Shipping and logistics have always been an important part of the floor covering business. Changes in the industry certainly have driven changes within the trucking business and the inverse is also true, changes in the trucking industry have always and will continue to drive changes in the flooring industry. We had an opportunity to sit down with Darrel Harris, CEO of Xpress Global Services, a firm that specializes in logistics within the floor covering industry, to look at this relationship and what we can expect in the future.
You can listen to this conversation in its entirety here. The following are excerpts of that conversation.
TF: I am sure most are aware of the Xpress Global organization but talk about the organization and its relationship with the floor covering industry.
Harris: Sure. Xpress Global Systems has been around for about 36 years. We really started off specialized in the transportation of roll goods and that is really at the core of the company and who we are, and it is what makes us unique and special. We take pride in that. As a result, we have always had a pretty close relationship with the floor covering industry. As the floor covering industry continues to evolve, we continue to evolve with it.
Back in December 2018, we were acquired Aterian Investment Partners, a private equity firm based in New York, who has really come in and helped us elevate ourselves in the space with investments, additional facilities, and significant expansion. As a result we have had a great deal going on throughout 2019 and early 2020 to really help put the company in a position for growth and scale.
TF: The transportation needs of the industry have changed a great deal over time. Talk about some of those changes and how is it changing currently.
Harris: I think the competitive nature within the space, and as you are aware there is a certainly a competitiveness within this space that raises the bar of expectation for any vendor and supplier provider of services for the industry. I think that is something we all embrace here at Xpress Global Systems and the challenges that our customers face continues to increase. We must increase the quality of our service and frankly it is created a nice environment that has driven us to provide additional solutions for our customers that maybe we did not provide 20 years ago.
TF: I looked at your website and it seems like the company has a great many locations around the country. Talk about the network of cities and regions that Xpress Global serves.
Harris: Our network is the largest in floor covering transportation. We have 30 of our own locations, meaning that we have company drivers in these delivering locations to support the delivery of goods throughout the highly concentrated areas and population in the nation. We also use a network of partners in some of those medium to smaller cities such as Des Moines or Omaha. We have these types of facilities throughout the nation. So, when you really look at our network, we have well over 40 facilities combined that can help provide the transportation of goods throughout the nation. And many are tied to a major metro markets such as Chicago, Dallas and Los Angeles. But when you look at our map you are going to pretty much take coverage throughout most of the highly populated areas in the nation. And that is one of the things that separates us from our competition.
TF: How does the company work in tandem with major producers?
Harris: We have an interesting and a diverse group of customers. We basically provide more truck capacity than anyone else out of Dalton. So, we have a unique relationship and a very close relationship with all the manufacturers. We also support manufacturers in other ways. Manufacturing in the floor covering space has evolved and changed a great deal over time and as a result we offer many services for manufacturers that are not necessarily centralized in Dalton. We have warehousing capabilities and have cut services as well as pick and pack and many other services, things that are outside of simply the transportation of the goods from point A to point B.
TF: Every retailer in the industry has been affected by COVID-19 and the accompanying stay-at-home orders some more so than others. Talk about how it has affected trucking in general.
Harris: This certainly been a unique time for all of us in our personal and professional lives. First and foremost, here at Xpress Global it is the safety of our employees as with many of the companies throughout the nation, that we are concerned about. We have been hard at work over the last few weeks discussing the importance of safety and the guide lines of the CDC to help educate our employees on how to properly attack this, respecting social distancing, keeping work surfaces, trucks and forklifts disinfected and clean at all time. It has been really challenged throughout the network.
Talking about our customers, it has been volume, the sharp incline in volume. Trucking is a density-based business. The more density you have the better service you can provide, the more creative you can get and it’s how you can keep cost in line. Whenever you see volume fall sharply as we have seen as a reaction to the coronavirus it becomes a much more challenging environment to operate in. This has certainly been a challenging time for us and one that our team is heavily focused on trying to continue to work to provide the best solution that we can despite the challenges.
TF: Let me ask you about the transportation industry in general, not necessarily connected with Coronavirus. What do you see happening in the future that will bring change in the transportation sector and specifically the floor covering industry?
Harris: What we see on our side of the business is how global the decision-making process is becoming, whether you are looking at it from a purchasing perspective from a perspective of the consolidation that has been happened. There is a lot of movement in these areas that it is creating a different landscape. There are core decision makers and mills that have been historically in the Dalton area that we have enjoy a great relationship with. But with the growth in LVT space and hard surfaces in general there is a different landscape when you look at it from a trucking perspective. Companies are launching goods, importing them and launching them from various parts in the country, creating an opportunity to modify, change and enhance one’s network from a trucking perspective to meet those needs. So, it is quite a bit different and it continues to evolve and change over time.
TF: I have heard estimates that at some point we can expect to see 10 percent of floor coverings to be sold online. How do you expect this will affect the transportation business?
Harris: It is hard to say, but it is something we have been watching as well and talking with our customers a great deal about. In the trucking environment how those sales are generated does not really affect us too terribly much until someone is ordering online from resident and expecting the delivery directly to that residence. Of course, in our environment today we have some of that but most of our deliveries go either directly to the retailer, a dealer, or the installer.
In anticipation of these changes we have modified our delivery truck format where now about 40% of our units are now box trucks, straight trucks with a lift gate that allows us to be a little more nimble whether you're going be it a residence or not and we are continuing to keep our eyes on these patterns and how they developed so we will be in position to best execute on the delivery side.
TF: Looking at the retailer community, what are the most frequent misconceptions retailers seem to have about transportation and logistics?
Harris: The one we come across a great deal is that many retailers feel that they are too small to take an interest in controlling their transportation. Some do take an interest in it, but many do not. They are extremely focused on their business, but there is a great deal that can be done to help streamline and reduce cost for retailers. One thing they can do is partner with someone like Xpress Global. We not only handle the trucking side of it but we also offer transportation management services. We are also a brokerage and can broker freight that exists outside of our network, such as truckload or other expedited services. We provide all of these services so what we bring to the table for a retailer is something that can help them to focus on their core competency while allowing us to handle the details of their logistic. Many retailers underestimate the cost of transportation and logistics and they often underestimate what their capabilities are to control it.