The Asset-Lite Solution | Check Call with Josh Allen

FreightWavesTV
May 29, 2024
Mary O'Connell

In this episode, we dive into all things asset-lite. Our guest, Josh Allen, Chief Commercial Officer at ITS Logistics breaks down the asset-lite model and the benefits it can post to a company. For more information subscribe to Check Call the newsletter or the podcast.

"Today we welcome Josh Allen, Chief Commercial Officer at ITS Logistics. Thanks for coming on the show today, Josh!" says O'Connell.

"Thank you!" says Allen.

"I am excited about this today because this is something we have not really touched on yet in the brokerage space and just as a solution that shippers can take advantage of. That is the asset-lite model. Before we get too into that, let's get some background on you and how you got started at ITS," says O'Connell.

"I'm going to break down my background for you. I guess you should know that at this point in my career, I have been building logistics businesses for 20+ years. I did take a three and a half year hiatus to build a tech company that was focused on industrial products and a little bit of supply chain management. That was post-COVID, but I am back to my roots now. I am focused on logistics businesses like ITS Logistics." says Allen.

"I feel like everyone has had a very interesting turn in their career, either during COVID or right after COVID. I myself went from a pricing analyst to talking to people about transportation and supply chain. We have all taken some turns, but you know it all comes back to the fact that once you are in logistics and supply chain, you can never leave." says O'Connell.

"Indeed. Fortunately for me, I have had the opportunity to touch several different vectors in the space. I have had the fortunate opportunity to build brokerage offices, manage trans businesses, domestic freight forwarding businesses, international freight forwarding businesses. If you think about where my career started in transportation, it was a typical small privately-owned family brokerage in a shoebox office in some random place in the Midwest where I started. It later parlayed into building bigger businesses. I even went to work for a financial services company, building a freight brokerage business there. I accidentally even tried to launch a product building container derivatives on an energy trading floor about 15 years ago. I have been very lucky to have several different experiences, but they all kind of come back to one premise, which is moving products, storing products, and helping companies drive efficiencies in their supply chain." says Allen.

"I love it. There always has to be that one central theme, which goes nicely into what we were planning on talking about today, that asset-lite approach to things. If you don't mind, could you please break down what the asset-lite, the asset approach kind of entails when it comes to some supply chain solutions?" says O'Connell.

"I will be a little bit cheeky here to start. What exactly is an asset? Is it a truck or a trailer? Is it a warehouse, technology? What are these assets everyone talks about? It is interesting for us. We think about it as all of those things. Anytime we make an investment in real tangible items on the balance sheet, we believe it's an asset. You could also say that asset-lite is where the modern 3PL combines asset investments typically in the transportation variety, plus technology investments and people, to make them really, really great. Made for today's shipper. But in terms of what does it entail to get into asset-lite business? You've got to put risk and true tangible assets onto the balance sheet. You are going to have to invite some risk into your life because as soon as you put those liabilities on the balance sheet, guess what? You have to pay for them and they cost every day, every minute, every hour. So a little bit different than just hanging out in a non-asset world. The second thing it entails is that for many folks who built their careers in non-asset-based businesses, you have to eat your words a little bit. There are many folks that have built their business and careers on talking to customers and building solutions in a completely non-asset-based variety and now you have to eat crow a little bit. You have to talk about why it makes sense and why you are a better partner and why you can do things differently than you did in the past, whether it is the same company or a different one. Then finally, you have to pick a direction, you have to pick a post. By definition, you can actually do things. You can do things differently than you have in the past. But you have to understand where you are going, if you are just stapling in assets as a means to say that you have them. That's great, sure you are one of a few companies or several handfuls of companies that are making those investments, what are you going and what is the return?" says Allen.

Listen to the full video here.