New York, New York–(Newsfile Corp. – February 26, 2020) – The e-commerce market, led by industry giants Amazon, Apple, and Walmart, is expected to become a more than $4.8 trillion economy by the year 2021. And, while investors may have done well by recognizing the growth potential in those companies more than two decades ago, the opportunity to catch the derivative opportunities may still provide a lucrative return.
Transportation and Logistics Systems, Inc (OTC Pink: TLSS) is one example of a well-diversified logistics company that is taking strategic steps to stake their claim in the thriving e-commerce economy. This OTC-traded stock most recently announced an agreement to acquire the assets of GRC Trucking, Inc., a New Jersey-based full-service logistics provider specializing in the import/export of ocean and rail intermodal and drayage shipping. The planned deal will also leverage GRC’s more than 30 years of experience to TLSS and adds additional depth to the company’s already diversified services platform.
Once completed, the combined assets may position TLSS to not only expand its services potential, but to also benefit from revenue expansion, increased diversification, and multiple opportunities for growth through the integration of additional logistics channels. Unlike many small-cap logistics companies, TLSS is a revenue-generating company that posted more than $18 million in income in 2018 and is projecting an increase upwards of $60 million for the full-year ending in December of 2019.
An increase of that magnitude often attracts the attention of investors, and with the planned acquisition of GRC Trucking, this thinly traded stock may soon find its way onto the radar screens of both retail and institutional investors. And for a good reason.
A Trillion Dollar Logistics Market Opportunity
In 2019, when CNBC reported that Bank of America expected a more than $1.4 trillion B2B e-commerce market by the year 2021, most investors paid attention to the e-retail side of the equation. E-retail giants such as Amazon, eBay, Walmart, and Apple were the obvious beneficiaries of the exploding market, and their stocks responded accordingly by sending valuations to near all-time highs in 2019. However, sometimes the best trades can be made in the derivative markets that serve these industry leaders. And, with a global e-commerce market now eclipsing $4 trillion dollars, the stakes are even higher.
Successful strategies of investing in the components suppliers to e-retail leaders, for instance, have often provided a gauge of future earnings. Similarly, by focusing on the companies that are essential to the growth of this economic revolution may offer an even more significant opportunity. Why? Because unlike manufacturing and distribution companies that are already stretched in valuation, the companies that fuel the growth, the logistics providers, are sometimes overlooked despite their enormous role in fueling the growth of the sector.
It sounds too obvious, but it’s a fact. Despite the name printed on the box that gets delivered to an address, the under-appreciated reality is that that package is mostly getting delivered by a contracted third party facilitator. Thus, finding the opportunities that are an integral part of the logistics process makes sense. It makes even more sense to find the companies that offer substantial valuation propositions that can potentially mimic the returns of the companies they serve. Transportation and Logistics Systems, Inc. may fit that scenario well.
A Diversified Suite of Logistics Systems
Transportation and Logistics Systems, Inc. (TLSS) brings much to the table in terms of having the ability and resources to become a significant provider of services to the e-commerce sector. Already a revenue-producing company that is expecting to report more than a 100% increase in revenue compared to 2018 results, TLSS has assembled a diversified suite of services that can help to expedite shareholder value and grow into a more suitable market cap valuation. Without the planned GRC acquisition, services already include “at home” delivery, last-mile delivery, and mid-mile transport services. Each of these logistics offerings provides necessary components for completing any e-retail transaction. Moreover, TLSS provides line-haul transport, which serves as a connection between manufacturers, distributors, and hub-to-hub outlets.
Whether the first step of the distribution process begins by air or sea, the final stage of the e-retail transaction will require a land-based logistics partner roughly 90% of the time. Moreover, as the methods of commerce have been changing to a more online-focused economy, so have the expectations of the consumer, and companies that want to thrive must respond.
TLSS, as an example, has actively engaged in creating processes that meet or exceed consumer and client demands by integrating faster delivery times, offering specialty services, and integrating advanced tracking systems that include the use of telematic devices and synchronization to clients’ networks and software. In other words, TLSS is providing its clients a suite of services that are often overlooked by the final recipient. Investors may miss the connection as well.
However, while the services appear basic to any transaction loop, not all transportation companies offer a competitive set of logistics and transportation options that are comparable to TLSS. And, it’s those distinctions that expose opportunity.
E-Commerce Is Driving Delivery Demand and Expectations
If we focus back on the leaders in the e-commerce sector, several relevant expectations emerge. Amazon, as an example, may have forever changed the consumer demand expectations for on-time delivery. Taking the lead, Amazon has made delivery a core customer value and is now providing same-day delivery on thousands of items to participating Prime customers. At the same time, Amazon is managing millions of additional two-day shipments by leveraging third-party logistics companies.
Morgan Stanley noted that Amazon is now “the elephant in the boardroom” that cannot be ignored. And, for logistics providers like TLSS, these third-party partnerships provide a substantial opportunity to participate in the trillion-dollar economy. At the very least, Amazon is forcing the competition to respond to its customer-focused delivery strategy, thus creating almost unlimited opportunities for companies like TLSS to form lucrative partnerships with companies needing to keep pace with companies like Amazon.
One of TLSS’s subsidiary companies, PrimeEFS, is already positioned to assist e-retailers to quickly respond to consumer expectations. In fact, just as 5-day delivery has become somewhat of an outdated expectation to consumers, PrimeEFS is building its reputation by meeting and exceeding market demands.
