BUSINESS

Help wanted: Cincy booming in this industry

Jason Williams
jwilliams@enquirer.com
Matt Ventura, James Steger and Pete Ventura, co-workers of Integrity Express Logistics, at their business in Harrison.

The business of moving everyday essentials into your life is booming in Greater Cincinnati – and evidence suggests the growth isn't over.

The region is both dominant in sales-driven freight brokerage and on the front lines of shipping goods and materials, and this year's Deloitte 100 list of the region's largest private companies reflects Greater Cincinnati's position as one of America's transportation and logistics hot spots.

Union Township-based Total Quality Logistics remains atop the list of our region's largest privately held companies for the second straight year, helping to establish transportation and logistics as the newest industry grouping on the Deloitte 100. Four other logistics companies join TQL on this year's list. The future looks bright: Greater Cincinnati has seen an uptick in logistics-related jobs recently, the economy continues to improve and collaborative efforts are underway to bolster the industry here.

"We fully expect the Cincinnati region to continue to experience significant growth in the transportation and logistics industry," said Larry Gigerich, managing director of Indianapolis-based Ginovus, an economic development consulting firm. "The ability to leverage interstates, river ports, railroad infrastructure from Class One carriers (largest rail freight companies) and DHL’s air cargo hub are pretty unique as you look across the U.S."

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The industry's strong showing in the Deloitte 100 comes on the heels of the recent announcement that Site Selection magazine ranked Greater Cincinnati No. 5 in North America for transportation and logistics. In many ways, Greater Cincinnati is a natural fit for the transportation and logistics industry.

Roughly 60 percent of the U.S. population can be reached within a one-day's drive and 80 percent of Americans are within a two-day drive. Our position along the Ohio River and Interstate 75 – the nation's busiest truck route – make Greater Cincinnati an ideal place for freight movement. Cincinnati/Northern Kentucky International Airport's suburban Hebron location has offered plenty of room for international shipping giant DHL to grow its North American hub.

But our central location and strong infrastructure don't have much to do with the boom in third-party, freight-brokerage firms.

"This area has long been such a hub for transportation, because we're at the crossroads of so many interstates," said Paul Verst, CEO of Walton-based Verst Group Logistics, No. 58 on the Deloitte 100. "As for the non-asset base side of the business, they could be located anywhere in the country. All you need is IT infrastructure and phone lines, and you can start dialing for dollars from anywhere. It's really hard to pinpoint why we're so strong in freight brokerage."

'The jobs are there, but the talent isn't'

TQL leads way in an ultra competitive industry

Total Quality Logistics, making its 12th straight appearance on the Deloitte 100, has had a lot to do with establishing Greater Cincinnati as a freight-brokerage hub, local leaders say. The firm was born out of Cincinnati's transportation and logistics tradition. Two former employees of Reds owner Bob Castellini's logistics-related companies left to form TQL in 1997. TQL matches companies looking to ship goods and materials with drivers and trucking firms.

Companies are struggling to hire and find qualified truck drivers to move products. That's been a big reason why TQL and other third-party, freight-brokerage firms have been successful.

"The driver shortage is not going away," TQL President Kerry Byrne said. "It will impact capacity in the future. There is a big need for premium service in the market."

A decade ago, TQL expanded outside of Greater Cincinnati, opening offices in the Chicago and Tampa, Florida, regions. The growth seemingly hasn't stopped. So far this year, TQL has opened 10 new offices and added 600 new jobs, from Portland, Oregon, to Daytona Beach, Florida, to Richmond, Virginia.

In 2014, TQL saw a one-year revenue increase of $500 million, bringing its total annual revenue to $2.1 billion. Putting that growth into perspective: All other companies on this year's Deloitte 100 have an average of $349 million in total annual revenue. TQL was listed among 13 logistics companies that are expanding in North America, according to Site Selection magazine.

TQL has laid the foundation for the region to become a national freight-brokerage hub, establishing a highly competitive landscape that regional leaders say has allowed other companies to form and subsequently experience fast growth across Greater Cincinnati. In many cases, the companies were founded or built by former TQL employees – fueling cutthroat competition.

"It helps having TQL get their start here," said Pete Ventura, CEO of Blue Ash-based Integrity Express Logistics. "They've shown people the model."

Blue Ash firm planning 125 new jobs

Ventura spent time early in his career with TQL, before moving over to Integrity Express Logistics in 2009. The freight-brokerage firm, founded in 2007, is not on this year's Deloitte 100, but it appears on its way. This year, IEL was ranked No. 1,592 on Inc. Magazine's list of the 5,000 fastest-growing private companies in the U.S. The publication reported IEL's revenue was $87.1 million, a 256 percent increase from the previous year.

IEL plans to break ground on a new 120,000-square-foot office building this month and add up to 125 jobs. Unlike most third-party freight brokerage firms, IEL owns a small fleet of trucks, but that has been no small part of the company's success. IEL provides shipping for Harrison-based JTM Food Group, which ranked 72nd on the 100 list.

