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Dallas Business Journal: “Meet the CEO who’s grown this Frisco company to $1.8B in revenue”

July 31, 2017

Meet the CEO who’s grown this Frisco company to $1.8B in revenue

The old days of managed transportation services involved a rate book, phone and fax machine. Humans dictated the process of determining how a product got from Point A to Point B. Today, computers manage billions of dollars’ worth of goods for Transplace — a Frisco-based logistics giant projected to earn $1.8 billion in revenue this year — 90 percent of the time. That makes the quality of technology Transplace uses of vital importance. “We don’t have to have a person touch it,” said Tom Sanderson, CEO. The company has grown five times in size since he took over in 2003. “That’s a huge change from the way things used to work.” Transplace manages freight transportation in North America for manufacturers and retailers in industries like food and beverage and chemicals. In Dallas-Fort Worth, the company employs about 125-150, mainly in IT. Overall, Transplace employs 1,700. Transplace’s proprietary software is developed in-house, with very little off-shore development done for things like maintenance tasks, Sanderson said. For a larger competitor like C.H. Robinson (NASDAQ: CHRW), developing your own technology is normal. A lot of Transplace’s smaller competitors, though, buy their technology off the shelf. That’s difficult to satisfy the customer, Sanderson said. If you’re in the business of technology, which modern-day logistics is, you have to bring the best technology to the table. “We love competing against those guys,” Sanderson said. Even if the little guys develop their own technology, which several of them do, it’s still a battle. They can’t spend the money that a company like Transplace or C.H. Robinson can devote to its technology. Sanderson knows this, because his company has bought those types of firms. “When we buy those companies, we move all those customers onto our technology,” he said. Sanderson expects about 10 percent growth a year organically, with acquisitions on top of that for a growth rate in the mid-teens.

Being backed by private equity has given Transplace the capital to acquire seven companies since 2009. The company is backed by Greenbriar Equity out of New York, who took over from CI Capital in 2013.

To talk more about Transplace and the industry as a whole, Sanderson sat down with the Dallas Business Journal.
What’s the biggest change in the company since you took over in 2003?

I would say the biggest change has been the growth of the cross border freight management solutions. We started that business from scratch in 2008. Two guys joined us to see what we could do in Mexico and the border of the U.S. and Mexico. And now that business is about a quarter of our total business. That’s really grown.

Because of your continental reach, how close an eye are you keeping on NAFTA renegotiations?

I keep a close eye on it. I think there’s a lot of noise. There’s going to be some tweaks. … The supply chains in
North America are so integrated that you can’t disrupt that without doing significant harm to our economy. We
don’t really want to fight a trade war with our No. 1 and No. 2 partners for export product. … I think what we’ve
seen in the last few months is cooler heads prevail. Yeah, we can tweak a little bit but nothing that’s going to slow
down the volume of trade across the Canadian and Mexican border.

On the campaign trail when it seemed Donald Trump was going to pull out of the agreement entirely, were you

I didn’t think it was even feasible. The economies are just too integrated. In general I think there was some
concern about that, but personally I didn’t think that would ever come to pass. Happy to see the rhetoric has
softened a little.

How will your company look different in a decade?

A lot of people think that the Uber model will come in for matching up trucking companies and the manufacturers
and retailers directly. And there’s quite a few startups going down that path. And, in fact, Uber itself is moving into
freight. I travel every week, and I use Uber all over the country. And I love Uber compared to taxi cabs. But, I don’t
think that model is going to be successful for trucking for a number of reasons. Part of it is Uber is a shared
capacity environment. They’re taking advantage of the fact that people have cars that they’re not utilizing all the
time or they’ve got spare time and can go out and drive on a part-time business. Nobody’s got a Class A truck
sitting in their driveway that’s not being utilized.

Read more here.