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The Official Publication of the Airforwarders Association

Summer 2013

FORWARD

Inside:AirCargo 2013 Wrap-Up

At the Bar: Hot Topics

M&A Transactions in the Logistics Sector

Viewpoint: The Real Cost of Doing Nothing

SAVE THE DATE: AirCargo 2014

Agency-Based Model Thrives on

ICAT LOGISTICS AT 20:‘You Grow, We Grow’ Teamwork

AfA Member Profile

Forward Magazine Summer 2013 Airforwarders Association16

Agency-Based Model Thrives on ‘You Grow, We Grow’ Teamwork“The people at the home office put

themselves in our shoes every day.”

That’s how Michelle Ulery, the ICAT Logistics agency partner who owns three separate o!ces, explains her relationship with ICAT’s World headquarters—aka, “the home o!ce.” She appreciates the ICAT system, because she knows all too well the "ip side

from her past experiences with a previous company.

“I heard about ICAT back in 2007. At that time, I had my own business and represented a competitor. I was getting frustrated by the lack of support they were giving my company—which was the largest agency in their system. We were being treated as though it was a burden to work with us, so I began making arrangements to bolt,” she said.

Today, Ulery appreciates everything about her alignment with ICAT. An avowed entrepreneur, she relies on the home o!ce to help her with complicated RFPs, insurance questions, personnel guidance or whatever additional assists she may need to grow her business. One of the recent highlights was Ulery’s ability to open the Dallas o!ce with a bang, going from $0 to $600,000 in revenues within the #rst six months, thanks to the joint e&ort with—and referrals from—the home o!ce.

ICAT Logistics at 20:

17airforwarders.org Summer 2013 Forward Magazine

Like Ulery, ICAT believes in the power of entrepreneurism, which is what has propelled the Elkridge, MD.-based company that celebrates its 20th anniversary this year. “We think when there’s skin in the game, the commitment rises,” says Rick Campbell, ICAT’s president and CEO, who created ICAT “from the ground up,” and is proud that original employees and agency partners continue to be a!liated with the company two decades later.

(e company has grown in most of its 20 years, and typically adds two or more new o!ces annually. In recent years, ICAT has been focusing on not only growing domestically, but globally as well. So far in 2013, ICAT has signed on two more o!ces, San Juan and Miami, to be more internationally focused and to expand its reach into the European and Latin American markets.

Laser Focus: Being #1 Agency-Based Freight Forwarder

“About three years ago, we identi#ed our “sandbox”—ICAT would strive to be the #1 agency-based freight forwarder in the United States. (at’s our goal – clear, concise and simple. Making that decision meant we were not going to take a piece of our agency partners’ income to fund our own company stores. We would fund our agency partners’ growth instead,” Campbell explains.

Most franchisors follow a model that contains a mix of “owner-operated and franchised” o!ces, which can pit one form of ownership against another. ICAT chose to abandon that arrangement so its agency partners would not have to question allegiances or e&orts “in the trenches.”

Agency partners #nd that ICAT is willing to work “outside of the box” on their behalf. As Jim Vespa, vice president of #nance explains it: “We go above and beyond in working for our agency partners, because our success is tied to them.” How does that look, in practice? “If a piece of business doesn’t #t nicely inside the contractual box from a fee standpoint, but the opportunity has merit, often we’ll work with them, in those cases, to come up with a mutually bene#cial solution,” he says.

Another way ICAT assists agency partners

is by providing a “big picture” view of their business, which can be di!cult to see for the day-by-day operator. Such was the case with an ICAT o!ce that relied on home delivery of consumer electronics purchased online. “On the surface, the business looked good, high shipment volume, attractive revenues —but this business has the knack of being a very claims-intensive business, and the margins are thin. At the end of the day, after factoring in all the costs, you really aren’t making any money,” Vespa remarks. Using the numbers, the ICAT home o!ce team convinced the partner to pursue other types of business. “As a result, #1 they’re much more pro#table today, and #2, it saves us a ton of time in the back o!ce,” he explains.

