Editorial: Trucking’s Newest Internet Creation

The latest dot.com entrant in the trucking business isn’t a “virtual” company at all, but rather an amalgamation of six major truckload carriers determined to make the Internet work for them, even as fuel prices and driver-related costs continue to climb.

The announcement of Transplace.com’s creation is further evidence of the major changes electronic-commerce technology is fostering in trucking.

In this case, the six carriers have agreed to spin their logistics subsidiaries into a new jointly owned company that will operate over the Internet to coordinate the management and execution of freight shipments. At the same time, the partners will continue to run their trucking operations independently, and in competition with their partners and all other trucking companies.

Last year, these six companies — J.B. Hunt Transport Services, Swift Transportation Co., U.S. Xpress Enterprises, M.S. Carriers, Werner Enterprises and Covenant Transport — had combined logistics revenue of $650 million.

Thus Transplace.com is a far cry from the “virtual” trucking companies and logistics providers that have popped up in recent weeks, seeking to take advantage of Internet technology without having to invest in tractors, trailers, terminals and drivers.

The new venture will have more than 38,000 tractors, 91,000 trailers and 22,000 intermodal containers at its disposal, and almost 48,000 drivers.

The participants believe they can reduce costs and increase equipment and personnel utilization by joining forces and using the Internet to coordinate operations.

The Transplace.com partners said they also expect to use the company to negotiate discounts on fuel and equipment purchases, as well as repairs, insurance and credit services.

The plan was an immediate hit on Wall Street, where analysts filled reporters’ notebooks with positive comments.

“It’s a major home run,” said James J. Valentine of Morgan Stanley Dean Witter. “I think they will crush some of these virtual dot.com competitors.”

But part of what Wall Street likes may be a result never intended by the participants.

“From Wall Street’s perspective, you have an industry that is extremely fragmented, with tens of thousands of competitors,” Valentine said. “This technology will accelerate industry consolidation.”