The Freight Pod
The Freight Pod is a deep dive into the journeys of the transportation and logistics industry’s brightest minds and innovators. The show is hosted by Andrew Silver, former founder and CEO of MoLo Solutions, one of the fastest-growing freight brokerages in the industry. His guests will be CEOs, founders, executives, and leaders from some of the most successful freight brokerages, trucking companies, manufacturers, and technology companies that support this great industry. Andrew will interview his guests with a focus on their life and how they got to where they are today, unlocking the key ingredients that helped them develop into the leaders they are now. He will also bring to light the fascinating stories that helped mold and shape his experiences.
The Freight Pod
Ep. #25: Drew Wilkerson + RXO Acquires Coyote Logistics
RXO just announced the acquisition of Coyote Logistics for $1.025 billion. On today's episode, you get to hear a deep dive with RXO CEO Drew Wilkerson. He breaks down why Coyote was such an attractive acquisition target for RXO, what he hopes to accomplish through the integration process, and how he is thinking about their future together strategically. We talk about the impact to the people from both organizations, the processes, and the technology the organization will use moving forward. Drew gives us a glimpse into his strategic approach and a message to his future employees from Coyote.
We also delve into the complexities of integrating sales teams and maintaining customer relationships during acquisitions. Drew sheds light on the importance of people and culture, emphasizing that success hinges on engaging with employees and customers alike. Learn how RXO plans to use detailed customer feedback to drive continuous improvement and align everyone to their mission. Drew's enthusiasm is palpable as he discusses the future, confident in the freight brokerage model and the strategic advantages this acquisition brings.
***Episode brought to you by Rapido Solutions Group. I had the pleasure of working with Danny Frisco and Roberto Icaza at Coyote, as well as being a client of theirs more recently at MoLo. Their team does a great job supplying nearshore talent to brokers, carriers, and technology providers to handle any role necessary, be it customer or carrier support, back office, or tech services.***
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*** This episode is brought to you by Rapido Solutions Group. I had the pleasure of working with Danny Frisco and Roberto Icaza at Coyote, as well as being a client of theirs more recently at MoLo. Their team does a great job supplying nearshore talent to brokers, carriers, and technology providers to handle any role necessary, be it customer or carrier support, back office, or tech services. Visit gorapido.com to learn more. ***
A special thanks to our additional sponsors:
- Cargado – Cargado is the first platform that connects logistics companies and trucking companies that move freight into and out of Mexico. Visit cargado.com to learn more.
- Greenscreens.ai – Greenscreens.ai is the AI-powered pricing and market intelligence tool transforming how freight brokers price freight. Visit greenscreens.ai/freightpod today!
- Metafora – Metafora is a technology consulting firm that has delivered value for over a decade to brokers, shippers, carriers, private equity firms, and freight tech companies. Check them out at metafora.net. ***
Hey listeners, before we get started today, I want to give a quick shout out and word to our sponsor, our very first sponsor, rapido Solutions Group, danny Frisco and Roberto Acasa, two longtime friends of mine, guys I've known for 10 plus years, the CEO and COO respectively, and co-founders of Rapido Solutions Group. These guys know what they're doing. I'm excited to be partnering with them to give you a little glimpse into their business. Rapido connects logistics and supply chain organizations in North America with the best near-shore talent to scale efficiently, operate on par with US-based teams and deliver superior customer service. These guys work with businesses from all sides of the industry 3PLs, carriers, logistics, software companies, whatever it may be. They'll build out a team and support whatever roles you need, whether it's customer or carrier, sales support, back office or tech services. These guys know logistics. They know people. It's what sets them apart in this industry. They're driven by an inside knowledge of how to recruit, hire and train within the industry and a passion to build better solutions for success. In the current marketing conditions, where everyone is trying to be more efficient, do more with less near shoring is the latest and greatest tactic that companies are deploying to do so, and Rapido is a tremendous solution for you. So check them out at gorapidocom and thank you again for being a sponsor to our show, a great partner. We look forward to working with you To our listeners. That's it. Let's get the show on the road.
