Transportation and Logistics Systems, Inc. (OTC: TLSS) stock is in rally mode with shares trading higher by more than 300% since last week. Investors are embracing the company’s recently published (unaudited) financial results that show a yearly revenue run rate approaching $30 million. Also, the company announced last month that they are again expanding its operations by acquiring the assets of GRC Trucking, Inc. That deal will leverage GRC’s more than 30 years of experience to TLSS and add additional depth to the company’s already diversified services platform. Also, the company announced that it has taken several immediate steps to address and seize upon the heightened logistical demands of its eCommerce partners, and the general public, as a result of the current Coronavirus (COVID-19) pandemic.
Explicitly, Frank Mazzola, Chief Operating Officer of PrimeEFS and ShypDirect, TLSS’ primary delivery brands, stated, “TLSS is partnering with its customers, which includes some of the leading eCommerce companies in the world, to enable them to fulfill their delivery commitments and ensure people have the vital supplies they need during this crisis. He added, “To meet the increased demand, we are hiring more drivers and adding new routes in our seven states of operation as more and more people are being asked to stay in their homes.”
Before the demands from the global pandemic, the e-commerce market is expected to become a more than $4.8 trillion economy by the year 2021. And, while investors focus toward the large-cap players in the sector may have been prudent just two months ago, the demands created by this spreading virus have created substantial opportunities to logistical services players like TLSS.
Expanding Services To Fill Burgeoning Demand
Transportation and Logistics Systems, Inc. is already in growth mode. Unlike many small-cap logistics companies, TLSS is a revenue-generating company that posted more than $18 million in income in 2018 and is projecting a sharp rise in the coming quarters. And, that was before the current health crisis that has made online purchasing and delivering a critical component of general commerce. Amazon (Nasdaq: AMZN) is proof that the demand is substantial and is real.
TLSS also noted that in cooperation with its eCommerce partners and to ensure its ability to handle the heightened demand, the company has increased the hourly wage for all of our drivers by $2.00 per hour. The temporary initiative is intended to support and reward its logistics team for their dedication and commitment to ensuring timely delivery of essential products and services for both its customers and the end-user. TLSS reiterated that during these trying times, its clients can count on the company to be a responsive partner to maintain the consistent flow of goods to the general public.
Logistics In Demand
In 2019, CNBC reported that Bank of America expected a more than $1.4 trillion B2B e-commerce market by the year 2021. At that time, most investors paid attention only to the e-retail side of the equation. E-retail giants such as Amazon, eBay, Walmart (NYSE: WMT), and Apple (Nasdaq: AAPL) were the apparent beneficiaries of the exploding market, and their stocks responded accordingly by sending valuations to near all-time highs in 2019.
However, as these global leaders have seen share price valuations deflate as the Coronavirus continues to spread, the companies that lean toward fulfillment are not getting hit as hard. And, they shouldn’t, especially with the cost of business declining due to depressed oil presses and the sharp increase in delivery demand.
In other words, investors, without disregarding the enormity of the current health crisis, are focusing more on the companies that are essential to completing the logistics processes to help curb the spread of the virus. Why? Because unlike manufacturing and distribution companies that are feeling the pressures of declining demand for some products, other logistics channel providers offer a valuable service that is experiencing heightened demand.
Thus, finding the opportunities that are an integral part of the logistics process makes sense. It makes even more sense to find the companies that offer substantial valuation propositions. Transportation and Logistics Systems, Inc. may fit that scenario well.
A Broad Suite of Logistics Systems
Transportation and Logistics Systems, Inc. (TLSS) brings much to the table in terms of having the ability and resources to become a significant provider of services to the e-commerce sector. Already a revenue-producing company that is expecting to report more than a 100% increase in revenue compared to 2018 results, TLSS has assembled a diversified suite of services that can help to expedite shareholder value and grow into a more suitable market cap valuation. Before the planned GRC acquisition, services already included “at home” delivery, last-mile delivery, and mid-mile transport services. Each of these logistics offerings provides necessary components for completing any e-retail transaction. Moreover, TLSS provides line-haul transport, which serves as a connection between manufacturers, distributors, and hub-to-hub outlets. The GRC asset purchases extend those capabilities.
Here’s where the importance of TLSS gets more pronounced. Whether the first step of the distribution process begins by air or sea, the final stage of the e-retail transaction will require a land-based logistics partner roughly 90% of the time. And, TLSS is already well-positioned in that capacity.
TLSS, as an example, has actively proven itself to demand hungry clients by creating processes that meet or exceed consumer and client demands by integrating faster delivery times, offering specialty services, and integrating advanced tracking systems that include the use of telematic devices and synchronization to clients’ networks and software. In other words, TLSS is providing its clients with a suite of services that are often overlooked by the final recipient. But, its clients have not.
