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June 8, 2015 4:00 AM, EDT

Letters: Change the Basis for Ranking Logistics 50

This Letter to the Editor appears in the June 8 print edition of Transport Topics. Click here to subscribe today.

Change the Basis for Ranking Logistics 50



I am a longtime reader and strong supporter of Transport Topics and particularly enjoy your annual rankings issues that illustrate how our industry continues to evolve.

However, I take exception to your methodology in ranking logistics companies. I grant that it is tough to compare apples to oranges to bananas, which is what is required to compare dedicated fleet providers to warehouse and distribution center providers to managed transportation providers, brokers and air and ocean freight forwarders.

Net revenue (gross revenue less purchased transportation) is clearly not the answer. Gross revenue is a far better indicator of company size when trying to compare disparate businesses.

Some dedicated providers have purchased transportation components and others don’t, but that is not relevant in thinking about size of the provider. Warehousing and distribution center providers typically have no purchased transportation component so gross and net revenue are equal, or very nearly so. Brokers and forwarders always have a significant amount of purchased transportation. Many of the large providers have two or more of these services under the corporate umbrella, which adds to the challenge.

Transport Topics does an excellent job of recognizing this challenge in the sections that rank dedicated providers by number of trucks, warehousing firms by total square feet, and ocean forwarders by number of containers moved.

But when the fruit salad is mixed together, I believe readers will be much better informed about who the largest “Logistics Companies” are based on gross, not net, revenue.

Tom Sanderson

CEO

Transplace Inc.

Frisco, Texas

Transport Topics response:

Net revenue is used to rank logistics companies because it represents the money available to operate the business and not funds that are simply passed through to freight carriers. At this time, we believe it is best way to measure a firm’s size and capabilities.