Logistics Firm Racing Toward Lofty Goal

What might have seemed liked the wrong time for many small trucking firms was the perfect time for three guys who had an idea, little money and a lot of enthusiasm.

By 2009, the recession-battered transportation industry had seen its ranks thinned as many small firms, and a few larger ones, called it quits.

But friends Justin Winberry and Kalub Jones, who’d worked together for years in the trucking and logistics industry, had an idea to start a little brokerage company. Winberry introduced Jones to another friend, Jay Mejia.

Although Mejia’s background was in architectural engineering, he had a master’s degree in business operations management. He was employed, but thought the idea would make a nice little side business and decided to come on board with his friends.

Jones was handling operations for a small firm called Leon Cannon Trucking. The three friends’ goal was to be an agent for a company.

“After starting to put the numbers together and looking at the profit margin, we decided, ‘Why don’t we make Leon an offer to buy the business?,’” Mejia said.

Cannon accepted their offer, and in October 2009, the friends formed WMJ Enterprises LLC and purchased the company.

To that point, the new owners say, the highest total revenue LCT had recorded in its 15-year history was $1.5 million.

The owners changed the company name to Leon Cannon Logistics to better reflect what it did, Mejia said, and in 2010, after its first full year in business, LCL posted revenue of $7.5 million.

That number grew to $13 million last year, for an increase of nearly 74 percent.

For 2012, the owners are projecting revenue of about $35 million, or a 169 percent increase over the previous year.

That kind of growth was way more than the partners ever expected.

“Everything happened really fast,” Mejia said. “It’s kind of hard to look back at what really happened, it was just so fast.”

Mejia thinks the recession helped them by winnowing out many of the smaller and mid-sized fleets that would have been LCL’s competition, at the same time that large trucking companies were thinning their own fleets.

With truck tonnage up and expected to keep rising, according to American Trucking Associations chief economist Bob Costello, LCL seems poised to fill the gaps in service.

 

From the Ground Up

Currently working from the second floor — “the penthouse suite,” they jokingly call it — of an office building near Interstate 540 in Lowell, LCL is about to outgrow its current 6,500 SF of office space.

They’re up to 24 employees (not including drivers, who are on contract), and are looking to hire about five more shortly.

Though still fairly modest, the location is a far cry from the first few months of the venture. After buying the trucking firm, the partners closed its Springdale office and worked, with one other staff member, out of Mejia’s home.

“Starting in the middle of the Great Recession, we had a hard time getting financing initially for capital,” said Mejia, the company’s president and CEO. “But we opened our doors and things just started moving.”

As a new company, they couldn’t get any banks to take them seriously, Jones said. So they scraped together personal funds, even using credit cards, to cover operational expenses while waiting for their one customer’s check to arrive.

“Those first five months were kind of scary,” said Jones, LCL’s chief operating officer, “because we had a lot more money going out than coming in.”

But with the addition of a few more accounts, the cash-flow issues soon resolved.

“It gives us a better appreciation now that we do have access to capital,” Winberry said.

Jones added, “It’s funny how [the banks] are calling us now. The same banks that hung up on us are calling us now.

“Not that we don’t like them calling us,” he said with a laugh. “We might need them one of these days.”

 

The Personal Touch

LCL’s first customer was Asarco, a Tucson, Ariz.-based firm that mines, smelts and refines copper.

After working with LCL for 2 ½ years, Asarco’s traffic manager said, he appreciates the company’s good customer service, and especially its quick and accurate billing.

LCL uses a network of smaller fleets and independent owner/operators to serve the 48 contiguous states. It lists among its client base such well-known names as Monsanto Corp., Georgia-Pacific, International Paper and Home Depot.

Ryan Fengler, a transportation planner in the Green Bay, Wis., office of Georgia-Pacific Consumer Products, said what sets LCL apart from its competition is its focus on the client, “with everything that goes with moving a load from point A to Point B, as far as expediting loads to meet our customers’ needs, especially now when companies are trying to run leaner, carrying lower inventories,” he said.

Mejia also said customers have said they like LCL’s logistics software, which was custom-made by several local computer businesses.

Clients say the software is very user-friendly, Mejia said, and if they need a function or item, such as an invoice, adapted to meet certain specifications, LCL can easily have it modified for them.

The partners realize how vital customer service is to their company’s credibility and bottom line.

“Just as important as picking a load up on time and delivering it on time is the back office, and having it run smoothly and efficiently,” Jones said.

 

Staying Flexible

To build its client base, Winberry said LCL continues to go after the smaller companies it started with, but he’s also setting his sights on the Fortune 100.

But these businesses can take a long time to get set up with, he said, largely because of all the paperwork involved.

“So we’re really working on two levels,” Jones said. “We’re going after that small business [clientele] while working on getting into those bigger companies.”

In fact, the partners think that kind of flexibility and client diversity are keys to their success. These include having both a brokerage side and a dedicated side.

“It’s the game of guaranteeing capacity,” Mejia said. “It’s a good balance. By having our brokerage side, we can add extra capacity when needed. We can tap into our owner/operator network.”

The company owns “a lot” of trailers, but leases trucks, Mejia said. That helps reduce maintenance costs.

And because the drivers are independent, he added, “Our drivers take more pride in their cargo, and a little more pride in what they do” than those who drive for a large fleet.

For the three partners, Mejia said, the next challenge will be stepping back a bit from day-to-day operations and delegating more of those duties so they can focus on the bigger picture.

All three agree the company is hitting a sweet spot in its growth.

“Not only do we understand our business,” Winberry said, “we feel like we understand our customers. Banks are opening up, access to capital is loosening, the market is beginning to shift to the carriers’ favor. And we’ve got some deep roots with a lot of large customers.”

Mejia added, “We’re big enough to go through all those things that used to be obstacles at some point.”

The partners radiate pride and passion for their business, and that same excitement is tangible in their main operations room, where men and women scurry about while talking on their phones to customers from Kankakee to Tallahassee.

“There’s no doubt about it,” Jones said, “everyone in this building is just as passionate [as we are] about what they do.”