Jeff Silver has already built and sold one standout logistics company. He was part of the executive team at American Backhaulers, a freight brokerage in Chicago that was acquired for $136 million in 1999. Now, his current company, Coyote Logistics, also based in Chicago, is on a path to become a billion-dollar business. And he’s accomplished that feat in just six years.
If you have your eye on breaking into the fast-growing supply-chain management industry, Coyote is one company to watch.
The Back Story
Silver founded Coyote Logistics in 2006, after earning an M.B.A. from the University of Michigan and a master’s degree in engineering and logistics from MIT. As a transportation management company, Coyote matches companies' and organizations’ shipments with available carriers—trucking companies as well as the private fleets of large corporations. It specializes in fleet backhaul: scheduling shipments to travel on carriers’ return trips so that the trucks do not travel without loads. Customers include food and beverage companies, such as Heineken, as well as a handful of retail and consumer goods companies.
Since its founding, Coyote, an Inc. 500 honoree in 2010 and 2011, has grown exceptionally fast. After just its first year in business, Coyote received a strategic investment from the private equity firm Warburg Pincus. Over the next two years, Coyote acquired two other logistics companies to expand its transportation network and strengthen its intermodal freight capabilities. Most of its growth since then has been organic, says Silver. Coyote finished 2011 with $560 million in revenue. That figure places it among the top transportation management companies in North America, according to Armstrong & Associates, a firm that tracks the logistics industry. (Coyote’s biggest competitor, the publicly traded company C.H. Robinson, bought American Backhaulers, Silver’s last company.)
An Edge Over the Competition
Coyote’s business model sets the company apart from many of its competitors. Breaking from the traditional brokerage model, the company separates its sales functions from its carrier arrangements. Employees secure shipments or arrange carrier transport, rather than handle both functions at once. American Backhaulers used the same model, so Silver implemented it at Coyote. Doing so, he says, allows the company to optimize routes easily; rather than having to find a carrier for a particular load, Coyote can see which of its carriers’ trucks is already nearby. “It’s the best scenario for the customer and the carrier, and it produces the least amount of deadhead, which is best for the environment,” he says.
Coyote also differentiates itself from other companies in its industry by guaranteeing shipment of every load it accepts. In the past, freight brokerages would occasionally delay or refuse loads from customers if they could not find carrier capacity at a reasonable rate. Coyote’s commitment to every load gives the company a distinct edge, says Evan Armstrong, the president of Armstrong & Associates, and has influenced the industry at large. “At mid to large freight brokers, that type of approach is becoming commonplace,” he says. “It’s hard to grow like Coyote if you can’t cover a load."
Getting—and Keeping—the Best Talent
In addition to customer service, Silver has sought to distinguish Coyote through its commitment to employee development. Scarcity of talent, according to a recent study on third-party logistics conducted by Penn State, poses one of the greatest threats to the industry. Coyote addresses that issue through its intensive training program for entry-level employees, who are recruited primarily from local universities. New hires spend four weeks in Coyote’s classroom learning the ins and outs of the logistics industry, as well as customer service and presentation skills. During that time, they are required to memorize a map of 750 trucking hubs. Then, they spend 12 weeks under the wing of a more experienced employee, whose job is solely to train new hires. After employees have completed training, they begin working on shipper and carrier accounts.
As a result, Coyote fills nearly all of its management positions from within. Recently, the company launched two continuing education programs for its employees: a “mini-M.B.A.” in partnership with DePaul University and a sales and management training program with Michigan State University. “You can’t rush experience,” Silver says. “Hiring other people’s mistakes is not my idea of a good time.”
Silver believes that Coyote, equipped with the industry’s best practices, is poised to continue its breakneck growth. For now, he plans to remain focused on the North American market, though the company may eventually consider expanding to other regions. In a couple of years, he says, there is a strong likelihood that the company will go public. “I think we’ve changed the dynamics of the industry, and we’re starting to elevate expectations,” he says.