the transit market had three or four cities that were upgrading their transit systems or getting new subway or rail cars at any given time. It was a very predictable business. But then the economy crashed, cities were broke and transit ridership fell. Business evaporated for five years. So to keep working and stay profitable, we pulled together as a family by recasting and retraining the Silk Road team. We kept them going into other areas until the transit business returned. Now transit projects that have been committed are at similar levels to when we first invested in the business.
We are now three years into the current downturn of oil and gas. The last downturn in this industry lasted two years and this one will probably take two more years before there’s a radical restructuring of the market. In the last two years there was a lot of investment in manufacturing and power generating capacity as well as utilities, cities and governments. When things got soft in 2016 the infrastructure work was shut off again. These types of downturns can dramatically affect heavy haul and rigging companies. Historically in this industry you have a heavy haul company experience a couple of good years and good growth and then they are hit with a hard recession. It’s very tough on a small business to be able to plan for what’s happening with the economy. Today, this volatility is continuing on a larger scale. How do you not overspend on equipment and still stay agile? How do you move beyond your comfort zones and still make money over the long term?
You recently worked with the SC&RA on a Permitting and Enforcement survey to quantify challenges specialized carriers face in permitting oversized loads. What were the key take-aways?
The No. 1 takeaway is that SC&RA members and our industry in general have to engage better with regulators and law enforcement for constructive change. Sometimes we are our own worst enemies. No. 2, regulations are oftentimes inconsistently applied in different geographical areas. No. 3, law enforcement officers do not have adequate information at an inspection point or traffic stop to know whether or not we are operating lawfully. More often than not, when law enforcement or regulatory officials make a mistake, it is not intentional. To make it worse, our members don’t always have the constructive engagement required, which can result in a ticket or fine. We need to continue our work with the states to harmonize regulations so that moving something from Ohio to Texas isn’t more complicated than moving something halfway across Africa.
What is the best lesson you ever learned?
The best lesson I ever learned came from my father who was an entertainer by trade: Treat famous people like they aren’t and treat people who aren’t famous like they are. I started off in a humble world as a law enforcement officer where you saw the best of people in bad times and the worst of people in the best times. Also, treating other people as you would like to be treated but expecting nothing is a great way to live.
What do you do in your leisure time?
When I’m not working my wife and I have several hobbies. We are wildlife photographers and we travel all over the world taking pictures. My wife is from Scotland, and we love to travel in our free time. We have recumbent tricycles and we pedal all over the country. We go to parks and take our cameras, and that’s how we get in all these beautiful places to find the wildlife we photograph. We love birds. We take photos of lots of birds – predatory birds, water birds, birds in flight and birds in unique environments.