Speaker 1:Welcome back to another episode of the Freight Pod. I'm your host, andrew Silver. I am joined today by none other than the man of the hour, the man of the summer, mr Drew Wilkerson, ceo of RXO, who recently, or two days ago, announced their acquisition of Coyote Logistics. A return guest for us, our first return guest. So if you haven't yet listened to Drew's episode from back in November, please go check it out. It's been getting a lot of traction the last few days and people are getting a deep dive into who you are and the kind of leader you are. But today we're going to just stick to the topic of Coyote Logistics. So welcome to the show, drew. How are you doing?
Speaker 2:Doing fantastic. How about you, Andrew?
Speaker 1:I'm doing great. I'm excited I got this interview. To be honest, this is a lesson in you don't get what you don't ask for. When I texted you congratulating you, I thought to myself I should ask him if I can interview him. And then I was like, hey, he's probably too busy. And then the next day I just thought maybe I'll just ask Nina, his chief communications officer.
Speaker 2:asked Nina, his chief communications officer, and she immediately was like, yeah, we'd love to come on. So I'm happy to have you Absolutely Excited to come on, excited about the acquisition and be able to talk about it some in this setting. We know the following is here and you know, even thinking about the RxO team and the Coyote team having a chance to hear more from me on some of the thoughts behind the acquisition is something that I look forward to. So let's start with an easy one then. Why'd you do it?
Speaker 2:Andrew, you've been in this business a long time and know as well as anybody that scale in this business is important and for us, when you look at the scale that this adds to our business, it more than doubles RxO's brokerage business.
Speaker 2:It makes us the number three brokerage in North America. It gives us a lot of market share and diversifies our verticals of customers that we're doing business with. When we looked at that, we saw that RxO had more business in industrial manufacturing, retail and e-commerce, automotive. Coyote was huge in food and beverage and transportation, obviously being a big piece. So when you look at what we were adding from a scale, there's so much that you can do with that. It starts with just your fixed cost of running a business, your fixed cost running a business. You're spreading across more loads, so you're pulling down your cost per shipment immediately upon acquisition. The second thing is purchase. Transportation is such a big part of the brokerage business and RxO was built doing business with small carriers. Coyote is working more with mid to large carriers and we're excited about the private fleets that they're working with.
Speaker 2:We're not really working with many private fleets at RxO. So when you think about the added capacity to be able to pull down purchase transportation, there's a lot of power that we're able to add to the network with the scale that we're adding. As we dove into the customers, there was not a lot of customer overlap. It's one of the things that got us the most excited. You know how hard it is to bring on new business and the number of accounts that do a million dollars in revenue for RxO will go up by 80% on day one. So that is a huge piece of business that we're adding. And then the last thing that I would say is the people. We got to know some of the management team and it's a talented team that has accomplished a lot in this industry and excited to add them to the already great team that we've got at RXM.
Speaker 1:So there's a couple of things I'll touch on there.
Speaker 1:And you know, private fleet is something that I don't think many people know what an advantage that has been for Coyote over the years and they were, frankly, a pioneer in how they approached that segment of the market.
Speaker 1:And it's a way to get deeper with your customers when you're not only hauling their freight but you're putting freight on their own trucks. So I think that's a great point you make in being able to bring that into your network and, conversely, in Coyote's model with a lot of enterprise business, there's a ton of density with these food and beverage customers which you can now bring that into your capacity network to make a bigger offering, a better offering for your carrier. So my question that I'm curious about with respect to especially purchase transportation is around UPS. So this is a very interesting deal because UPS not only was the seller but also is a very large customer for Coyote. How did you think about that as you were approaching and I know you were able to secure a five-year or long-term deal with them through January of 2030. But I'm curious how you thought about that in terms of creating a valuation on the business and also just in terms of a long-term relationship there.