PrimeEFS Emerging As An E-commerce Logistics Leader
TLSS’s subsidiary, PrimeEFS, has an established e-commerce logistics platform in place that provides line-haul, mid-mile, and last-mile services. Taking the lead from the consumer demand, PrimeEFS has further implemented white-glove delivery that offers end-to-end solutions from distribution centers or manufacturer’s docks to consumer doorsteps.
PrimeEFS is led by an experienced management team that brings decades worth of logistics experience to run operations and manage key client relationships. Their implementation of a 24/7 Network Operating Center (NOC) integrates with their clients’ tracking and update systems that facilitate seamless delivery and transaction details to both the drivers and the company’s clients. While these matters are mostly taken for granted by the consumer market, that’s not the case for vendors. Client companies, manufacturers, and distributors are laser-focused on using only the logistics providers that can protect their brand image and expectation.
To that end, PrimeEFS boasts of having a highly respected rating by leading clients. Additionally, by building trust that its services will routinely meet or exceed e-commerce delivery requirements, clients are afforded the opportunity to develop new customer-focused services intended to drive market share higher. Importantly, these large-volume companies are unlikely to change what’s working, which keeps PrimeEFS a preferred choice for logistics purposes. And, with the company’s core competencies being safety, reliability, and efficiency, PrimeEFS is likely in a position to continue its momentum to become an established and long-term provider to multi-billion and even trillion-dollar client companies.
Organic Growth With Strong Assets
While PrimeEFS itself is a significant asset, TLSS is unique by controlling an additional set of intrinsic assets. First, unlike competing companies, TLSS is an asset-based carrier that employs its staff through W-2 engagement. In other words, they do not use independent contractors to facilitate company functions. Second, TLSS only uses equipment that is owned or leased by the company, with maintenance being done in-house. Third, because TLSS manages its fleet and staff, the company may be in a significantly better position than its competition to manage safety, reliability, and overall company performance.
Perhaps most relevant to the asset-based structure is that as the market continues to develop, e-commerce companies are trending toward, and even mandating, that their transportation service partners be asset-based. Thus, TLSS may be ahead of the curve when it comes to procuring and expanding new and current client relationships.
And while TLSS is expected to report strong 2019 numbers, the company remains focused on creating higher shareholder value by seizing real-time opportunities to expand its services by scaling into metro markets that are currently outside of their geographical footprint. Moreover, strategic acquisitions, like the one announced with GRC Trucking, can bring additional diversified opportunities by opening new geographic markets that can leverage the experience and assets of the company to a broader client base. Notably, TLSS has suggested that there is an ample pool of quality logistics companies nationwide that can be accretive to the company quickly expanding routes and client connections.
At the end of the day, however, it’s pleasing the client that will lead to sustainable growth. TLSS appears to have that consideration covered.
TLSS Adapts to Client Systems and Expectations
As a primary concern, even the best companies need to stay focused on the most essential component for success -customer service. Failing to maintain a competitive advantage or not responding to change can transform a leader into a follower quickly. TLSS is addressing that reality with action.
The primary advantage of TLSS’s growing success is that they can become experts on their clients’ platform. Referring to themselves as technology agnostic, TLSS understands the value of using a client’s systems rather than connecting other, third party logistics systems. The ability to seamlessly connect to its clients’ network also helps to deliver transparent, accurate, and timely records that provide a superior level of trust compared to companies that utilize third-party systems.
Further, TLSS maintains strict records about the health and performance of its fleet in Fleetio, an industry-recognized fleet management and maintenance system that is audited daily by company management. The results of proactively maintaining its delivery assets help to ensure that its trucks and vans are 100% operational, which produces the company’s high on-time delivery times and enhances the safety of its core asset – its drivers.
In addition to focusing on its fleet and personnel, TLSS offers its NOC platform that provides its clients the real-time status of every delivery and shipment. The program also provides clients with geographical location, when the shipment will arrive, and if any issues have transpired during its transportation. These advantages are important to the client and allow them to communicate with their own customers with facts rather than speculation. In effect, NOC is a valuable asset that closes the communication loop between the supplier, TLSS, and the end customer.
Seizing A Value Opportunity In TLSS
Recognizing the value in companies before others do could result in an enormous success, and the value-proposition from TLSS comes from a combined set of factors that may ultimately translate into lucrative returns.
The capital structure is inviting with only 11.7 million shares of stock outstanding as of November 2019. And, the small float keeps the stock thinly traded. However, with the planned GRC deal being an all-stock transaction, liquidity is on the way to help facilitate a more predictable market for its shares.
As noted earlier, TLSS is expecting to report a sharp increase in revenues compared to the already posted $18 million in 2018. If the company comes near the projected $60 million estimate, shares could respond with a price to revenue valuation that is considerably higher than current levels. Moreover, the recently announced acquisition of GRC Trucking creates a new logistics category from which TLSS can generate additional revenues beyond its 2019 year-end projections.
Well managed, asset-based, and a low share count are only some of the factors bringing attention to Transportation and Logistics Systems, Inc. The real measure comes from their opportunity to participate in a trillion-dollar e-commerce economy, where reputation and performance matter. And, its from those inherent assets that TLSS can expand its revenue base and leverage asset-based utilization levels to their fullest potential. Combined, this asset-based logistics provider may already have the pieces in place to drive substantial long-term growth.
And that’s a consideration too hard to ignore.
Soulstring Media Group
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