Some freight forwarders might have simply cut ties with an agency that was creating more work for the home o!ce. Not ICAT. “In our case, we live and die with our agencies; they make or break us, and once on board and through our process, we do everything we can to help them succeed,” he says. “Yeah, we could’ve decided to move in another direction, but we clearly wanted to keep them in the fold, by getting them refocused and redirected into more pro#table business.” (e mark of a good partner is best determined by interactions not just during good times, but also in how the partner reacts during adversity.

Accelerating Agency Owners’ Growth

Because Campbell started ICAT in 1993, he has seen his share of market expansions and contractions—including the post 9/11 fallout and the most recent slog through the

Great Recession. (rough it all, he has led the company with energy, focus and integrity, qualities that—with the company’s impressive growth statistics—earned him the honor of receiving the Ernst & Young Entrepreneur of the Year award in 2006.

In 2005 and 2006, ICAT Logistics appeared on Inc. 500’s fastest growing private company list—and in recent years has experienced growth of 1.2% from 2009 to 2010, and 8.8% from 2010 to 2011—again, during a period when many companies in the industry failed to survive.

It was in 2010 that Campbell had a discussion with his longest standing agency partner, Dan Cser in Detroit, who has been with ICAT 19 of the 20 years it has been in business. “Dan and I have always interacted and consulted one another from the very beginning,” says Campbell. “Detroit was probably one of the hardest hit markets during the recession, and we decided to focus on Danny’s o!ce growth.” (e end result? A 35% increase in revenues from the previous year.

(e biggest obstacle for Cser was his understandable reluctance to hire a salesperson when the economy was so lackluster. However, Cser was considering buying a competitor’s business. Campbell convinced Cser to suggest, instead, that the seller reassess his business, and become an independent salesperson on commission for ICAT. “I’ll help you show him the monetary bene#ts and the lifestyle bene#ts,” Campbell recalls telling Cser.

Today, that salesperson reports that taking Cser up on that o&er was “the single best decision he’s ever made professionally,” with more time for selling—because he wasn't running a business—and just as important, more time for himself and his family, Campbell explains. “Our job is relatively simple,” says Campbell, “to help others grow by truly looking at what is best for them, and we will do just #ne ourselves.”

Cser appreciates the relationship he has with Campbell and the supportive crew at ICAT home o!ce. “(e value they have is that they’re the hardest-working executive team in the industry, and they are a readily available resource to the agency owner, to help in whatever endeavor the owner is trying to accomplish—whether it’s operations or training or sales recruiting or sales

“We think when

there’s skin in

the game, the

commitment

rises,” says Rick

Campbell, ICAT’s

president and

CEO, who created

ICAT “from the

ground up,”

AfA Member Profile

Forward Magazine Summer 2013 Airforwarders Association18

generation,” says Cser, who runs an o!ce with eight employees that does 80% of its business in the automotive market. “(ey will help you in any area that is not your strength, but yet important in running a successful business.”

All an agency owner has to do is say, “I need help with ….,” and the ICAT home o!ce will research ways to assist. “(ey will do coaching sessions at any interval you want, if you need it,” Cser notes. “(e whole time I’ve been a!liated with ICAT, I’ve always been treated as a partner—not just as an o!ce out in the #eld.”

Cser’s input has helped not only himself, but other agency partners as well, since his “lessons learned” become part of the business model. (at kind of sharing—“to make it better for other business owners who come on board”—is a large part of the “partnership” concept that drives ICAT, says Cser, whose o!ce handles a good deal of international shipping, whether it’s an oversized piece of equipment that needs specialty handling, or #nding a freight vendor to #eld all of a client’s shipping needs.

International Growth: ICAT’s Global Presence

ICAT has done business internationally for years, including the daunting task of moving an entire water amusement park from the U.S. to Saipan in 2003. “We’ve been involved helping #rms on the international side for quite a while, and that has become the fastest growing segment of our business over the last several years,” said Campbell.

