Liz Lasater, founder and chief executive of Red Arrow Logis tics Photographer: Eric Dennon/ Vakkar Studio via Bloomberg

November 22, 2010

Scanning an attendee list for an industry conference earlier this month, Liz Lasater, the founder and chief executive of Red Arrow Logistics in Bellevue, Wash., was happy to see four other women’s names among the 60 attendees. Not bad, she thought, for the heavily male-dominated logistics industry. Then she got to the conference. Two of the other women were state legislators and a third was a reporter. “There’s a lot of old- school mentality in this industry that makes it challenging” to be a woman business owner, says Lasater, plus a sense of isolation because of so few women at her level and occasional comments, especially earlier in her career, that she was “taking a job away” from a man.

Lasater hasn’t let speed bumps slow Red Arrow’s growth since she started it seven years ago. She says the 10-employee company -- which contracts with regional and national truckers for customers moving raw materials and finished goods around the country -- propelled itself through the recession by choosing “recession-proof” market sectors and competing for federal contracts. Launched with $100,000 of her own savings, Red Arrow had $4.5 million in revenue in 2009, Lasater says, and she expects more than $6 million in 2010. Earlier this year, her business was named one of the Women Presidents’ Organization’s 50 fastest-growing companies owned or led by women in North America.

Red Arrow is a tiny player in the mammoth trucking transportation sector. Figures from the U.S. Commerce Dept. show that trucking transport generated more than $1.2 trillion in economic activity in 2008, the last year for which figures are available. Trucking represents about 8 percent of total U.S. GDP, says Sandeep Kar, global program manager for commercial vehicle research at analyst Frost & Sullivan. The industry is splintered -- the vast majority are small outfits with fewer than 20 trucks, and half are owner-operators driving just one truck, according to the American Trucking Associations.

VIRTUE OF AGILITY

That’s why nimble outfits like Red Arrow are uniquely positioned for continued growth, particularly when they can capitalize on such trends as renewed interest in preserving U.S. manufacturing jobs, rising fuel prices, and a shift toward companies with smaller carbon footprints, Kar says. Because smaller brokers run fewer vehicles using optimum routes, they are considered greener than the huge corporations that dominate logistics, such as FedEx and UPS. “The microeconomic conditions at companies that do local transportation are good and can only get better as the economy picks up,” he says.

Instead of trying to “catch every fish in the ocean,” Lasater pursues clients from high- margin industry sectors, such as defense contractors, federal agencies, and renewable energy manufacturers. “I have to compete against really big companies, so I think about what I can do to outperform them,” she says. She specifically avoided the automotive Lasater insists on 30-day payment terms, even though bigger companies often agree to 60-day payment terms, a stretch of time that would devastate Red Arrow’s cash flow. “I am not going to let these billion-dollar operations run their companies by leveraging my cash flow,” she says. “The best customers to work with also started out small, so they understand my situation and will pay me every 30 days.”

SHARING GROSS PROFIT

Robust employee incentives drive up profitability at Red Arrow. “Every employee knows exactly how they contribute to our bottom line,” says Lasater. “If we achieve on-time performance [and] meet our profitability numbers and monthly profit goals, they get a numerical percentage of our gross profit number.”

Slow, measured growth has been part of Lasater’s business philosophy: “You grow up in terms of revenue and then you expand out, and then you hit a plateau, then you repeat.” The company is expanding to include international freight forwarding and should have the regulatory compliance in place by early 2011, Lasater says. “Horizontally you build sectors and then vertically integrate them with your customer base. Once you get customers, you mine them for different opportunities in different product sectors.”

Above all, establishing trust with clients explains Red Arrow’s success, she says. Her candor can be both humorous and disarming, as when she remarks that she has “sprouted a chin whisker” since her recent 47th birthday. Her tendency to speak her mind “drives my publicist crazy,” she confesses. In an industry fraught, however, with brokers who take kickbacks and drivers who demand cash for on-time deliveries, it’s a crucial trait. Early on, when Lasater had no track record, she asked a carrier to deliver a load of freight. “They didn’t know if they were going to get paid,” she recalls, “but their sales guy believed me, trusted me, and extended $100,000 credit to me.”

Next year, Lasater plans to revamp her marketing plan to include speaking at industry conferences and establishing herself as an expert in the industry, though Red Arrow already occasionally gets fishing calls from larger competitors, says Jan H. Raymond, Red Arrow’s outside counsel. He notes Lasater wants to stay independent for at least the next three to five years. “Given enough time and infrastructure investment,” Raymond says, “this company could go to the sky’s limit.”

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