Speaker 2:It was one of the key principles for me for getting the deal done to have a deal locked in with UPS as a core customer, making sure that we're protecting the business that we're acquiring but also protecting the people that are serving the UPS business right now today at Coyote and letting them go in there and continue and develop relationships with UPS with opportunities to grow.
Speaker 2:We're excited to partner more with UPS and I think that you know, coming out of this, there's going to be things that are added from both sides, from a capacity that we'll be able to do more for customers than what we were able to do prior to this. Ups is obviously going to be an important customer for us. It was an extremely large customer for Coyote and it'll be a large customer at RxO and one of the things at RxO that has always mattered is relationships. We want to develop deep relationships with our top customers. We want to give them great service, create solutions, have them embedded into our technology and because we've done that well, our top customers have been with us for 16 years on average and looking forward to doing that same thing with UPS.
Speaker 1:That makes sense. With respect to the acquisition and now integration. I heard on the conference call you had yesterday that the plan is, to quote quickly and successfully integrate Coyote. So my first question is what does a successful integration look like?
Speaker 2:Yeah. So what I would say is integration mindset starts when you're actually going through the diligence of the company and for me, I'm focused on three key things on the integration. Number one the people. There are good people at Coyote and we want to be able to make sure that we're retaining those people. We want to be able to get them in front of customers. We want to help expand the business that they're doing. Number two is customers, and you know customers are extremely important and I talked earlier about how you have to have service solution, innovation and relationships. We want to protect the business at Coyote and expand. We think that the added capacity that's coming from the RxOS side will give them more to sell. They're going to have opportunities to cross sell into these customers and talk about other services like managed transportation, ltl, cross-border freight. So we think that we're going to be able to offer customers more than what we were offering today and extremely excited about that opportunity.
Speaker 1:How about? The name Coyote is an iconic brand name, one that has 18 years of history behind it. Rxo comes from an iconic brand in XPO, but it is still a year two-year-old name. What's happening there?
Speaker 2:The name's going to be RxO. But we've got a lot of respect and we want to honor the legacy that the Coyote name and brand built and what we want to do is be able to bring over a lot of the entrepreneurial spirit that Coyote started with that when Coyote was a rocket ship, when it first started it was the hottest brand in transportation, had strong relationships with customers. It was growing faster than most in the industry. So we want to be able to honor the legacy that was created at Coyote, but the brand will go under RXO. That's already publicly traded.
Speaker 1:That makes sense. I can appreciate that and I resonate with what you said. With respect, I mean, I was a part of that rocket ship journey. There are many people like myself who have, frankly, everything that we've learned we owe to our years at Coyote, historically known to being excellent at, was hiring and training. Absolutely, when you think about process with respect to an integration, how do you move forward? How do you know if it should be the Coyote legacy training process that the future brand keeps or the legacy legacy rxo process? How do you think about that with respect to different processes in the business?
Speaker 2:spending time with the people, and it's not walking in there with a tunnel vision of knowing exactly how things are going to go. It's spending time with the people from both teams and letting them help develop the plan of who rxo is now and how we're going. It's learning from both sides and being able to take best practices from what was Coyote and what was RxO and having that become the new way of doing business at RxO. As far as best practices, there's absolutely going to be pieces at Coyote that they did better than what we were doing at RxO, and there's gonna be pieces where RxO was doing things that were better than what C were doing at RxO, and there's going to be pieces where RxO was doing things that were better than what Coyote was doing. But that's part of the excitement around the acquisition is being able to take the best of both worlds and pull it together for customers, for carriers and for employees.
Speaker 1:I think the mindset is very important, yours specifically, and then whatever you can instill in your team, because it's very easy to go into an acquisition and say we bought you, so we're doing it our way, and it just doesn't make sense most of the time because, especially in a case like this, where you have two very successful organizations that have a history of success, a history of growth, a history of happy customers and employees, there are many ways to skin the cat and you know. To go into it and say, hey, we know all the answers is, I think, a fool's mistake. What do you think is your responsibility in this to the employees and customers? And when I say yours, I mean you're specifically in how you approach this whole thing.
