Covenant Transport is one of America's biggest truck carriers with nearly 7,000 trailers on the road, but the head of the trucking company hopes to eventually get as much as half of the company's revenues from its non-asset businesses, including its growing freight brokerage business that moved into a new North Shore facility last month.
David Parker, the founder and CEO of Covenant Transport, said Wednesday he hopes the company's Covenant Transport Solutions and other non-asset businesses will double in size in the next two years.
"We're certainly not moving away from the asset side of our business and we want to continue to do well in our (truck shipping) business," said Parker, noting that Covenant Transport enjoyed record profits in fourth quarter of 2018. "But we hope this other side of our business will explode."
Covenant on Wednesday celebrated the expansion of its freight brokerage business into a new 16,000-square-foot facility in Chattanooga - the first company division started in Chattanooga to move outside of the company's Lookout Valley headquarters complex. Covenant Transport Solutions, the freight brokerage business that Covenant began in 2006, relocated March 1 into the second floor of the Signal Mill building on Manufacturers Road on the North Shore.
The newly remodeled space is designed to help the growing business attract more workers who want to be closer to downtown and the North Shore.
"We have some of our workers now who bike or walk to work and one who even skateboards to work," said Paul Newbourne, the chief operating officer for Covenant Transport Solutions who has helped boost the company's revenues by 65 percent since he joined Covenant in 2016. "The reason we moved is that the city is very popular with younger workers and we thought that coming downtown and being part of the city scene will allow us to be more attractive to the younger workers who tend to start with us and are helping us to grow. Our move has really resonated with our existing team and we're getting a lot of interest from others in the jobs we are trying to fill this year."
Thessela White, a customer service representative who joined Covenant in 2010 and moved to Covenant Transport Solutions last September, said she loves the new open work space "and being located near everything here on the North Shore."
"It's fun to be part of a growing business," she said.
Covenant Solutions worked with 8,500 carriers last year and generated more than $110 million during 2018.
"We're expecting aggressive growth this year, growing our staff from 50 to about 65 employees by the end of the year," Newbourne said.
Covenant Transport Solutions is among a half dozen other freight brokerage and truck logistics support companies with offices in Chattanooga, including Coyote Logistics, Lync, Avenger Logistics, Reliance Partners, Arrive Logistics, FreightWaves, Axle Logistics and Trident Transport.
Combined with two of the nation's biggest trucking companies - U.S. Xpress and Covenant Transport - and the nation's biggest privately held warehousing company - Kenco - Chattanooga is emerging as one of the nation's top logistics cities.
Chattanooga Mayor Andy Berke, who came to Wednesday's ribbon cutting to open the new offices of Covenant Transport Solutions, said logistics "is a huge part of our local economy" and most of the jobs in the industry pay middle-class or higher wages.
"We grow our business in Chattanooga by capitalizing on our strengths and this is an important strength area for our city," Berke said. "These logistics jobs are good paying jobs where people can live a good lifestyle and contribute to our local economy and its growth."
For Covenant, Parker said the freight brokerage business, along with third-party logistics and warehousing operations like what Covenant acquired last July in its $83 million purchase of LandAir Holdings, should help stabilize company operations when the economy sours.
"During a slowdown, the logistics and warehousing side of the business is one of the last things to get cut and will fare better when the economy isn't as good," Parker said. "Our vision is geared toward how we can protect ourselves through the good and the bad economic times."
Freight brokers and third party logistics companies arrange shipments, negotiating between the millions of product suppliers and the thousands of truck carriers across the country to arrange shipments. Warehouses store goods while they are waiting to be shipped.
During strong economic periods, Covenant and other truck carriers perform well, but they incur more debt and usuallyy more susceptible to economic downturns than others in the logistics industry.
Parker said the economic downturn a decade ago pushed Covenant into the red and forced costly cutbacks for the company. Covenant Transport Solutions shrunk from $60 million to $30 million in revenues, but Parker said the freight brokerage division still remained profitable and helped him get through the roughest period in the company's 32-year history.
Parker said he hopes to eventually expand through acquisitions and organic growth the company's freight brokerage, transporation management, warehousing and leasing through Covenant Transport Solutions, LandAir, TMS and other divisions as big as the truck carrier side of Covenant's business.
As he did when he began his company with only 25 trucks in 1986, Parker launched the new business side on the North Shore Wednesday with a prayer, reflecting what he says is a covenant with God from which his company is named.
Parker said with God's help, his business survived the Great Recession and has grown to employ more than 6,000 workers across the country.
Those trucking assets, while costly in a downturn, also helps differentiate Covenant's freight brokerage business from some of the company's rivals in brokering shipments, Parker said.
"What separates us from our competitors - and we think it is a very big advantage - is that we have access to over 3,000 trucks in our company," Parker said. "We believe that positions us better and we think should help us continue to grow."
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340