Nailing a Niche in Logistics

From a simple start, Diane Gibson built Craters and Freighters into a global 3PL to corporate and other 3PL customers.

Diane Gibson quips that she doesn’t think she found logistics, it found her. She identified a niche in the logistics industry after working with Pak Mail Centers of America, a market segment she calls the retail pack and ship operators. “It didn’t take long to figure out that the big stuff was where the money was,” she says. That launched her into a more specialized mode of packing and arranging shipments of art and antiques. And, as she describes it, “If youship a huge piece of art or an antique, you can certainly take that technology and evolve into some of the more commercial things we do today.”

Gibson has developed a network of highly specialized franchise operations covering the United States, and today, the sky’s the limit, literally, for Craters and Freighters (www.cratersandfreighters.com), the company Gibson founded.

Brad Barenberg points to a recent contract to crate and move O-rings for NASA’s Space Shuttle. They’re 19 feet wide, he points out and they have to ship flat. To add to the complexity, the shipments had to move across eight states, and that involved special hauling equipment, permits, and pilot cars. All in a day’s work for Craters and Freighters Global Logistics, a company that grew out of the original Craters and Freighters. That company evolved to fill some specific needs of larger customers that required centralized quotes, more standardized pricing, central billing, and a single point of contact, explains Gibson. Barenberg helped develop Craters and Freighters Global Logistics, and Gibson later sold it to him.

Both companies, Craters and Freighters and Craters and Freighters Global Logistics, operate out of the same office in Golden, CO with the same goals and strategies in mind, says Gibson. It works extremely well, she adds.

During her stint with Pak Mail Centers of America, Gibson clearly had time to explore the franchise concept for the business she eventually started. It’s a bricks and mortar operation, she is quick to point out. Much of the crating and shipping operations take place at a Craters and Freighters warehouse, though some customers prefer (or their products require) that the crating take place on site.

A central feature is the crate engineering services department at the headquarters office. That office not only fills specialized needs through computer aided design and engineering, it sets specific standards for the types of crates and passes that standard along to the network of franchise operators.

A lot of the systems standards come out of the Colorado head office, says Gibson. “We work hard on training and communication,” she continues. “We have a very specific set of systems standards and in the franchisee’s license agreement, they agree to adhere to all systems standards. And, of course, it’s in their best interest to do so.”

Training never stops. The head of the engineering services department conducts different training classes and advanced crating techniques classes as methods and standards evolve, continues Gibson. The specialized nature of the business isn’t for everyone, and Craters and Freighters isn’t boasting hundreds or thousands of locations. There are nearly 70 locations and, “at our peak, we’ll only have a little over 100 or maybe right at 100,” says Gibson. There are two reasons for that. One is the process of standardization and quality control. The other is that a Craters and Freighters franchise is for one city. That allows ample coverage nationwide and makes the training and standardization easier. That’s the model the company will follow in expansion outside the US, says Gibson. “We want to expand through an international program,” she explains. “One of the benefits that we have in the United States is this network of brick and mortar operations,” says Gibson, “and it’s our goal to start developing those in specific foreign countries.”

Existing customers are driving some of that opportunity already. One possible approach to filling the needs in global markets would be to license a “master franchisee” with expansion rights in a specific region or country, continues Gibson. That master franchisee can be trained and receive updates at Craters and Freighters and then do the training and support themselves.

The two companies have evolved a business model that satisfies a very specialized logistics need through local entrepreneurs yet overlays the systems and disciplines that help the domestic and international networks to serve larger corporate customers. Many of those customers are outsourced logistics providers themselves who come to Craters and Freighters for their specialized expertise.

The calls can range from the simply unusual—like the oversized O-rings—to the colossal. A growing area, says Barenberg, is in reverse logistics. He offers an example of a woman who called from major law firm to say the company had a number of servers that were lease returns to Cisco. They had to be moved out of the company’s eight locations, and by the time she had found Craters and Freighters, she had only four days or the company would incur another month of rental on all of the equipment. There were over 450 pieces in office buildings in major metropolitan areas across the US and Europe, all of which had to be crated and returned to the vendor.

“A lot of our bigger clients have footprints in China, the Pacific Rim, and Europe,” notes Barenberg. “They come to us and say we have equipment sitting in Amsterdam, we need you to pick it up, get it crated, and get it shipped to Chicago.” That has pushed the development of Craters and Freighters Global Logistics as a full third party logistics operation— including providing those same services to other third parties.

At the top end of the scale of unusual requests Barenberg recounts is a company that had purchased three sawmills in the US that were to be moved to the heart of Siberia. The sawmills were in different locations Barenberg said could only be described as the middle of nowhere--400 to 500 miles from any major metropolitan area. Craters and Freighters got a rigging team to break the equipment down and then a crating team came in and crated it up on site. They arranged to move the containers to a port where they were shipped to St. Petersburg, Russia and then hauled 3,200 miles inland by rail.

It isn’t all reverse logistics, says Barenberg. One large company came to Craters and Freighters when a big high-tech equipment manufacturer told the customer its terms were now FOB origin (ex works) at plants in China, Brazil, and Europe.

On a smaller scale, one frustrated caller asked Barenberg if Craters and Freighters could move six servers from point A to point B. The caller admitted that he had been having his technology people handle the moves, but they were simply going to the local office supply store and buying bubble wrap and putting the delicate equipment in whatever box was at hand. At $15,000 per unit, the 35% damage rate had finally pushed the caller to seek another alternative.

It’s a common mistake, adds Gibson. Many people don’t understand the importance of the different crating techniques, which leads to damage. The type of cushioning is important, adds Barenberg. It depends on the size of the asset, the weight, and the fragility. There’s not one density of foam that’s appropriate, he continues. Knowing which density is appropriate for a server rack versus a 10,000-pound machine makes a big difference.

Proper insurance is also crucial, says Gibson. “We operate with a cargo policy that was written specifically for our company,” she explains. “We’re not a trucking company, we’re not a warehouseman, we’re not moving and storage, we’re not a forwarder.” The standard language on a conventional air waybill or bill of lading doesn’t cover what they do, and Craters and Freighters puts the coverage right out there for the shipper to see—in a large font and encourages customers to review the coverage with their risk management people, says Gibson. “We’re a big enough insurance player that our underwriters don’t mess around, they write a check. If there’s subrogation after that, then that’s another issue.” Clearly, the goal of the training and standards and best practices is to avoid a claim in the first place because, after all, concludes Gibson, “the name and the reputation is everything.”

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