Speaker 2:Yeah, it's listening. My responsibility is to listen. Ultimately, we'll have a team that will be made up of both Coyote and RxO that will make the decisions on how we're moving forward. But my number one job is to get in there and know the people of Coyote, Know what has made them successful over the years, Know what the stumbles have been over some of the years and how can we learn from that and be better. What motivates them? What type of incentives are they looking for? Listening from everything from customer to culture to incentives like what works for people.
Speaker 2:And then the second thing that you're talking about, on the customer side. I love spending time with our customers. I spend a lot of time with RxO customers and once the acquisition is finalized, I'm looking forward to spending a lot of time with the customers that will be coming from Coyote and customers are a key piece and there's so much that customers are going to be able to benefit from the added capacity that we're offering, the added services that will come in. I'm looking forward to spending a lot of time on the road.
Speaker 1:I can appreciate that. I think the best CEOs are the ones who are out in front of customers and listening to them, because if you're customer-led, you tend to be able to build the right processes and actions in your business, because, at the end of the day, if your customers are happy, then the business will grow and you can make money. So when I think about integrations, I'm curious. You mentioned on the call yesterday that you've done 12 acquisitions since 2012. What are some things that you've learned from M&A and what are some mistakes that need to be avoided?
Speaker 2:Yeah, I think one of the things that we've learned is you want to move fast, but you want to be responsible too. So, as you're talking about technology, no matter which way the technology goes is deciding on the platform. It's not going to be something that's rolled out wholesale all at once. It'll be something that is rolled out and it would be branch by branch and maybe even half of a branch by branch to making sure that we're learning from the mistakes during the rollout process so that as we start going into larger locations, it should be smooth as far as what we're doing there. The other thing that I've learned is that what we just talked about get in front of the customers and get in front of the customers extremely fast. Find out what is working and what is not working, where do customers see the gaps in and what are the opportunities for us to improve our service overall, on both sides.
Speaker 2:I mean, one of the things that we've always done at RHO is we do a simple customer survey and ask them a lot of questions and ask them to rate us one to seven on how we are doing. How are we doing from a relationship standpoint? What are we doing from a service? What are we doing from solutions? How do you find the technology? I mean, there's a lot of questions. It takes customers no more than 20 minutes, but we get a lot of valuable insight off of that that helps us go in there and actually create solutions from it. We heard you say this. We're going to be able to do X, y and Z off of that. And then the last thing is that I talked about earlier the people. The people make the business, and you know spending time with the people, the people make the business, and spending time with the people, the people know what we do great and they know exactly where our shortcomings from and if you listen to them, they'll guide you into the right directions.
Speaker 1:I wholeheartedly agree. So I'm curious you mentioned the technology and Bazooka as Coyotes T tms is no. Do you know what that stands for? I don't know. My father was a big fan of acronyms. Everything's an acronym, so bazooka was brokerage.
Speaker 2:Automated zoom on operations killer application. That is awesome. That's great. No, I did not know that so it's.
Speaker 1:it's a system that has for. For those of us who worked at Coyote, it's historically been known as a very excellent operating system, and for many people who left over the years and those who I've talked to they all, wherever they went, they look back and say what I got is not as good at Coyote as Coyote's bazooka. But I don't know enough about what you've built at Arc, so I know it's been known to be cutting edge. How are you thinking about the technology platform that'll be utilized moving forward?
Speaker 2:I want to go in there and do deep dives on both platforms, learn from both platforms. We'll decide on the platform and take the best of the one that we don't decide on, take the best things off of it, whether it's things that allow an employee to reduce their keystrokes, become more productive, maybe increase productivity by a load per day, whether it's something that's customer automation or whether it's carrier automation that just makes it easier for us to do business with on the carrier side. What are the tools that we can lift and shift and make sure that we're not losing anything?
Speaker 1:that whatever we do is all about being able to move forward for customers, carriers and employees. And moving to people, I guess let's start with an easy one. What is kind of the message you have to the Coyote employees today that just found out they have a new parent organization that just found out they have a new parent organization.
