A creative business solution guides Knichel Logistics to success

 

Kristy Knichel has led Knichel Logistics as president and CEO for a decade now, but she still feels the pressure of operating a family business acutely.

Kristy and her father William founded the company in 2003. Her brother William Jr. and younger sister Casey are actively involved in management, while another sister and her father remain part owners. As frustrating as it can sometimes be, Knichel says that the ability to navigate the issues that come with operating a business successfully with your siblings drives her to this day — and is a factor in the company’s growth.

“As much as I’ve gone through, a lot of heartache and crazy times — there’s a reason for it,” she says.

Running a family business presents a unique set of challenges that don’t come into play at other companies. The ability to be creative and flexible in that environment and to keep everything moving forward, however, can often put the leader in a better position to deal with the more common issues that come about in leading a business.

A balancing act

After her promotion to leadership and her father stepping down, Kristy has had to strike a balance when it comes to taking her father’s advice, someone whom she views as a mentor and who was responsible for kindling her interest in logistics. Sometimes his input has conflicted with her own ideas and her management style.

“It can be difficult,” Knichel says, “but at the same time, I keep telling myself there’s a greater goal here.” That goal is obviously to make decisions that contribute to the company’s continued success.

She says that this situation is complicated by the fact that the current challenges are different than what Knichel Logistics faced when it was smaller. Her father doesn’t always understand the reasoning behind her decisions, primarily because his own success in the industry occurred under different market conditions.

“It was a challenge for me, talking with him about things I wanted to do. We weren’t on the same page a lot,” Knichel says. “Now, he doesn’t question me as much, what I’m doing.” To put it specifically, her success has built up more trust between father and daughter.

Knichel has been quite open publicly about her family business, including in several published articles and in a speech she presented as a keynote speaker at the 2016 Transportation Intermediaries Association convention.

Keeping up with the competition

Compounding the complications involved with segregating familial dynamics and work is the fact that operating and sustaining a midsize third-party logistics company (3PL) in today’s transportation industry has never been tougher. As a 3PL, Knichel Logistics arranges freight transportation for their customers through their wide array of carrier partners and contracts with the Class I railroads.

The transportation industry is notoriously competitive and expansive, with numerous mergers and acquisitions occurring monthly by enormous corporations, meaning uncertainty for smaller players. As a $50 million provider of transportation and logistics, Knichel Logistics is considered a small fish in this industry.

Unlike other companies its size, Knichel Logistics does more rail/intermodal business than truckload. Intermodal transportation has slimmer margins, however, so the company is currently working to grow its truck business and achieve greater diversity within their portfolio.

But the truck brokerage industry is consolidating as companies buy pieces to ensure they provide services like expedited and freight forwarding, she says. Large truck brokerages also have offices all over the country that better understand regional and local markets.

“It’s been tough for us because the bigger companies are getting bigger and they have more buying power out there with some of these larger trucking companies,” Knichel says.

As a small player, Knichel Logistics has to be creative to compete. That’s where being an efficient, family-run business can be beneficial.

Exhaust all possibilities

Creativity and being open to new ideas has already helped Knichel Logistics find a solution to a unique problem — a lack of growth in its less than truckload, or LTL, division.

LTL loads are defined as having a billed weight of less than 10,000 lbs, and the determining factor, since it’s a small shipment, is usually price. But Knichel Logistics couldn’t compete on price against larger companies with more volume, thus they were having difficulties securing new opportunities.

Knichel, along with her senior leaders, knew that there was an opportunity to grow this division and that the demand for the service was already there based on the needs of current customers who were already shipping intermodal and full truckload.

“That spoke volumes, that there was a lot more business we could potentially grab. Why aren’t we grabbing it and what do we need to do to grab it?” she says. “We have a huge customer base that we know wanted that service. If we don’t offer the service, they are going to go look somewhere else and then potentially we could lose the other modes that we have with that customer as well,” Knichel says.

The company’s leadership started looking for an answer.

Knichel Logistics was already using a co-broker relationship with several LTL carriers, so it explored becoming an agent. You receive better pricing, but it can make your customer base, which is in their system, vulnerable if you decide to sever the relationship, Knichel says.

Another idea was negotiating directly with the carriers, but it’s a lot of work and, again, the smaller companies don’t have the volume of business to leverage better prices.

When faced with a difficult problem, Knichel says you can’t give up. Keep the dialogue going through constant networking, as well as conversations with consultants, and trust in the advice of the people you surround yourself with.

“There’s a lot of people out there to help and guide you in the right direction,” she says. “Even though we didn’t have to go to a consultant for this, just in general there have been times we bring consultants in on different areas when we feel like we’re at a standstill. What do we do? Where do we go from here?”

Knichel says don’t be afraid to reach out to other people and do the research to find a solution, because there are solutions out there.

A solution for all

The answer to Knichel Logistics’ LTL problem ultimately came from a post on LinkedIn that her team noticed. BlueGrace Logistics, an LTL provider in Tampa, was looking for franchisees. Knichel Logistics was familiar with BlueGrace’s culture and had worked well with the company in the past as a co-broker. Because BlueGrace specialized in LTL, it wasn’t a direct competitor, so the circumstances were ideal.

It took about six months, but Knichel Logistics created a separate company via the franchising agreement called BlueGrace Logistics Pittsburgh North for its LTL division.

For the first six months, it was able to keep its old name on invoices, but then it had to educate its customers as to why the paperwork no longer said “Knichel Logistics.”

“We’ve really done a good job to overcome that (change in name). Really being in front of our customers, sending out emails, letters, talking to them about it.” Knichel says.

Because it looked for the right solution, before jumping into something that wasn’t everything it wanted, Knichel Logistics is able to utilize BlueGrace Logistics’ web-based proprietary system and an online customer portal without having to invest the resources into a system of its own. It also retained its autonomy and staff and has benefitted from BlueGrace’s leveraged pricing and vast carrier network.

“As a result, the franchising decision has been very financially advantageous for us,” Knichel says. “At the end of 2016, we saw a 40 percent growth over 2015 and almost 62 percent growth over 2014, our last full year before we became a BlueGrace franchise. And we beat our best year, which was 2013, by almost 17 percent.”

Takeaways:

  • Working with family can be tough but can also be a good motivator.
  • Be open to new ideas. Sometimes the solution to the most difficult problems is right in front of you.
  • Don’t be afraid ask for help. Keeping an open mind and seeking opinions is wise.

The Knichel File:

Name: Kristy Knichel

Title: President and CEO

Company: Knichel Logistics

Born: New Jersey

What was your first job and what did you learn from it? My first was busing tables at the Kaufman House in Zelienople. I would say that I learned about working hard. A lot of times, especially in jobs like that, you always have people that slack. I learned to pick up other people’s slack to be noticed so I could move up.

What’s the best business advice you’ve ever received? Surround yourself with people smarter than you.

If you weren’t a CEO, is there another job you’d like to try someday? Before I did this, I wanted to buy a pizza shop. I had approached my father about buying a pizza shop because I was managing two pizza shops and one was for sale. He talked me out of it. So, I don’t know if necessarily it would be buying a pizza shop, but I enjoyed that for whatever reason.

What do you like to do when you’re not working? My husband and I go riding on our Harley a lot. I go to every home Steelers game and a lot of concerts. Camping is another big thing we do as well.