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Online operation changes with times

Feb. 9, 2005
From the end of 2000 through 2001, as Internet-based ventures across the U.S. economy fizzled in huge numbers, Jon Russell wondered if he hadn’t made a mistake launching an online buying co-operative for small truck fleets

From the end of 2000 through 2001, as Internet-based ventures across the U.S. economy fizzled in huge numbers, Jon Russell wondered if he hadn’t made a mistake launching an online buying co-operative for small truck fleets.

“There was a question mark hanging over us for a while there and we wondered if we’d make it,” Russell, president & COO of TruckersB2B, told Fleet Owner.

His father, Stephen Russell, chairman & CEO of Indianapolis-based truckload carrier Celadon group, had started Truckers B2B – previously named Truckers Co-Op – in partnership with GE Capital in February 2000 to consolidate the buying volume of small fleets, to gain national pricing discounts equal to those of bigger carriers.

While the idea seemed solid at the time, the Internet as a marketplace was not. Although TruckersB2B generated $5 million in revenue by the end of 2001, it lost over $4 million-- not a recipe for success.

“But the basic story of what we were trying to do made sense – give the small fleet an opportunity to save money, drive some business to what we call ‘premiere’ brands in the market, and make a little money for ourselves in the process,” said Russell. “We had to change a few things and alter our approach a little, but by 2002 we’d turned it around and we are now celebrating five years in the business.”

TruckersB2B posted operating income of $1.6 million for its 2004 fiscal year on revenues of $8 million, up from $1.2 million and revenues of $7.25 million in its 2003 fiscal year. The company has reported $850,000 in operating income through the first half of its 2005 fiscal period.

To date, the firm has over 16,500 fleet members operating some 450,000 trucks. On average there’s 26 trucks per fleet, with each fleet generating about $2 million in annual revenues, said Russell.

Those numbers in part convinced Celadon to move forward with its stock repurchase plan, buying out the remaining stock held by GE Capital to take 100% ownership of Truckers B2B – a sign that it expects even better performance down the road.

“The key is that, within the first two months, we realized the cooperative model wasn’t going to work – both fleet customers and vendors were leery of it,” Russell explained. “So what we did is switched to work more like a marketing and rebate company: offering just a few products we considered to be the ‘premiere’ brand in their segment – Michelin and Goodyear for tires, Pilot and Travel Centers of America for fuel discounts, for example – while providing for a rebate to make those top brand purchases more attractive and cost effective for smaller operators.”

The company is now expanding its offerings beyond the simple “basics” for fuel and tires into other areas, such as toll discounts through BestPass, communication offerings through PeopleNet, and parts discounts through International Truck & Engine Corp.’s Diamond Advantage purchasing card program.

While a small fleet can’t get the pricing discount that a large national carrier can, Truckers B2B tries to “split the middle” in Russell’s words, by offering a wider variety of services to generate larger savings over time.

“The goal is offer everything a fleet needs and give them an opportunity to save money on buying the ‘top’ brand in a particular product category – and allow them choice,” he said. “The ability to choose what they want to buy through us is critical because these fleets are used to negotiating their own pricing. That’s why functioning as a rebate and not a pricing firm really works for us.”

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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