Other freight-brokerage firms have experienced similar meteoric success. Downtown-based US Logistics is making its debut on the Deloitte 100 this year at No. 98. The firm has the second-highest growth among the companies that disclosed 2014 revenues on the Deloitte 100 – bringing in $86.4 million in 2014, a 46 percent jump from the previous year. A former TQL employee also has helped to build US Logistics, founded in 2009.

"Well, they got great training," Byrne said. "That's going to happen. There are lots of folks who are (Procter & Gamble) alums who are very successful elsewhere."

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Area schools start adding logistics programs

The peak season for logistics is November and December. Job growth tends to spike for the holiday shipping season and then dip in January and February.

Despite this seasonality, federal labor statistics show an upward trajectory for logistics-related jobs in the region this year. The 214,200 trade, transportation and utilities jobs reported in June were the highest one-month jobs number since December 2007. Some 220,700 jobs were reported that month, just before the U.S. sloughed into the Great Recession.

"The economy is recovering, and we're on the upswing now," Miami University economist Jim Brock said. "There's more and more business being created, and you have to move the stuff that's being made."

Obstacles exist to handling that growth. Greater Cincinnati companies struggle to find qualified workers in the transportation and logistics industry, but that's not unique to this region. Freight-brokerage firms need highly motivated sales representatives who work on commission. The reward can be a six-figure salary, but the downside is sales representatives may find themselves competing against their own co-workers for business and burnout is common.

On the front lines of the industry, companies have long struggled to find qualified truck drivers. DHL and other package-handling companies have a hard time filling jobs that require heavy lifting and other manual labor.

Verst Group almost always has openings for truck drivers. CEO Paul Verst says daily job openings typically range from 5 to 10. Logistics leaders say truck drivers can make respectable salaries, but the hours and time away from home can take a physical and emotional toll.

Verst is among a handful of business and economic development leaders who have been imploring area vocational schools, colleges and universities to create transportation and logistics-related training programs and degrees. Cincinnati State Technical and Community College started a regional logistics council last year to try to bring regional leaders together to address the workforce development issues. Verst is part of the council.

"A lot of times, just getting people through the application process and to pass the drug test is a challenge," Verst said. "We decided to go into the high schools and colleges. We really have to show (students) how logistics could be a great career path."

Addressing workforce development issues in transportation and logistics has become a "boardroom topic now," Verst added. "If you look at what has made WalMart and Kroger so successful, they've really excelled in logistics."

Some progress has been made in education. Cincinnati State launched a two-year associates degree in supply-chain management last fall. This year, Northern Kentucky's Gateway Community and Technical College launched a Commercial Driver's License (CDL) training program. Verst Group has allowed the school access to the company's trucks for training.

"I'd like to see a little more collaboration between the universities on this issue," Verst said.

Other efforts could grow logistics jobs here 

We're now the 'Ports of Cincinnati and NKY'

The timing of improving education and training could be critical to other jobs-creating efforts across the region.

The Port of Greater Cincinnati Development Authority and a group of barge-terminal operators have been working to prepare the region for an expected influx of freight on the Ohio River in the coming years, because of the widening of the Panama Canal.

The port authority and Central Ohio River Business Association this year successfully convinced federal, state and local leaders to approve rebranding the region as the Ports of Cincinnati and Northern Kentucky, an effort to make the area more attractive to Ohio River cargo shippers. More coal, plastics, grain and other materials coming into the region could increase business for rail and trucking companies.

Other efforts complementary to transportation and logistics are underway. The Port of Greater Cincinnati Development Authority is working on a strategy to try to convince manufacturers to relocate to the region. Officials from the economic development agency say they are working on a plan to buy and cleanup old industrial sites to make the land attractive to companies looking to build new factories and warehouses.

The goal is to invest $200 million to redevelop 500 acres and add 12,000 new jobs over several years, port officials said. The University of Cincinnati is conducting a study to assess 2,000 acres of old industrial sites along Interstate 75 through the city of Cincinnati and Hamilton County. The port authority plans to use the study results to guide its strategy for buying land. Once the port authority can get some sites in order, the plan is for REDI to market the land to companies looking to build new facilities.

"We continue to attract companies in industries that support this (transportation and logistics) sector," said Johnna Reeder, president and CEO of REDI, the region's leading jobs-creating initiative. "Whether it's advanced manufacturing or food processing, these companies are making products in Greater Cincinnati that need to get to an end user."

See why region is losing out on jobs

Crystal Ferry,  of Integrity Express Logistics, operates a fork lift loading trucks with J.T.M. Food Group Products at the business in Harrison.
Paul Burton (left), of J.T.M. Food Group, talks with John Coliflower, staging director for Integrity Express Logistics at thei IEL warehouse in Harrison. The Enquirer/Patrick Reddy