In 2014, Matt Pyatt and Eric Dunigan started Arrive Logistics with a handful of employees in Austin, Texas, managing the transportation for Nutrabolt, a sports nutrition company that was having logistical problems. Less than two years later, Arrive has more than 100 employees and feeds freight to more than 7,500 carriers. They just opened an office in downtown Chicago, where they first learned the business from Paul Loeb, legendary founder of American Backhaulers and Command Transportation.
“One thing that Paul was adamant about was that you were nothing without your carrier relationships.” Pyatt said in a recent interview.
That might seem like paradoxical ideology for a non-asset based broker. Arrive’s business model has been described as “The Chicago Model” that was developed by Loeb, but Dunigan and Pyatt prefer to call it the “Split Model.” About 60% of Arrive employees work on carrier relations, while the other 40% sells and services shippers. The point is that carriers come first and the investment into these relationships is important to Arrive’s explosive growth.
“We’d rather have the capacity in place and work to bring in more loads rather than the other way around. In fact, we will always have more carrier reps than customer reps so we can immediately service new business with pre-qualified and high-quality carriers as we grow, rather than go scurrying for capacity when the business appears.” Dunigan said. “A lot of brokers seem to regard carriers as commodities, but our carrier reps live and die by their carrier relationships.”
Arrive’s business model requires that its carrier reps master the details of each carrier’s fleet: e.g., equipment type, empty lanes, availability, and much, much more. “We treat every carrier we work with as a long-term business partner,” Dunigan affirmed.
“Our business philosophy is simple: customers come to the brokers who have the carriers,” he explained. “We have one point of contact with carriers so we can get to know them personally. We take care of them on things like accessorials and detention, even when we aren’t reimbursed,” said Dunigan. “It might seem odd to do this at a time when capacity is loose, but the market is cyclical. That’s why we put time, money and people into building a rock-solid carrier base.”
Talent in Austin
Pyatt and Dunigan based the business in Austin for several reasons: The University of Texas has over 51,000 students, and a reputation for academic prowess as well as sports. UT is loaded with talent looking for fast-track companies like Arrive that invest in their employees.
When Pyatt and Dunigan first started Arrive, its roster featured experienced brokers who were willing to join the startup team. Today, however, Arrive focuses on hiring recent graduates, enrolling them in two cycles of training classes that coincide with the end of the academic semester. This summer, four new classes are scheduled to start, with 10 to 15 people each. The education process usually takes 9 to 12 months.
This investment in hiring and training has been very successful for the company, which has not voluntarily lost a single new hire.
The first week or two of training introduces new employees to the technology tools they have to work with, including the DAT Power load board, DAT RateView for current market rates, DAT CarrierWatch to qualify and monitor their carriers, and the DAT Keypoint TMS that ties together operations and accounting in a single-entry system. Keypoint also integrates with the load board, rates, and carrier qualifications.
From then on, new employees take a deep dive into industry knowledge so they can speak the language of their carriers and their shipper customers: industry education, equipment types, regulations (e.g., hours of service, ELDs, CSA and its successor programs). At some point in the training, it becomes apparent that a trainee is better suited for carrier relations or customer sales. The trainee then becomes a “mentee,” and is assigned a personal mentor who has proven to be successful in Arrive’s business model, and who teaches new recruits the business and, just as importantly, the culture. Each mentor may have several “mentees,” and as they mature in the business, “mentees” become mentors within their own teams.
Arrive’s carrier relations team follows a rigorous process for ongoing carrier quality and monitoring to make sure the carriers meet the company’s standards for service. On the sales side, technology initially compensates for lack of experience and then complements skills learned on the job, including lane rates and seasonal trends, supply and demand in the markets being worked, typical pick up and drop times, and the scheduling requirements on different routes.
Technology That Scales
To get talent up to speed quickly, you need technology that moves as fast as you do, and can scale up as you grow.
For Arrive, the central nervous system is DAT Keypoint transportation management software. It helps Arrive’s carrier reps keep track of the 7,500-plus carriers the company works with, and it supports the sales reps staying on top of the shipper’s needs. The single-entry operations and accounting system knits both sides of the business together.
“A lot of software for brokerages will require you to use other software programs like Great Plains or QuickBooks,” said Matt Pyatt. “But Keypoint is very good operationally and for accounting. In fact, not too long ago, an auditor who specializes in transportation companies came in and went over our ‘books,’ which meant going through Keypoint reports extensively. When he finished, he told us he was extremely impressed with the usability of Keypoint’s accounting system and the ability for us to pull reports together quickly without having to work with multiple systems, which is even more remarkable considering we hired a CFO after the audit.”
Eric Dunigan added, “We looked at just about every transportation management system that’s marketed to brokers. I’d been through so many vendor presentations that I was prepared to reject DAT Keypoint before I even got the pitch – not because of anything I’d heard, but because I was tired of webexes,” Eric Dunigan admitted. “I have to hand it to Keypoint. Every objection I threw at them, they countered with an answer I couldn’t object to. And now that we have the software and have put it to the test, I have to tell you that it’s the best off-the-shelf, commercial broker software for running a business like ours.”
Dunigan explained that in a high-velocity brokerage like Arrive, the carrier and customer sales reps will let them know when software is slowing them down.
“It can be something as small as an additional mouse click or two – they won’t put up with it.”
“Little things make a huge difference in efficiency,” Pyatt explained. “We were determined to train our people on the industry, not the tools. And Keypoint has made it easy to bring on people new to the industry and get them productive from the jump.”
One of the load board features enables them to find quality carriers on lanes where capacity is either thin or doesn’t match up to the broker’s standards. LaneMakers makes it possible for brokers – and carriers, for that matter – to find business partners where they’re needed.
“DAT has been a great lead generator for us,” Pyatt said.
The fact that all the DAT broker tools are integrated into the TMS is critical for Arrive.
“Again, one of the nice things about Keypoint is that we can get market rates on any of the lanes we run with RateView as well as obtain information we need to qualify and monitor our carriers with CarrierWatch,” said Pyatt. “It’s fast, it’s easy, it’s effective.”
Arrive is working with Keypoint on features that will help with reporting, both on the carrier and the shipper side.
“We’re building scorecards that work for both sides of the company and allow us to be more efficient and accountable,” Pyatt said. “With the increased use of ELDs and load tracking, we’ll keep raising the bar.”
Raising the bar could be the mantra of this young company. Arrive did $31M in sales its first year, and it’s on pace for $65M in 2016. Revenue projections for 2017 exceed $100M.