Speaker 2:We're extremely excited. You've accomplished a lot. If you look at what Coyote has been, it's been one of the strongest brands in the transportation industry, so we're very excited. I'm excited to spend time with you. I'm excited to learn from you. The way that we run the organization is all about the people, so I want to get to know you. People are critical to what we're doing. And then the second thing I'd say is we're brokers. We understand asset light transportation very well. We know the cyclicality of this business and what that means to you and we know how to operate in that and we're looking forward to getting into the trenches and fighting with you.
Speaker 1:I mean, I love that message and I think you know I've been asked this by a number of people in the last 48 hours Like what do I think about it?
Speaker 1:And you know, I think it's.
Speaker 1:I think UPS did you a big favor.
Speaker 1:I think when UPS announced it publicly some time ago, they created the angst for the employees that it's like almost having a parent tell you I'm putting you up for adoption.
Speaker 1:Like I know that that has happened but, like in this example, it's like a child all of a sudden feels less loved and so like as someone who's working in that organization for a period of time, knowing the parent org doesn't want me anymore, you just become almost eager and looking forward to whoever comes in next. But what I think I really appreciate, just from the little time I spent with you in the podcast back in November, is you seem to be a very empathetic leader and one who understands that. Listening to and you've already said it four times on the show today in 15 minutes, and I think it's really important but going in eyes wide open and saying, hey, help me understand how to make the right decisions to build the best business for us, because it is now us I think that's really important and I think that the Coyote folks are really lucky to have someone like you and your team to be kind of taking them into the next chapter.
Speaker 2:Thank you. Thank you, I appreciate it Very kind, but it is all about the people even being able to complete this acquisition. There were so many people from both sides. I mean, coyote had a leadership team that was still running the business and they were running a process at the same time. So I know the hours that were put in RxO had people who were doing diligence and they were still running a business at the same time. So it's all about the people and surrounding yourself with people that are going to make you better, that are going to challenge you to think differently than what you're doing, and I'm excited to get in there and learn from the Coyote folks.
Speaker 1:So I recall from our last conversation you talking about the importance of aligning people to the mission. So, just as a refresher, what is the mission that we're now on? What is the mission that these Coyote folks are becoming a part of?
Speaker 2:Not at enormous profits. We want fair profits for the work that we're providing. We want to be led with technology as far as what it does for customers, what it does for carriers and how it's easy to use for employees, and we want a culture that is better together, that as we listen to each other, we can come up with solutions that are differentiated in the industry. If you can create alignment, I truly believe that anything is possible. And this is just the first chapter of the story of announcing the acquisition. Chapter two is running so much faster after we are together as one.
Speaker 1:And acquiring a business with over 2,000 people is scary, and I'm just curious how do you think about creating alignment with such a large group that you're now bringing into the fold?
Speaker 2:It's getting the teams to get to know each other and having the RxO folks and the Coyote folks together and as much as we can mix things in, that's where it becomes the new culture of our RxO, of what we've learned from each other. For me personally, you'll see me a lot in Chicago. I will be in Chicago a lot. I will be out in Denver a lot. I'll be in Chattanooga. I'll be in Atlanta. I know the key locations that are at Coyote and Detroit. I'll make sure that I am present at it. And again, it's setting the culture of sitting with the people, learning from the people, creating the culture together. If you come in and it's a dictatorship, I don't believe that works. I don't think that that would set us up for success long-term. We're going to create the roadmap together and we're going to be better for doing that.
Speaker 1:So one of the things that I've now been through two acquisitions and integrations one as a actual sales rep at Coyote when we acquired Access America I don't know 12 years ago or whatever that was, and then another when my own company, molo, was acquired by ArcBest. And undoubtedly one of the hardest things to deal with is the sales reps and the integration of the sales reps and who's going to get what accounts. And one thing I'm certain of is already probably happening is your reps at Coyote and your reps at RxL are in their customers' ears right now asking the first question of and they're crossing their fingers hoping the answer is no are you doing business with the other company already? And if the answer is yes, then they are starting to sell and they're pushing and say, hey, tell whoever you want to work with me. It's the nature of a sales rep, so I understand it, but it also can create some conflict. How do you think about that?