Today, many companies are running lean, lacking the expertise or time to analyze how to best manage an international supply chain. (at spells opportunity for ICAT. “We’re a mentor, an educator, and in some cases an adviser,” says Campbell. For instance, a Baltimore company that makes smart phone covers grew from infancy to $50 million in #ve years. “(ey source overseas, and while they have done an incredible job in many key areas necessary for this type of growth, international logistics per se is not part of that expertise depth,” he explains. “(ey’re bringing goods in from China via a well-known carrier. (ey paid a very heavy bounty due to the method and manner in which they used that carrier—but that’s all they knew, because they were so focused on reliably

ful#lling promises to their key national customers.”

Now, this company consults with ICAT about various issues, including custom regulations. “(at’s a trend that will continue in our industry. Companies that can customize the added services, build partnerships, will add value,” Campbell explains.

Another example of how ICAT delivers on that value proposition comes from Keith Buford, vice president of global operations. “We think it’s critical that we build an end-to-end turnkey product so that our agency partners can go out and pursue new clients, competing against the multinational forwarders for the supply chain business. We want to be able to o&er them a solution, from an IT standpoint, from an overseas agency standpoint and from a global expertise standpoint with the support of the international home o!ce folks. We can bring big picture ideas and solutions that they can take to their clients and, collectively, everyone wins: the customer, the agency and the home o!ce,” he explains.

Many of ICAT’s agents have close local relationships with companies they have served domestically for years. “(ey might do distribution for a particular product. Our international expertise allows the agency partner to ask, ‘How do you get your product here?’, which opens the opportunity to quote the business from the factory in Vietnam to the U.S.,” says Buford. Or, ICAT might look at a huge distribution center in California, and ask the client about where products are shipped to #nd ways of moving products closer to customers. Another option is to help agencies’ clients manufacturing in the U.S. discover ways to sell into the Chinese or Japanese markets.

By strategizing with a multinational electronics customer, for instance, Keith and his team managed to save that client hundreds of thousands of dollars a year. (ey examined its international operations, and then recommended the purchase of a warehouse the company had been leasing so it could be converted into a bonded warehouse with U.S. Customs. “(is allowed them to pay duty only when they used a product for manufacturing,” says Buford.

“We have over 400 agents throughout the world,” Buford points out. “(at allows us

to not only focus on major markets, but ancillary markets as well.”

Highlighting ‘The ICAT Way’

Jeanie Perkins, ICAT vice president of administration, has been part of the company for the past 20 years. New to the logistics industry when she started, Perkins helped Campbell build the business in ways that made sense to them—whether it was the traditional “freight forwarder” method, or not.

Her focus on agency partners is to treat them with the “utmost respect,” and to do the same for their customers, revising client practices as needed, for instance. “We’ll be supportive in helping to train them if they need HR assistance, or if they want help with an assessment before hiring someone,” she said. “We want to be their resource.”

Perkins coordinates monthly one-on-one “collaboration growth calls” between Campbell and each agency partner so they can explore goals and obstacles together. “(at’s been huge,” she said, in promoting agency success.

At ICAT, it is everyone’s responsibility to share ideas and to speak up if someone sees a better way to accomplish goals. (at’s how they deliver on their commitment: “One Call. Right Solution…DONE!”

“Our succinct messaging empowers every member of our team. Our Values, Our Mission, Our Vision and our Customer Promise allow each of our folks to act accordingly in their dealings with our internal and external partners,” Campbell, the CEO, says. His guiding principle is “growth,” for everyone the company touches. “Keeping my focus is the most important growth decision I’ve made on behalf of ICAT. For many years, we were opportunistic—not necessarily strategic—as a company. Now, we state it simply: Our “sandbox” is to be the #1 agency-based freight forwarder in the United States, as de#ned by the number of stations in the U.S.,” Campbell explains.

Detroit’s agency owner Cser attests to the end result: “At ICAT, it’s always about ‘win-win.’ If that’s what you’re looking for, join ICAT and watch your business grow.”