RoadOne’s Kellaway spearheading Uberization of drayage via E*Dray

Longtime logistics entrepreneur Ken Kellaway, believing the drayage industry and its customers can benefit from a shared-asset model, is at the fore again, this time in advancing E*Dray. Indeed, Kellaway, president and chief executive officer of Randolph, Massachusetts-based RoadOne IntermodaLogistics, believes E*Dray could be the most positive disruptor the port drayage business has ever seen. In a wide-ranging interview with the American Journal of Transportation, Kellaway offers insights on E*Dray, RoadOne, industry challenges and family business – and an analogy between pole vaulting and drayage. With your having led a number of leading-edge ventures, what makes E*Dray stand out? E*Dray is a collaborative port drayage model that is a technology solution and logistics solution combined. We’re changing the process flow in and out of ports, empowered by strong technology. Although I came up with the idea and happen to be the founder, E*Dray is not a RoadOne business, but RoadOne is one of the drayage partners. To bring the idea to life, we’ve brought in Reade Kidd, formerly director of international logistics at The Home Depot, as president of E*Dray, a separate company with a world-class leadership team and advisory board. It’s a combination of both technology and improving how the logistics process works. It’s really the Uberization of our industry. We’re getting big import customers to collaborate with top-tier drayage companies. Instead of each drayman trying to pick up his specific container at the port, we will work together so he picks up the first container available in the stack. The way the process traditionally has worked, drivers and import customers lose a lot of turn time waiting for a specific container to be dug out. Society has changed. Whether jet sharing, car sharing, house sharing or hotel sharing, everybody’s doing things in a much more collaborative fashion to manage and improve asset utilization.  Call it Uber, call it Hotels.com, call it a whole host of things: They’re much better because of the advent of technology and ability to improve visibility. There are much better ways to manage capacity more effectively as long as you’re willing to collaborate. But it takes vision, it takes leadership and it takes people willing to venture into new areas. As we begin the launch of E*Dray, first on the West Coast, we’re turning to other high-quality drayage providers and working together in a more collaborative fashion to support each other and our accounts so we can flow in and out of the ports better. REZ-1 [a unit of chassis lessor Direct ChassisLink Inc.] is our technology partner. We’ve been working on this program for a year, dealing with everybody from FMC [Federal Maritime Commission] commissioners to heads of every major port authority to presidents of the major steamship lines to owners of the largest drayage companies to some of the largest importers. Unequivocally, everyone says this could be the biggest and most disruptive thing to happen in drayage for the positive, to improve fluidity through the ports, to improve driver revenue, to improve trucking companies’ revenue, to reduce port costs as we drive this new strategy. What has keyed RoadOne’s growth to become the nation’s leading single-source solution – S3 as you call it – for intermodal drayage, warehousing and distribution and related services? We started the business 30 years ago, relaunching a small family warehouse business as Kellaway Intermodal and Distribution Systems, adding trucking and CY [container yard] operations. We knew that, to succeed in the marketplace, we needed to be more than one-dimensional. People didn’t want just standalone warehousing or just standalone trucking companies. We felt they wanted more of a comprehensive company that could service multiple facets of their business. Years ago, we were in Somerville, Massachusetts, but I restarted the company in Pawtucket, Rhode Island. We were always based in the Boston area. For 50 years, we were in the public warehousing business, in South Boston and then Somerville, storing wool imported from overseas and footwear, being the largest footwear warehouse on the East Coast for all the Japanese trading companies in the ’60s and ’70s. Kellaway Warehouses, back in the days of my grandfather and father, actually occupied and ran for 50 years what is going to be General Electric’s new corporate office they’re now building in Boston. I was working with my family driving a forklift truck while working my way through undergraduate (Providence College) and graduate school (an MBA from Babson Business School). My family was fortunate to sell the Somerville warehouse property when Massachusetts Funding for the Arts was looking for a new place to house artists. My parents made a significant little fortune for themselves. I was just getting out of Babson with no intent of getting in the business but was quickly thrown in and asked if I wanted to take over the family legacy company.  I restarted the business in Rhode Island with one truck in 1987. I knew the Rhode Island market very well because I’d also worked during college for Ryder Truck Leasing, and the real estate was cheaper in Rhode Island than Boston. So we went from being a public warehousing company servicing footwear importers to being a transportation company and U.S. Customs-bonded container yard in Rhode Island, servicing steamship lines and all major importers in the Rhode Island market.  The steamship lines quickly came to us saying they wanted to expand further in New England, so, by 1990, we were back in Boston again and had set up a container terminal operation, a trucking operation and container freight station. We ultimately ended up buying a few airfreight companies at Logan [International] Airport and expanded even into the airfreight business. So a lot of our growth came from customer requests and the desire for us to start with one vertical and expand it into multiple verticals. We began offering our three-touch program. We wanted to touch their freight in three ways, whether it was local trucking, warehousing or through a truck brokerage operation, nationwide transportation.  In 1992, David McLaughlin, our chief operating officer, came aboard, and he has been my partner for 25 years. In the ’90s, we expanded the business throughout the Northeast and had over 13 locations, down to Baltimore and Harrisburg, PA, and throughout New England. We did a consolidation with five other companies, and that’s when we created RoadLink as one national product, because the drayage space was very fragmented, with really no national provider at the time. What major challenges does the drayage industry face, and how is RoadOne addressing them? The biggest single challenge is people and drivers – trying to make sure this is a viable career path and that the industry is lucrative enough for us to pay our drivers a fair wage for their hard work – making sure we can get enough good, qualified drivers in today’s environment. Barriers to entry are getting higher for drivers. Regulatory requirements are getting more difficult all the time, from hours-of-service to a safety standpoint to training and longevity. The answer for us is to try to be the best provider in the industry for not only the customer but also the driver. We work real hard to provide our drivers with good quality revenue and freight to move every day. That’s why we align ourselves with very good customers with high-quality freight.  We want to make sure we pay drivers fairly. We give them very good programs to purchase fuel and healthcare, and we give them best-in-class technology. How is it gratifying to see your son (RoadOne’s vice president for commercial strategy and solutions, Kendall P. Kellaway III) following in your footsteps? It’s exciting to see the younger generation come in and embrace the underlying logistics business but with different thoughts as to how we can make this business more contemporary, including advancing shared-asset models. It’s great to have him in an industry that, on its surface, is very old school and parochial, but there is an opportunity to contemporize it, which he is helping us do. Who has most inspired you personally and professionally? Most recently, I’d say Brad Jacobs, [chairman and CEO] of XPO [Logistics Inc.], a really sound entrepreneur in consolidation of the logistics space. Being an entrepreneur all my life, I’m always intrigued by entrepreneurs who build great businesses. In business in general, you’d have to look at Jeff Bezos, [founder and CEO] of Amazon.com, who has created an amazing culture and successfully taken on so many innovative sectors with highly disruptive business models. What nonwork interests allow you take your mind off business, and do you ever find enough time for such activities? You try to find time. We have four kids, all young adults now, so we try to spend time with them. We travel when we can. I do play golf occasionally, not as much as I’d like, and we probably enjoy boating as much as anything. I still actively work out as much as I can. I played sports all my life. In college at Providence, I played rugby. All through high school, I played football and was a wrestler and pole vaulter. Pole vaulting looks so difficult... It’s kind of like being in the drayage business: High risk and a high probability of injury. To succeed, you need to continue to raise the bar and challenge yourself to get to new heights. As you raise the bar, the chance of failure and injury increases, but the reward does as well.