ArcBest's Momentum Grows With MoLo Deal

ArcBest's Momentum Grows With MoLo Deal
Danny Loe, chief yield officer and president of asset-light logistics at ArcBest Corp. of Fort Smith

ArcBest Corp. added revenue and diversified its sources after acquiring of truckload freight brokerage MoLo Solutions LLC last year, executives say.

Four months after Fort Smith’s ArcBest completed the $235 million deal, No. 11 on the Biggest Deals list (Page 11), its integration of the Chicago company is going well, they report.

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The cash acquisition more than doubled ArcBest’s carrier partners to 80,000-plus, raised its workforce by 500 to 14,300, and added about 500 customers to its 30,000-strong base, said Danny Loe, the company’s chief yield officer and president of asset-light logistics — a division that consistently beat Wall Street earnings expectations throughout 2021 and reported record revenue and profit for the year. Loe told Arkansas Business last week that ArcBest’s customers had been asking for the asset-light services MoLo offers.

“One of the things we looked at was: How do we move quicker? How can we move quicker in answering the needs of our customers? And MoLo was one of the fastest privately owned growing brokers,” Loe said.

Revenue Impact

Established in 2017, MoLo had about $5 million in revenue that year, Loe said. By last year, it had grown to nearly $600 million in annual revenue with a “fairly small customer base” of 500, he said. In November and December, MoLo added about $120 million to ArcBest’s revenue.

ArcBest expects the new money to push it into the top 15 nationwide brokers as ranked by industry publication Transport Topics, up from No. 126 last year. On a Sept. 30 conference call, ArcBest CFO David Cobb said the deal was projected to increase the portion of the company’s revenue that comes from its asset-light business by 10 percentage points, to 44%.

On the profit side, MoLo has been breaking even, but ArcBest expects it to be profitable and to increase earnings per share by this year’s fourth quarter.

The deal also opened up a $3 billion cross-selling opportunity, CEO Judy McReynolds said on the Sept. 30 call. More than 60% of the company’s customers who use asset-light services also use its asset-based services, so both segments are likely to grow, she said.

Loe said both companies have achieved growth by responding to customers’ needs and because of their high-quality employees.

“When you’re a broker, you have to view it from both ways, because you’re engaging your customers … you’re servicing your carrier partners as well and making sure that you’re meeting their needs because, otherwise, you won’t have the capacity to continue to move the freight,” he said. “So it’s really a connection. Your employees are connecting with carriers and customers, and that’s where you win.”

He said ArcBest was impressed by MoLo’s expertise in serving very large customers, which set it apart.

McReynolds said on the call that MoLo’s great scale provides more data for the digital tools ArcBest uses, meaning the company can better serve customers and carriers more efficiently.

A MoLo executive was unavailable for an interview, but Loe said that company had been looking to partner with a larger organization for the capital it needed to continue growing.

For its part, MoLo gained 29,500 customers and the ability to offer owned assets, increased drop trailer capabilities, less-than-truckload, expedited, outsourced transportation management and other services, according to a September news release.

All of MoLo’s executive team remained with ArcBest.

For ArcBest, MoLo’s headquarters in Chicago was icing on the cake. That city is “the hub of the freight brokerage world. There’s a lot of things going on in that area,” Loe said, adding that ArcBest had been considering opening an office there.

How Did It Happen?

The initial conversation between ArcBest and MoLo took place in late fall 2020, but talks began in earnest in March 2021, officials said. The companies announced the transaction in late September and closed in November.

ArcBest can thank Jeff Silver, father of MoLo CEO and founder Andrew Silver as well as a MoLo shareholder. He introduced his son to Loe, the ArcBest chief yield officer said.

The elder Silver owns software company Mastery Logistics Systems of Chicago, and ArcBest was speaking to him as it evaluated its own software needs, Loe said.

After meeting the younger Silver, the ArcBest executive took a trip to Chicago, saw the MoLo offices there and had dinner with that company’s leadership. The rest, as they say, is history.