Corporate 100: Atlas monitors wave of consolidation in logistics sector

With a wave of consolidation moving through the trucking and logistics industry, Evansville-based Atlas World Group has made a couple of acquisitions over the past three years.

In just one four-month period last year, Overdrive.com recorded 12 significant trucking fleet mergers across the nation, including the Atlas logistics subsidiary’s acquisition of Wausau, Wisconsin-based Progressive Trucking.

IBJ recently chatted with Phil Wahl, president and chief operating officer of Atlas Logistics Inc., about the impact of the consolidations and the company’s outlook for the rest of 2023.

How are your two recent acquisitions fitting into the company?

One of them was Top Hat Logistics. And they’re a final-mile company that services mainly the furniture and appliance industry. When you order a refrigerator or something at a Home Depot or something, then this company would be the company that would deliver it to your home and put it in place.

So that was our entry point into the e-commerce world. And we felt like that piece of the business is going to continue to grow. And we wanted to be part of that. So we went out and found this home-delivery company based up in the Chicago market, and we’ve seen good things from them. Since the Atlas acquisition, they’ve been able to leverage additional business, and they’ve seen revenue growth since the acquisition, So we feel like it was a good point of entry for us into the e-commerce world, and it provided some warehousing opportunities for our agency network as well.

You also had a second acquisition on the logistics side of the business, right?

Yeah. We also purchased a small trucking company up in Wisconsin, Progressive Transport, and they’re a little 21-truck padded-van carrier. … We’re a padded-van carrier as well. So it was complementary to what we do. It added some capacity to us. And they’re also an employee model, so that all their drivers are employees of Progressive, where, with Atlas, our drivers are contractors. So we don’t have any employee drivers.

So it’s another recruiting tool for us that we can go try to recruit drivers that want to be employees and also have a fleet for the owner-operators as well. So it was kind of two plays there. One is adding some capacity to the network, and then also building that employee model to help us recruit drivers as well.

What does the ongoing consolidation in the trucking and logistics industry mean for Atlas going forward?

Well, I think we are seeing some of our competition consolidate and join forces. I think economy of scale is coming into play and the ability to build efficiencies within the transportation piece of the business. The cost of running a fleet or for an owner-operator to run their tractor is just continuously going up.

So, if you can merge together or they can join a larger organization, they can get some buying power through volume and leverage services that other companies might have that they don’t. There are a lot of advantages there from that perspective.

And you know, we’ve seen that already with Progressive and the ability for them to take advantage of, for instance, some of our gas programs, purchasing programs that we have because we’re a larger organization. Getting access to other maintenance programs and different things like that has already saved them money since the acquisition. So a lot of that, I think, is really to help kind of try to control costs in their operations.

What’s your assessment of the current demand for your services, and how are you balancing that against the shortage of truck drivers?

Right now, there’s been a little bit of a slowdown on the moving and storage or the relocation side of the world. So the house moves have slowed down. The economy and the interest rates and the housing market, all that stuff has kind of slowed that side of the business.

And even then, we saw coming out of the first quarter and second quarter some slowdown on the business that we do on the freight side. There’s still a lot of freight out there, but there has been a loosening of the capacity in the industry this year. So we’ve seen transportation rates come down a little bit, which is a good thing. But at the same time, our padded-van freight that we normally haul has slowed down as well.

But we’re holding steady. We’re maintaining the size of our fleet. We’re trying to grow the fleet a little bit. We’re not actively trying to increase our fleet dramatically right now because the business just isn’t there. But we’re positioning ourselves to be ready when the business comes back.

But we continue to look for the right drivers, and we’re really focusing more on retention right now than we are recruiting. We want to keep the drivers that we have. Keep them happy, keep them moving. And then looking for the right drivers when they become available. There seems to be a little bit of movement on the driver side, [with them] looking to make a move, and that tends to happen when business slows a little bit. Or looking for another opportunity or someone that has had the business, so we’re seeing opportunities. We’re just looking to make sure we’re making the right decisions when we make them.

Most people know Atlas and the Atlas Van Lines subsidiary as a mover of household goods. But you do much more than that. Could you describe the scope of your business?

We also do a lot of transportation and distribution of store fixtures, restaurant equipment, hospitality furniture, fixtures and equipment that go into hotels. We also do a lot of senior-living and assisted-living furniture equipment that goes into both facilities. And we also move a lot of electronics and computer equipment and medical equipment, those kinds of things. So anything that needs nice pad wrap that needs to be protected when it goes on the trailer. We do general freight when we need to move a truck and when we have to, but normally we’re doing something that requires, you know, equipment and special care when it’s in the trailer.

What do you see as some of the challenges and opportunities for Atlas in the coming year?

I think everyone in the industry is … just looking to control our costs going forward. We’re pretty … bullish that the third and fourth quarters are going to be pretty strong for us this year. So we’re just looking right now to position ourselves to be ready to take advantage of those opportunities when they arise. We’re positioning ourselves to get our fleet where we want it to be. We’re looking to hire some drivers, get them in place and get them trained. Make sure our equipment and our trailers are in position and ready to go.

The whole thing … I think in the industry right now is, everybody’s trying to run their operations as [efficiently] as we can. The cost of everything—maintenance costs, equipment costs, everything—is continuing to rise, and freight rates are not rising at the same level. So we have to be more efficient; we have to be more cost-conscious. And I think that’s the key that we’re trying to do right now … to make sure that we got all of our costs under control.•