Veraction Merges With Trax Technologies: A Q&A with CEO Chris Connell (Part 2)

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The transportation management industry is big, fragmented and ripe for disruption. In Part 1 of this interview with Chris Connell, CEO of Trax Group and former CEO of Veraction, we discussed the June merger of the two companies into a combined transportation spend management, freight audit and payments solution. Today, in Part 2, we conclude the conversation with a forecast of where the transportation and logistics markets are going, the potential asteroid that could disturb the whole ecosystem (hint: it involves Amazon) and how Trax fits into that future.

Jason Busch: If you were to take out the crystal ball and look at the future of this sector, where do you see the market going? Maybe with a three-, five-, and 10-year lens.

Chris Connell: On the three-year lens, I’d say that I think the analytics we are delivering will grow in importance and create amazing opportunities for customers to manage their spend better. To put it in perspective, we have customers today that ship as much as 100 million parcel packages a year. You can’t even fit that data set into an Excel spreadsheet to conduct any level of analysis. The ability to slice and dice that data with our tools along with our domain expertise is a game changer for customers.

Another big industry change is that customers are really trying to consolidate the management of their transportation spend. In the past customers may have had multiple providers like us to help them with specific parts of their transportation spend. Today, customers are pushing to get all spend under one “umbrella.” Once they do that, they are finding that they can be much more agile. You can’t do that when you manage your spend in silos.

JB: Why would a head of supply chain or a CPO prioritize this whole area today beyond just classic freight auditing?

CC: It’s a massive cost category and a potential lever if managed well. Today, customers are thinking about this far more strategically. People are seeing the enormous costs associated with transportation, and it’s getting the spotlight. It's large and it needs to managed like any other cost category.

JB: What are the asteroids you see which could disturb the whole ecosystem in this space? Should we be looking at Amazon as a carrier in the future? What, from a supply market perspective, could shake up this market?

CC: I think you hit the nail on the head. We hear the Amazon story often from a lot of our customers. Amazon has two major impacts on shippers from our perspective. One impact is direct and the other is indirect but certainly every bit as important.

The direct threat is the fact that they represent a fulfillment juggernaut. For any of the customers I serve on the retail or apparel side, they wake up every day thinking about Amazon. It’s mostly from a market share standpoint and this can obviously drive down their volume.

It’s a real concern but I will tell you that the shippers we deal with seem to be getting more and more adept at circumventing the Amazon challenge. I’m not diminishing the challenge. It’s still a real one, but so far the retailers we serve seem to be combating it effectively despite the pressure. Amazon keeps them on their toes, but they have successfully been driving their volumes up year over year. The competition has really “raised the game” of everyone.

The indirect threat is equally important. We recently signed a well-known consumer product goods company and one of the things they walked us through as we were onboarding them was the fact that they needed to capture information from their transportation providers pertaining to delivery windows.

They explained that in the past a carrier could could deliver anytime during the week. However, today and because of the need to not hold inventory, their carriers are required to show up inside a two-hour window at a destination. If they do not comply, they are typically paying a penalty on the overall invoice. This gives “just in time” a whole new meaning.

The reason for this change is Amazon. Because Amazon is putting such enormous pressure on the market as a whole, The channels which these manufacturers serve will not hold inventory unnecessarily. It has to be delivered at the exact right time to make them competitive.

JB: What’s the future of Trax? Are you going to focus on building out the broader set of offerings and data and benchmarks? Are we going to see more acquisitions and mergers? What’s the plan?

CC: It’s all the above. The new company aims to exploit our new leadership position in the market. Customers now can feel comfortable about us in terms of our size, our financial stability, our ability to innovate as well as keep up with security and compliance of regulations, which are becoming more and more important across all sectors.

Our customers can sleep well knowing that Trax is a significant company – 500 people, $10 billion in spend under management and over 300 customers. We feel this is a huge advantage and benefit to our customers.

Secondly, we have invested a lot of money into our platform. We are committed to innovating and keeping pace with the demands our customers are facing regularly.

You could see more acquisitions. We are very committed to maintaining the most robust solution suite in the industry and ensuring that we deliver the best set of transportation spend management capabilities possible and, in some instances, acquisitions may be the path for that. We are very bullish on our business and the outcomes we can create for customers.

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