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McLeod predicts ‘shake out’ coming for private equity in trucking tech Aaron Huff| CCJ – @AaronHuffCCJ

On Aug. 26 at the 2019 McLeod Software user conference, more than 1,000 attendees were advised on how to take advantage of current economic conditions.

“Set your sails in the direction the wind is blowing,” said Tom McLeod, president of the Birmingham, Ala.-based company that offers enterprise-wide transportation management software (TMS) for motor carriers and logistics companies.

The economic winds blew favorably from all directions in 2018. Motor carriers and freight brokers had all the freight they could handle. “It was a year unlike any other,” he said.

Results in 2019 have been mixed, especially for companies who depend on the spot market to find loads as volumes and pricing have fallen sharply. Although freight patterns have shifted, McLeod stressed that the change is an opportunity for transportation companies to differentiate and transform themselves using new and emerging technologies.

Many technologies in the market have been developed by companies funded by private equity investors, and McLeod advised his customers to choose their vendors carefully.

Some of the biggest investments in trucking technology have been flowing into companies that offer digital freight matching platforms. In the process of integrating these and other third-party software applications with McLeod’s TMS platforms, “we’re in a position of seeing companies with remarkably and starkly different strategies for solving the same problem,” he said.

McLeod questioned if the level of private equity investment in transportation and other industries may have created an economic bubble. Investors have been acquiring companies with high evaluations and loading them with debt, he said. This raises the likelihood that an economic slowdown could burst the private equity bubble in a fashion similar to what happened to the dot.com industry in the early 2000s and the housing industry in 2008.

“If there is a bubble, this may be where it is. There may be a shakeout coming,” he said.

McLeod Software is a privately held company with “good profitability and no debt,” he told CCJ during an interview following the keynote. Not having outside investors has several advantages in today’s market, he stressed.

More than 1,000 attendees gathered at the Gaylord Rockies Resort in Denver for the 2019 McLeod Software user conference.

“It puts us in a position to really make long-term better decisions,” he said. “Taking investment is like placing a big bet. There is a timeframe involved so it’s almost like you’ve lit a fuse. If you don’t get whatever critical mass is defined as (by the deadline) then things blow apart.”

McLeod Software has added more staff to help it sort out the applications and vendors it integrates with, he said.

“We’ve long had the philosophy that we want to be open and easy to work with in terms of integration,” he noted. “We want to make available connections to other services that are proving viable in the marketplace.”

During the keynote, McLeod told the audience at the Gaylord Rockies Resort in Denver where he thinks the safe bets are for new and emerging technology. He is especially keen on machine learning applications that can give users instant recommendations for pricing freight, planning loads, and hiring and retaining drivers.

McLeod Software has developed a real-time load acceptance tool that ranks load offers with a 5-star system and gives recommendations for how to turn a 2-star load into a 5-star load, for example. “This real-time information can help make better, more profitable decisions,” he said.

The company is also using machine learning to improve the driver work experience.

“Whoever is able to recruit and retain drivers will win in today’s marketplace,” he said.

McLeod Software introduced a new Driver Choice module at the conference that gives carriers an automated process for letting drivers have more say in the loads they are being assigned. If a fleet chooses, the module will allow drivers to self-dispatch their next load from those the carrier offers by using a web portal or the McLeod Driver App. The offered loads are screened by filters set up by the carrier and checked for feasibility based on available hours-of-service, location and estimated time of arrival.

The company also rolled out a new Trip Management module that helps drivers plan ahead to make better use of available time. The module accounts for hours-of-service, traffic patterns, fuel stops and other route data. The product was jointly developed with Trimble Maps, formerly ALK Technologies.

For brokers, McLeod developed a new digital freight matching tool called Top Match that ranks carriers in the broker’s database according to who is most likely to take a load and automates the offering of loads to carriers, he explained.

He also mentioned a tool that carriers and brokers can utilize at any time to find loads and capacity. Carriers can use a built-in feature in the load planning screen of their LoadMaster TMS by tapping a “backhaul” button that displays available loads from McLeod’s logistics customers that use the PowerBroker TMS.

The backhaul button performs a search for loads that are the closest to the delivery point of the vehicle and displays the name and phone number of the broker, along with the average rate information on the load to help make dispatchers better negotiators, he said.

Original Source: https://www.ccjdigital.com/mcleod-predicts-shake-out-coming-for-private-equity-in-trucking-tech/

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