However, despite the services appearing common to any transaction loop, not all transportation companies offer a competitive set of logistics and transportation options that are comparable to TLSS. And, it’s those distinctions that expose opportunity.
Coronavirus Adds To Delivery Demand and Expectations
One of TLSS’s subsidiary companies, PrimeEFS, is already positioned to assist e-retailers to quickly respond to consumer expectations. In fact, just as 5-day delivery has become somewhat of an outdated expectation to consumers, PrimeEFS is building its reputation by meeting and exceeding market demands. Consumers need products “tomorrow.”
To that end, TLSS’s subsidiary, PrimeEFS, has an established e-commerce logistics platform in place that provides line-haul, mid-mile, and last-mile services. The company is also positioned to maintain its presence in the fulfillment loop by extending its end-to-end solutions from distribution centers or manufacturer’s docks to consumer doorsteps.
PrimeEFS is led by an experienced management team that brings decades worth of logistics experience to run operations and manage key client relationships. Their implementation of a 24/7 Network Operating Center (NOC) integrates with their clients’ tracking and update systems that facilitate seamless delivery and transaction details to both the drivers and the company’s clients. While these matters are mostly taken for granted by the consumer market, that’s not the case for vendors. Client companies, manufacturers, and distributors are laser-focused on using only the logistics providers that can protect their brand image and expectation.
Organic Growth With Increasing Assets
While PrimeEFS itself is a significant asset, TLSS is unique by controlling an additional set of intrinsic assets. First, unlike competing companies, TLSS is an asset-based carrier that employs its staff through W-2 engagement. In other words, they do not use independent contractors to facilitate company functions. Second, TLSS only uses equipment that is owned or leased by the company, with maintenance being done in-house. Third, because TLSS manages its fleet and staff, the company may be in a significantly better position than its competition to achieve safety, reliability, and overall company performance.
Perhaps most relevant to the asset-based structure is that as the market continues to develop, e-commerce companies are trending toward, and even mandating, that their transportation service partners be asset-based. Thus, TLSS may be ahead of the curve when it comes to procuring and expanding new and current client relationships.
And, while TLSS has guided toward substantial growth in the coming quarters, the focus on creating higher shareholder value by seizing real-time opportunities to expand its services by scaling into metro markets is also a work already in progress. Moreover, strategic acquisitions, like the one announced with GRC Trucking, can bring additional diversified opportunities by opening new geographic markets that can leverage the experience and assets of the company to a broader client base. Notably, TLSS has suggested that there is an ample pool of quality logistics companies nationwide that can be accretive to the company quickly expanding routes and client connections.
TLSS Adapts to Client Systems and Expectations Of Crisis Demand
As a primary concern, even the best companies need to stay focused on the most essential component for success -customer service. Failing to maintain a competitive advantage or not responding to change can transform a leader into a follower quickly. TLSS is addressing that reality with action.
The primary advantage of TLSS’s growing success is that they can become experts on their clients’ platform.
This expertise allows TLSS to integrate seamlessly. Referring to themselves as technology agnostic, TLSS understands the value of using a client’s systems rather than connecting other, third party logistics systems. The ability to connect to its clients’ network also helps to deliver transparent, accurate, and timely records that provide a superior level of trust compared to companies that utilize third-party systems. Each of these components are assets that offer TLSS an advantage over competing providers.
Further, TLSS maintains strict records about the health and performance of its fleet in Fleetio, an industry-recognized fleet management and maintenance system that is audited daily by company management. The results of proactively maintaining its delivery assets help to ensure that its trucks and vans are 100% operational, which produces the company’s high on-time delivery times and enhances the safety of its core asset – its drivers.
In addition to focusing on its fleet and personnel, TLSS offers its NOC platform that provides its clients the real-time status of every delivery and shipment. The program also provides clients with geographical location, when the shipment will arrive, and if any issues have transpired during its transportation. These advantages are important to the client and allow them to communicate with their own customers with facts rather than speculation. In effect, NOC is a valuable asset that closes the communication loop between the supplier, TLSS, and the end customer.
Global Demand Exposes TLSS’s Strength
Undoubtedly, the world is witnessing trying and unprecedented times relating to the Coronavirus. And, as much as people would like to turn off the investment screen, the reality is that investors are still managing and deploying capital. For that reason, keeping an eye on an opportunity for long-term growth is ongoing.
Well managed, asset-based, and significant logistics partnerships are only some of the factors bringing attention to Transportation and Logistics Systems, Inc. The real measure comes from their opportunity to participate in a trillion-dollar e-commerce economy, where reputation and performance matter. And, its from those inherent assets that TLSS can expand its revenue base and leverage asset-based utilization levels to their fullest potential. Combined, this asset-based logistics provider may already have the pieces in place to drive substantial long-term growth.
And, after this current crisis passes, TLSS may be in an even stronger position to maximize its growth strategies.