Speaker 2:Well, I think everybody needs to remember right now the acquisition is not complete. We're still two separate companies. I appreciate the ambition and the eagerness. You're right. I am certain that some of that is already happening and taking place at both RxO and Coyote. But for us it's about the relationship with the customer. So focus on your book of business what you've got today, continuing to service the customer build off of what you've got. There's no need to tear down the other side. There's enough freight. This is a $400 billion for hire trucking market. I promise you we will make the right decision and be able to make sure that everybody's got plenty of freight to book.
Speaker 1:And then just in general, I mean it's inevitable that there's going to be overlap, not even with customers, just with people and roles. How do you think about that with respect to managing and moving forward?
Speaker 2:Well, the good thing is, you know, I think both organizations have some open roles right now. So it's about finding the right people and putting them in the right seat, and I think that there's opportunities for us to. The roles may not look the same as what it's in today, but again it's in today, but again it's about what positions are. So for the strongest growth going forward, we'll always look for the right person going in the right role. It was in a book that I read years ago good to great and just making sure that you're finding people and you're putting people on the right seat in the bus. And again, those are decisions that aren't made yet. You know, frankly, we haven't spent enough time far enough down within the Coyote organization to know what that is. And as we get together and we work with the team, those are decisions that we'll make as a team that benefits customers, carriers and employees.
Speaker 1:And with the deal not closing until it's supposed to close at the end of the year.
Speaker 2:Before the end of the year. That's right.
Speaker 1:What, what is? What are the next six months of the year look like for you and the team?
Speaker 2:Yeah, so hopefully it doesn't take six months. We'll see, but hopefully it doesn't take six months. The sooner that it closes the better. We're ready to start running and we're ready to run fast. Obviously, the the the has to clear through for it to go final and still in that process. But you can't actually go in there and do work on the business of what it is, but you can start to plan what your work is going to be on day one. So it's spending time with the Coyote leadership team, spending time with the RxO leadership team, maybe getting together and getting to know each other more as people first, so that there starts to be a trust and a bond, this form for the common mission that we're going out and we're going to be starting to create before the end of the year. And then, as it starts to go, what does this look like as we go forward and who are the right people in the right roles and where does that fit?
Speaker 1:Yeah, Great, well, we're coming up on time here. I'll just leave you with one more here. Is this the end of the M&A journey here for you guys, or is there more in the pipeline?
Speaker 2:Yeah, our story has always been one of a balanced capital allocation approach, so the first place that we always look to invest at is in the business You've got M&A and you've got share buybacks for. So those would be two and three and, as you look at it, we're going to do what makes sense during the right time For us. This was the right time in the market for us to double down on what is going on in freight brokerage. We believe in the model that we've got and we think that the acquisition of Coyote positions us in a much stronger position when the market inflects. We were ready I think everybody's ready for the market to inflect, but we were ready and knew that we would perform well when the market inflects. I am much more confident with the power of these two brands coming together.
Speaker 1:I mean, I share that confidence and I might have to buy some shares, but it's you know that saying is that the Warren Buffett saying be greedy when others are fearful. And it seems like now's the time where everyone's kind of worried about what's going on in our industry and you guys are swooping in and buying again, as you said, one of the more iconic freight brokerage brands in history, and seemingly at a great price. So, absolutely, we are ready to run brokerage brands in history and seemingly at a great price, absolutely.
Speaker 2:We are ready to run.
Speaker 1:Any parting words you want to leave our audience with here.
Speaker 2:Thank you. Thank you for taking the time to the Coyote team. I look forward to working with you. I look forward to meeting you, hopefully sooner rather than later. Let's take care of the customers and the carriers and stay close to our employees.
Speaker 1:Well, with that, that's the end of our episode and I appreciate our audience and we'll see you next week. Thank you you.
