Arrive Logistics, a prominent Austin, Texas-based freight brokerage, has announced a significant financial milestone, securing over $300 million in a funding round led by Atl Partners, a New York-based private equity firm. This investment marks ATL Partners as the largest minority owner in Arrive Logistics and signals a robust phase of growth for the brokerage firm.
The funding round saw participation from other notable investment entities including Baupost Group, British Columbia Investment Management Corp., and Temasek. This consortium of investors underscores the strong confidence in Arrive Logistics’ business model and future prospects within the dynamic logistics sector.
As part of this investment, ATL Partners will play a pivotal role in guiding Arrive Logistics’ strategic direction. Andrew Clarke, formerly a key executive at Forward Air, Panther Expedited, and C.H. Robinson, will assume the position of chairman on Arrive’s board of directors. He will be joined by Jerome Lorrain and Paul Bell, both from ATL Partners, further strengthening the board’s expertise in transportation and logistics. Amitava Sarkar, Managing Director at J.P. Morgan, facilitated the deal, which was swiftly concluded after ATL Partners presented a preemptive offer, bypassing the conventional sale process.
While the precise valuation of Arrive Logistics remains undisclosed, the investment comprises a combination of primary and secondary equity. A substantial portion of the secondary equity component is designed to provide liquidity for early investors, rewarding their initial commitment and belief in the company’s vision.
Matt Pyatt, Chief Executive Officer of Arrive Logistics, highlighted the company’s impressive financial trajectory, noting gross revenues of $800 million in 2020 and a projected $1.2 billion for 2021. “The investment has been a long time coming and puts us in a great position for the next five years of growth,” Pyatt stated. Reflecting on Arrive’s journey, Pyatt mentioned previous capital raises totaling approximately $50 million across three rounds since its inception in 2014. He emphasized that Arrive’s substantial growth was achieved despite operating with comparatively less capital than some of its peers in the high-growth sector.
Operating with a lean financial structure had presented challenges, particularly when the COVID-19 pandemic caused significant market disruptions in 2020. The necessary measures, including a 10% headcount reduction and a temporary hiring freeze, subsequently strained Arrive’s operational capacity when freight demand rebounded sharply. This new infusion of capital, spearheaded by ATL Partners, will empower Pyatt and his leadership team to adopt a long-term strategic approach, mitigating the impact of freight market fluctuations and enabling proactive planning.
“We’re a billion dollar company and we’ve always had a thin balance sheet,” Pyatt explained. “We wanted to have a larger vision — being short-term creates thrash.”
Andrew Clarke from ATL Partners echoed this sentiment, expressing enthusiasm about injecting significant capital into Arrive Logistics and supporting its preparations for the next phase of expansion. “One of Eric [Dunigan, co-founder and president] and Matt’s strengths is their ability to see through the cycle,” Clarke commented. “Now they have the capital to operate through the cycle too.” This partnership between Arrive Logistics and ATL Partners is poised to leverage both operational acumen and financial strength for sustained growth.
A primary focus for Arrive Logistics, fueled by this new capital, is a dramatic increase in technology investments. Historically, Arrive’s technology spending was around $5 million annually, initially focused on customizing an off-the-shelf Transportation Management System (TMS) and subsequently developing its own proprietary system. With the ATL Partners investment, technology expenditure is set to surge to $20 million this year and is projected to reach $30 million annually over the next five years, according to Pyatt. This substantial allocation is earmarked for internal development, excluding external software purchases, data acquisitions, or integrations.
“Our carriers and our customers want new capabilities and features,” Pyatt explained, highlighting the demand for enhanced technological solutions within the logistics ecosystem. Arrive’s strategic expansion into new service areas, potentially including a managed transportation platform tailored for small and medium-sized businesses, necessitates a larger and more agile software development team. This technological advancement is crucial for Arrive to maintain its competitive edge and meet evolving market demands.
Expanding service offerings is another key priority for Pyatt, Dunigan, and the Arrive Logistics leadership team. Currently, full truckload brokerage constitutes approximately 95% of Arrive’s business, with the remaining 5% encompassing less-than-truckload and intermodal services. With the backing of ATL Partners, Pyatt intends to invest more aggressively in growing these existing service lines and exploring new avenues such as cross-border, expedited, and potentially international freight services. To support this ambitious growth trajectory, Arrive Logistics plans to add 1,000 net new employees per year for the next three years, significantly increasing its current workforce of around 1,300 employees.
Looking further ahead, Arrive Logistics will evaluate whether to build or acquire an international freight forwarding division. Jerome Lorrain, with his extensive experience as the former CEO of CEVA Logistics and board member of Pilot Freight Services, is expected to provide valuable guidance in this strategic decision. Clarke, from ATL Partners, also brings relevant expertise, having overseen multiple freight forwarder acquisitions and integrations during his tenure as CFO at C.H. Robinson.
The substantial capital infusion from ATL Partners and other investors will also enable Arrive Logistics to reinforce its established “corridor” strategy. This approach focuses on developing highly specialized and reliable capacity by partnering with small and medium-sized fleets on high-density power lanes. A stronger balance sheet will empower Arrive to handle increased freight volumes and cultivate deeper, more strategic relationships with top-performing carriers within these critical lanes.
In the immediate future, Pyatt’s focus will be heavily oriented towards strategic planning. This includes building essential infrastructure in areas such as recruiting and training, scaling the technology development team, and optimizing accounts payable and receivable processes. These foundational elements are crucial to support the anticipated rapid growth and operational complexity.
“We also need to answer questions like: ‘What’s the right velocity of growth?’” Pyatt noted. “We grew 50% last year and we’ll grow 50% this year. We can give projections, but this investment gives us the flexibility to toggle that growth rate up or down depending on the opportunities we see.” This adaptability, facilitated by the financial strength provided by ATL Partners, will be a key asset for Arrive Logistics in navigating the dynamic logistics landscape.
Clarke, representing ATL Partners, conveyed his enthusiasm for collaborating with the high-performing team at Arrive Logistics. “Our job as a board is to make sure the team has the resources and assets they need to be successful,” Clarke stated. “We get to use our breadth of experience to help them see around the corner and work on next-level stuff.” This partnership between Arrive Logistics and ATL Partners represents a significant step forward for both entities, promising innovation and growth in the logistics industry.
