GE Trailer Fleet Services
|Founded||Philadelphia, Pennsylvania (1957)|
|Key people||Joe Artuso (Chairman and CEO)
GE Trailer Fleet Services (formerly Transport International Pool, Inc. (TIP)) is a wholly owned affiliate of GE Capital, itself a subsidiary of General Electric. Founded in 1957, the business rents and sells truck trailers, commonly referred to as “over-the-road,” cartage and storage semi-trailers. These 48 and 53-foot trailers are primarily used to haul raw materials to factories, and finished goods to distribution centers and retail stores. Older trailers are often used as storage units in retail, agricultural and other applications.
Headquartered in Wayne, Pa., the company owns a fleet of 60,000 trailers (dry vans, flatbeds and refrigerated trailers), and operates from a nationwide branch network in both the U.S. and Mexico. This includes five retail centers where older trailers are sold and remarketed to dealers and individual buyers.
Customer types served include some of the largest freight carriers, logistics firms, shippers, retailers, and private fleets in the U.S. The largest customer is the U.S. Postal Service.
Formation and Early Company History: 1957–1979
Transport International Pool began as “Container Leasing, Inc.” founded on September 12, 1957 by a group of entrepreneurs at 43 South 19th Street, Philadelphia, Pennsylvania. The company’s official filing stated that Container Leasing, Inc. would “engage in the business of buying, selling, renting and/or leasing for hire all type of trucks, automotive equipment, railroad equipment, marine equipment, aircraft equipment, and containers of any type and description, and any other items of like nature used in the transportation of general merchandise of any kind whatsoever.”
By August 1959, Container Leasing, Inc had eight shareholders, led by the original majority owner, Solomon Katz. Katz was also president of Strick Corporation, a trailer manufacturer. After another executive at Strick Corp., William “Bill” Sennett, observed that customers were increasingly asking for rental trailers, the Katz and Sennett founded Rentco, a separate business that used trade-in vans from Strick to serve the rental demand.
Katz named Sennett president of the new Container Leasing business, and its legal framework was used to form a new trailer rental business. In May 1966, Container Leasing changed its legal name to Transport Pool. The firm was operated from an office in California, and its first branch was in North Bergen, NJ. Other locations soon followed in Los Angeles, Chicago, Denver, Charlotte, NC and Trevose, PA.
In 1969, Sennett hired an Australian immigrant, Laurie Weisheit, as a salesman and later a branch manager. By this time the firm had four divisions: West, Midwest, South and Northeast. Weisheit became the Western division vice president in 1970 and began opening branches in quick succession. Transport Pool expanded into Canada in 1967, and in 1969 it started Space Rentals, an office trailer division that later became known as Modular Space, a provider of temporary office and classroom space.
Sennett and CFO Michael Morris expanded the business into Europe in 1969, opening a branch in the United Kingdom and a corporate office in Rotterdam, the Netherlands. By the end of that year, Transport Pool was operating 25 U.S. and five foreign branches. Transport Pool opened more branches between 1969 and 1974, bringing the total to 96.
Soon, the firm became the first national trailer rental company to introduce a mileage charge and a collision/damage waiver. In 1971, a holding company of Transport Pool was listed by NASDAQ. When recession hit in 1975, the firm’s stock dipped to $2 per share. Minneapolis-based Gelco Corporation, a firm that leased cars and trucks to large corporate fleets, offered $5 per share (about $30 million), and Katz, still the majority shareholder, sold the company, which had about 500 employees at the time.
Transport Pool’s operation changed little under Gelco’s supervision. The company was the most profitable segment of Gelco and changed its name to Transport International Pool, Inc., (TIP) in 1976 to reflect the global nature of its business. Sennett retired the same year, Morris became president, and Weisheit was named executive vice president in 1977, moving to Philadelphia to head sales and marketing. By the end of the 1970s, TIP had more than 100 branches, however growth through just opening additional locations was becoming impractical.
When the trucking industry in the U.S. was deregulated in 1980, shippers and those wanting to enter the industry as carriers and trailer rental companies alike benefited from the changes. Prior to deregulation, the authority to transport certain goods along certain routes was trading for hundreds of thousands of dollars, as regulatory hurdles made acquiring new authority difficult. To deal more effectively with outdated inventory coming in from rental and lease deals, TIP launched its first formal remarketing trailer sales operation in 1980.
After the Motor Carrier Act of 1980, there were 18,000 regulated trucking companies. More than 42,000 such companies were operating by 1989. Many of these new companies were unable to afford to buy trailers and looked to rental companies to fill the need for trailers.
Transport International Pool had 130 branches as of 1988. The extra demand that deregulation caused, combined with TIP’s continuing growth, resulted in an annual need for new trailers. Division managers would give their requisitions to Laurie Weisheit, who became president and chief operating officer in 1982, and he would consolidate the purchasing requests. Weisheit would then negotiate with the leading trailer manufacturers for volume purchasing deals.
