Feature Article

Niche Shipper

Started 11 years ago as a spin-off of a paper company, Riverside Logistics has become a fast-growth company by managing medical-equipment supply chains.

By Peter Galuszka

In a cargo bay of a big warehouse near Richmond International Airport, workers in hospital garb reload cardboard boxes. They put in plastic bags containing surgical cloth, followed by packages of plastic tubes. Should they need a completely sterile environment, they can work in a special aluminum hut a few steps away. Later, a fork lift will move the repackaged boxes for truck shipment to hospitals from Richmond to Denver.

This kind of highly specialized loading and supply chain management, with a heavy emphasis on smaller loads, has proved a winner for Riverside Logistics. Making use of the Greater Richmond area’s strategic location along the East Coast and its Mid-Atlantic region, the fast-growing logistical services company has carved out a niche in handling specialty shipments.

 

Oaken wine casks

Since its founding in 1996, the Midlothian firm has hauled a smorgasbord of goods ranging from Central American bottled beer to gravel to meticulously crafted wine casks of fine oak from France. Over the past three years, business has been so strong -- surging from $8.5 million in sales in 2004 to a projected $19.4 million this year -- that the company has had to triple its warehouse space.

Keith Hamlett, Riverside’s CEO, has ambitions to grow corporate sales to $25 million within another three years. Says Hamlett: “It’s all organic growth.”

Riverside has benefited from its participation in a vibrant  logistics sector in the Greater Richmond region. The Richmond-Petersburg metropolitan area stands at the junction of Interstates 95, 64 and 85, and it's the headquarters location of some of the nation's largest trucking companies. The ports of Virginia, only two hours away, provide ready access to international markets; mass market retailers such as Target, Wal-Mart and QVC have built hundreds of thousands of square feet of distribution space to handle the surging volumes of container traffic.

A number of companies in the Greater Richmond region also have expertise in the distribution of medical products. Owens & Minor is the nation's largest distributor of national brand name medical/surgical supplies. Says Gene Winter, senior vice president of the Greater Richmond Partnership economic development organization: "We've got the physical infrastructure it takes to be a world-class logistical center. But there's more to our competitive edge than interstates and warehouses. The Richmond advantage is really built on the knowledge and innovation of the companies that do business here."

Riverside is a classic example of a small firm that has developed deep knowledge in a logistical niche. Once part of the James River Corporation, Riverside embarked upon its modern incarnation in 1996 when it spun off from the parent company. When James River merged with another paper company and relocated to Chicago, Hamlett, Frank Ward and other colleagues created Riverside Logistics. Rick Holden joined the team as vice president of operations in 1998.

Since then, Riverside has developed a business model as a specialty shipper that provides “best value transportation,” Holden notes. Although it has a number of large clients, Riverside has found that its sweet spot is serving the transportation needs of smaller firms and start-ups. The company has created a template for handling nearly every aspect of shipping products: helping with orders, handling inventories, packaging, shipping and unpacking at the other end. Riverside tailors shipment needs to the correct shipping method, such as the right truck size, in ways that cut costs, says Holden.

As the firm has grown, it has developed other business lines, which it runs under distinct names. Riverside Logistics Services handles warehousing and freight payments, among other services. Advanced Trailer Systems, which also trades as Riverside Logistics, is a truck brokerage, and Shippers Commonwealth LLC, based in Charleston, S.C., provides logistics information technology services. All together, the firm has about 60 employees.

Although the products Riverside ships range from car brakes to paper, health care suppliers take up between 70 and 80 percent of warehouse space at any given time. Major clients include AVID Medical of Toano, Precept Medical of Arden, N.C., and Custom Healthcare Systems of Richmond.

Hamlett credits a close relationship with Hanover County-based Owens & Minor, a $4.8 billion-a-year medical equipment supplier, for helping Riverside develop a national footprint as a medical supply shipper. O&M has 43 warehouses across the country that disperse supplies such as syringes, catheters and surgical caps, gowns and gloves. Although Riverside is not a direct contractor for Owens & Minor, it does ship for vendors who supply O&M with its goods.

Henry A. Berling, a retired O&M sales executive who serves on Riverside’s board, has offered critical advice in building the medical business. “They've done a very good job,” says Berling. “They’re at the right spot at the right time. Health products are going to be needed as long as you and I are alive.”

Today, Riverside collects medical supplies from all over the world, including manufacturers in Thailand and Mexico, stockpiles them for its clients and ships them. One major customer, AVID, a Toano, Va.-based assembler of hospital trays, serves 800 hospitals.

Riverside, however, will consider shipping anything. Recently, the company received a request to store and ship gravel. According to Holden, that meant finding a storage facility separate from its medical-supplies operation. Riverside also has closed a deal with a West Coast distributor to import and ship several types of beer from Latin America, including Nautica Especial from Guatemala. It has imported pianos from South Korea and wine casks made of fine French oak preferred by vintners in Virginia, the Northeast and Midwest. “There’s a big rush around harvest time,” Hamlett says.

Riverside's core business enjoys growth prospects as solid as those of its customers in the medical equipment supply business, which benefit from America’s aging population and commensurate demand for medical services.

The company also sees promise in so-called Transportation Management Systems, which can help smaller companies ship product while avoiding large investments in supply chain infrastructure. If a company wants to ship products itself, it typically must invest from $250,000 to $500,000 in a shipping system that can take up to a year to put together, notes Deb J. Angstadt, a marketing consultant who works for Warren, Whitney & Sherwood Management Professionals. By using Riverside's Shippers Commonwealth service, the firm could be shipping in 60 days at a fraction of the cost, she says.

The surge in imports through Hampton Roads hasn’t affected Riverside very much, although it could if a special shipping container transfer station is built in Prince George County near Petersburg. In that plan, the Norfolk Southern railroad would take containers directly from docks along its main line running parallel to U.S. 460 to the station, where cargo would be divvied up and shipped by truck. Doing so would avoid traffic jams in Tidewater.

Hamlett would like to establish a presence at the trans-shipping facility. Says he: “If that station is built, it could be a big project for us.”

-- July 23, 2007

CEO Keith Hamlett

For more information...

Riverside Logistics home page

Asheboro Paper Newest Client (June 4, 2007)

Compass Technologies Retains Riverside (Dec. 22, 2006)

Another 40,000 Feet (Dec. 4, 2006)

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