For the second consecutive year, Integrated Connection LLC in Cedar Rapids has been recognized as the Corridor Business Journal’s 2023 Fastest Growing Company. Operating from an historic brick building on the edge of downtown Cedar Rapids, the transportation third-party logistics firm grew by 347.92% in 2022 – outpacing another 3PL company, Hiawatha-based BLX Inc., a […]
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For the second consecutive year, Integrated Connection LLC in Cedar Rapids has been recognized as the Corridor Business Journal’s 2023 Fastest Growing Company.
Operating from an historic brick building on the edge of downtown Cedar Rapids, the transportation third-party logistics firm grew by 347.92% in 2022 – outpacing another 3PL company, Hiawatha-based BLX Inc., a company with its own story to tell this year.
And since the operational model has proven successful in multiple years, Integrated Connection’s leaders say they don’t feel a need to make dramatic changes in their business plan.
“We’ve really stayed on the same path,” said Steve Belland, CEO of Integrated Connection and its associated company, Integrated Logistics. “Obviously, we’re taking care of our customers. Our strategy really hasn't changed a great deal. We're still doing the same types of movements, transportation-wise.”
Yet for a company that’s enjoyed steady growth since its founding in 2017, slight adjustments to the company’s operations have clearly helped to fuel ongoing success.
For example, Mr. Belland said, “we've put a little more emphasis on international (shipping) than we had previously. And that's certainly helping our margins quite a bit.”
That movement, Integrated Connection president and chief operating officer Moe Abu-Nameh said, was spurred by the onset of the COVID-19 pandemic in 2020.
“We just saw the trends in international shipping,” Mr. Abu-Nameh said. “When markets like China and Europe essentially shut down, the shipping rates skyrocketed.”
As an example, the cost of a shipment from England to the U.S. soared from $12,000 pre-pandemic to $28,000 at the height of the crisis.
“Our customers might say ‘give me 24 hours,’ and the next day the rate would go up $10,000,” Mr. Abu-Nameh said. “The space was scarce. There just weren’t that many (shipping) flights coming in.”
Higher tariffs also contributed to the price hike, Mr. Belland said.
“Plus, the ports were all plugged up and those containers were sitting on ships,” he noted. “All that created a fair amount of demand.”
And even as international shipping rates have cooled recently, they haven’t returned to pre-pandemic levels, Mr. Abu-Nameh said.
“It's about the timing, when our international shipments start moving and what the price is out there,” Mr. Abu-Nameh said. “When we do an RFP for a customer and then the prices go down, it helps us a little bit.”
Even minor movements in the expansive global shipping market can have a substantial impact for a smaller 3PL company like Integrated Connection, Mr. Belland noted.
“At the end of the day, we're a small fish in a great big pond,” he said. “The available market is gigantic, so even if you can’t see it in the overall market, any small movement for us is great.”
Mr. Belland said Integrated Logistics has also expanded its business in contract freight, under which a carrier agrees to a fixed rate to move a shipper's freight over a set period of time.
“When we first started, we were relatively afraid of contract freight,” Mr. Belland said. “If you have a contract for $3,000 and it costs you $4,000 to get a truck, that’s a bad day. Traditionally, most of our business was called spot market. We would get a truck and we knew how much to charge the customer due to current rates, so that would control our margins a little bit. When you go contract, you better know your business, because when the market fluctuates, your margin goes with it, plus or minus. So it's a little riskier freight. And now we’re a little worried about volatility in the current market.”
Fuel prices will continue to vary, Mr. Abu-Nameh said, as Saudi Arabia and other OPEC nations indicate they plan to curtail crude oil production.
“The fuel costs fluctuate,” he said. “We’re locked into the rate per mile, but when the fuel goes up, the truckers say they need extra money per mile as well. Then it becomes a matter of supply and demand.”
While the contract market has grown, Integrated Logistics has kept its involvement in the segment relatively low.
“I’d say 25% to 30% of our business is contract,” Mr. Belland said. “We want to stay under 40% for sure. It's just too risky.”
Another growth area has emerged in the realm of on-site container warehousing, Mr. Abu-Nameh said, spurred by increased storage demands as companies like Amazon ramp up their inventories and shipping volumes.
“We have trailers they can use,” Mr. Abu-Nameh said. “Some of them have been moving around, but some have been on site for two or three years now.”
As a result, Integrated Connection has purchased more of its own trailers to meet the growing demand, Mr. Belland said.
“Early on, we avoided assets for cash flow reasons,” he said. “Now we're picking up more assets, and we're putting them to work.”
Looking to the future, while 3PL shipping trends are generally favorable, some segments are beginning to slow their dramatic post-COVID growth curves.
Perhaps counter-intuitively, Mr. Belland said an expanded freight market can produce challenges of its own.
”Inflation has been taking a little bit of a nibble,” he said. “For us, when freight gets abundant, it gets difficult. When truck rates go up and the economy is banging away, truckers can just pick and choose what freight they want and at what price. So when the economy shrinks a little bit with the same number of trucks, we’re going to be a little more competitive as truck rates start to come down.”
Integrated Connection has split its leadership duties along generally-defined roles. Mr. Belland focuses on planning and internal processes. Mr. Abu-Nameh’s role is more customer-facing and operations-driven, with assistance from Troy O’Connell, executive vice president of operations, and Isaac Bartlett, vice president of business development.
Recently, the team has developed several internal operational efficiencies in areas such as human resources and employee onboarding. But for Integrated Connection and its 34 employees, teamwork will continue to drive the company’s success, its leaders say.
“Our employees know that if the company is doing well, they’re going to do well,” Mr. Abu-Nameh said.
“And that’s not typical in this industry,” Mr. Belland said. “You can see on the boards where bonuses are coming in, and that works well for everybody. We have quarterly meetings, and we show all the numbers to everybody. We want to have everybody working on the same team and rowing the same way. If we work together and get this, we all win together; if we don’t, we all lose together. We try not to individualize it too much. We're an open book. If we need to run faster, jump higher to get to the sky, let’s go.”