Trailer specifications were also beginning to change, and by the mid-1980s, the 48-foot trailer replaced the 45-foot trailer as the asset of choice. TIP acquired its first 48-foot trailer in 1983. The smooth-sided van trailer could carry more cargo, and was lighter and more fuel-efficient than trailers with corrugated sides. Repairs were easier to effect, and customers preferred the appearance of their respective company’s logo on the smooth-sided trailers.
In 1989, TIP announced it was renting oversized, 57-foot trailers, which were legal in eight states at the time. Fifty-three-foot trailers became standard around 1990. Trucking companies were soon competing with each other using larger trailers. Many companies could not afford to buy large quantities of new trailers, and looked to rental companies to meet their needs. Each time a new size trailer was introduced, TIP bought thousands to meet demand. At its peak, TIP purchased approximately 20,000 trailers in some years, with a yearly average in the decade of 10,000 units. The company would purchase a variety of trailers, including flatbeds, doubles and refrigerated units.
Purchase by GE Capital in 1987
TIP produced strong revenue for parent company Gelco. However, another Gelco acquisition, CTI Container Corporation (which at the time one of the largest seagoing container businesses in the world) was less successful. That transaction resulted in financial losses that TIP’s profits were ultimately unable to offset. In 1986 and 1987, Gelco reported losses of $6.4 million and $4.9 million, respectively. To recover, Gelco sold TIP Europe in 1986 to a management and investor consortium. Then, in December 1987, GE Capital Service], a unit of Fairfield, Connecticut-based General Electric, bought Gelco for about $414 million.
At the time, Gary Wendt, president of GE Capital, told The New York Times the purchase was complementary to the company’s plans to grow its rail-car, aircraft, auto and container leasing businesses. While the other Gelco divisions were rolled into existing parts of the portfolio, TIP was brought in as a stand-alone division of GE Capital.
Since its acquisition by GE Capital, TIP's growth had been modest. In 1992, GE Capital brought in Robert M. Agans, one of its financial executives with extensive M & A experience as CEO of TIP and GE Capital Modular Space. Employing the financial muscle of its new parent company, TIP expanded into Mexico, bought back its TIP Europe business, and acquired more than 10 other firms or fleets in the 1990s. It also developed its intermodal business, storage business, and trailer sales (remarketing) business. From 1992-1997, when Agans retired, the businesses assets grew from $500 mmillion to $2.4 billion and earnings quadrupled.
Following two acquisitions in its core product area, Canadian company Intercan Leasing in November 1992 and Transamerica Corporation’s 19,000-trailer U.S. fleet the next month, TIP became the largest North American truck-trailer renting and leasing firm, and now owned about 62,000 trailers. Later, in 1998, TIP bought the Chicago-based Trailer Leasing Co. to further expand its domestic trailer rental and lease business.
TIP also took actions to grow and formalize its intermodal container business. In August 1997, GE Capital consolidated TIP Intermodal Services and Genstar Container Corporation, calling the new entity TIP Intermodal Services. This added Genstar’s 18,000 intermodal containers to TIP’s 6,000-unit fleet. Subsequent intermodal business acquisitions brought the total intermodal fleet to more than 100,000 assets in 1999.
TIP opened its first Mexico branches in 1994 in the northern industrial city of Monterrey, and in Mexico City. In April 1993, it bought back TIP Europe PLC, and Barry DeSantis was appointed in 1994 to run the division, and was its president until 1998. By that time TIP Europe had a fleet of 40,000 trailers. As in North America, GE grew the business through acquisitions.
The European division was now also operating a container storage rental business, a fleet of 17,000 trailers through 65 branches, and a commercial vehicle leasing company
In the U.S., TIP faced an increasing problem in the 1990s with obsolete equipment, driven in part by the asset portfolios it was acquiring as well as changing specifications in the industry. After discussion, another TIP unit was created in 1997, National Trailer Storage (NTS). The goal was to find a second life for older trailers in the storage and cartage market.
Customers in markets ranging from transportation, manufacturing, construction, warehousing, retail and convention services were contacted, and ultimately served from 30 dedicated storage sites in the U.S. They could also access smaller inventories held at 120 other TIP sites. Storage trailers from 20 to 48 feet in length, and old marine containers in 20 or 40 foot lengths could be rented, leased or purchased with GE financing, if necessary.
In just one year, NTS grew its revenue 43 percent and by 1999 was a $27 million top line revenue generator for TIP. Competitors took notice and rapidly matched the core offerings. NTS was soon sold off in pieces to regional firms.
At the same time, Trailer units coming off rent or lease were grouped by type and sold to the secondary market for a profit. In 1995, TIP sold 12,000 trailers, double the number sold in 1993.
TIP was soon starting to face increased competition. Customer service became more emphasized and as the decade drew to a close, credit card orders and 24-7 access via 800 numbers and the Internet became more important to the company.
In an attempt to create more consistency for its customers, TIP beefed up training efforts, established a centralized Customer Service Center at its headquarters in 1997, instituted its toll-free “TIPLine” number, and a suite of special services for national accounts called TIP One. The company’s first Web site was launched April 1, 1996, featuring the ability to request online trailer rental reservations, and the capacity to view invoice history, lease/rental activity, asset specs, and branch locations.
As the economy faltered during the 1990s, TIP found that its revenue was dropping and margins were tighter. Many of its customers were going bankrupt, fuel prices hurt profits, and the global economy was changing traditional trucking routes. The rapid expansion of big box retailers created entire new private fleets with needs of their own. The “irrational exuberance” of the time was about to end. Technology required major investments and a change in core business processes. TIP needed financial assistance of its parent company in order to meet these new challenges, but GE Capital faced changes as well.
After the start of the new millennium, TIP was able to turn to the culture, process and technology tools of its parent, GE, to help it adjust to the new economic environment which was affected by the events of September 11, 2001, the financial scandals hitting Wall Street and an economic downturn that created overcapacity in the trucking business.
Former GE chairman Jack Welch had changed the company dramatically in the 1980s and 1990s, first with restructuring, and then with a focus on leadership development, empowerment and the use of process improvement tools such as Six Sigma and Digitization. Gary Wendt, the head of GE Capital Services (GECS) who had led the business the entire time TIP had been with GE, left in 2000, and was replaced by Dennis Dammerman as chairman and Dennis Nayden as president and CEO.
Dammerman and Nayden began looking closely at the units of GECS in a new framework, hoping to instill the operational efficiencies learned in GE’s manufacturing business into the deal-making and risk management culture of the financial services units. With financial scandals such as Enron hitting the news, renewed emphasis was placed on integrity, controllership and compliance at all levels of the company.
Then, in August 2002, GE’s new chairman Jeff Immelt announced the reorganization of the GE Capital Services portfolio into four business units, portions of which were later grouped with GE’s industrial-side businesses.
TIP ultimately became part of a new division named GE Equipment Services, part of GE Industrial, along with related businesses such as Rail Services, GE’s Penske Truck Leasing limited partnership, the GE SeaCo marine container joint venture and Equipment Services Europe (ESE). The ESE business included the former TIP Europe trailer business, which had separated from TIP in the United States by then, but was still part of GE.
To further balance the portfolio, Equipment Services transferred the TIP Intermodal business and assets in 2002 to GE’s Rail Services unit in Chicago, which allowed it to benefit from relationships the business had with rail customers and shippers.
With its former European unit now out on its own, its intermodal unit transferred out, and its storage unit sold off, TIP was asked to revisit its core business model of renting, leasing, financing, maintaining and remarketing trailers, primarily dry vans, flatbeds, and refrigerated vans. At the time, it had a fleet of 130,000 assets, 100 branches and 1,100 employees in Canada, Mexico and the United States. A new leadership team was in place, one partly shared with GE Modular Space, the offshoot of TIP’s 1969 entry into portable office and classroom trailer leasing.
TIP changed its “go-to-market” name in August 2004, to “Trailer Fleet Services.” The action was partly a requirement of new GE branding guidelines, partly to leverage GE’s brand strength, and in the end, due to the fact that a new business model was needed.
Maintenance Services were first offered in 2000, and include providing maintenance services on both company-owned trailers and customer-owned trailers, said Tony O’Brien, in 2010 the Remarketing Services vice president for Trailer Fleet Services. More than 500 mechanics, using fully outfitted mobile maintenance service trucks, serviced hundreds of trailers each day for national, regional and local customers. The service capitalized on the company’s decades-long experience in maintaining its own fleet.
Remarketing Services, including trailer sales, also came of age. Five retail centers were established in key cities, and Remarketing effort grew to the point where Trailer Fleet Services was selling 25,000 to 30,000 trailers annually, making it the largest retailer of used trailers in the United States.
The company built these other services after using GE process tools to engage its customers in a direct dialog on how to improve current services, and also develop new ones to meet future needs. This evolved into the Client Advisory Board (CAB) of Trailer Fleet Services, formed in 2005 by then Senior Vice President of Sales Bob Williams, and was made up of members from a cross-section of the customer types the company serves.
The company then designed its own trailer-tracking system, had it validated and tested at GE's Global Research Center in upstate New York, and launched the VeriWise asset monitoring product in April 2003.
By 2007, VeriWise had been installed on more than 150,000 trailers in the United States, Canada, Mexico and Europe. The dual-satellite product line was engineered to accept new sensor enhancements as customer demand dictated. Over the years this has included cargo and door sensors, solar-power capability and many others. The product line was further enhanced in 2007 by the acquisition of Terion, maker of a similar cellular-based system.
The development of VeriWise also resulted in the fourth business spin-off from the original TIP model: Asset Intelligence LLC, formed in 2005 and owned by I.D. Systems of New Jersey in 2010. Asset Intelligence is now an advanced transportation telematics engineering firm with main offices in Plano, Texas. The unit develops strategic capabilities to serve global supply chains, focusing on asset monitoring for trailers, railcars and marine containers.
Since its start in 1957, Transport International Pool has been creating asset management services, and spinning off different business models, including National Trailer Storage, TIP Trailer Services (Europe), TIP Intermodal, ModSpace and Asset Intelligence LLC.
- I.D. Systems Buys Asset Intelligence in $15 Million Deal, truckinginfo.com, Jan. 13, 2010