Landstar System Profile
Landstar System, Inc. (Landstar) operates as a technology-enabled, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third party capacity providers and employees.
The company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to comprehensive third party logistics solutions to meet all of a customer’s transportation needs. Landstar provides services principally throughout the United States and to a lesser extent in Canada and Mexico, and between the United States and Canada, Mexico and other countries around the world.
The company’s services emphasize safety, information coordination and customer service; and are delivered through a network of over 1,000 independent commission sales agents and over 85,000 third party capacity providers, primarily truck capacity providers, linked together by a series of digital technologies, which are provided and coordinated by the company.
Landstar markets its integrated transportation management solutions primarily through independent commission sales agents and exclusively utilizes third party capacity providers to transport customers’ freight. Independent commission sales agents enter into contractual arrangements with the company and are responsible for locating freight, making that freight available to Landstar’s capacity providers and coordinating the transportation of the freight with customers and capacity providers. The company’s third party capacity providers consist of independent contractors who provide truck capacity to the company under exclusive lease arrangements (the ‘BCO Independent Contractors’), unrelated trucking companies who provide truck capacity to the company under non-exclusive contractual arrangements (the ‘Truck Brokerage Carriers’), air cargo carriers, ocean cargo carriers and railroads. Through this network of agents and capacity providers linked together by Landstar’s ecosystem of digital technologies, Landstar operates an integrated transportation management solutions business primarily throughout North America.
Segments
The company operates through two operating segments: Transportation Logistics and Insurance.
Transportation Logistics segment
The Transportation Logistics segment provides a wide range of integrated transportation management solutions. Transportation services are provided by Landstar’s ‘Operating Subsidiaries’: Landstar Ranger, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Gemini, Inc., Landstar Transportation Logistics, Inc., Landstar Global Logistics, Inc., Landstar Express America, Inc., Landstar Canada, Inc., Landstar Metro, S.A.P.I. de C.V., and Landstar Blue, LLC. Transportation services offered by the company include truckload, less-than-truckload and other truck transportation, rail intermodal, air cargo, ocean cargo, expedited ground and air delivery of time-critical freight, heavy-haul/specialized, the U.S.-Canada and the U.S.-Mexico cross-border, intra-Mexico, intra-Canada, project cargo and customs brokerage. Examples of the industries serviced by the transportation logistics segment include automotive parts and assemblies, consumer durables, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics and military equipment.
In addition, the Transportation Logistics segment provides transportation services to other transportation companies, including third party logistics and less-than-truckload service providers. The independent commission sales agents market services provided by the transportation logistics segment. Billings for freight transportation services are typically charged to customers on a per shipment basis for the physical transportation of freight and are referred to as transportation revenue.
Truck Transportation Services
The Transportation Logistics segment’s truck transportation services include a full array of truckload transportation for a wide range of commodities and, to a lesser degree, less-than-truckload and other truck transportation services. A significant portion of the company’s truckload services is priced in the spot market and delivered over irregular or non-repetitive routes, while approximately 25% of the company’s fiscal year 2023 truck transportation revenue was generated by BCO Independent Contractors utilizing Landstar provided trailing equipment, which frequently is used on more routine, regular routes. The company utilizes a broad assortment of equipment, including dry and specialty vans of various sizes, unsided/platform trailers (including flatbeds, drop decks and specialty trailers) and temperature-controlled vans. Available truck transportation services also include short-to-long haul movement of containers by truck and expedited ground and dedicated power-only truck capacity.
During the year ended December 30, 2023 (fiscal year 2023), revenue generated by BCO Independent Contractors and Truck Brokerage Carriers was 38% and 53%, respectively, of consolidated revenue. Also, during fiscal year 2023, truck transportation revenue generated via van equipment and unsided/platform trailing equipment was 57% and 31%, respectively, of truck transportation revenue and less-than-truckload and other truck transportation revenue was 2% and 10%, respectively, of truck transportation revenue. The company’s truck transportation services contributed 91% of consolidated revenue in fiscal year 2023.
Rail Intermodal Services
The Transportation Logistics segment’s rail intermodal services operate with contracts with Class 1 domestic and Canadian railroads, certain short-line railroads and most major asset-based intermodal equipment providers, including agreements with stacktrain operators and container and trailing equipment companies. In addition, the transportation logistics segment’s rail intermodal services operate with contracts with a vast network of local trucking companies that handle pick-up and delivery of rail freight. These contracts provide the transportation logistics segment the ability to transport freight via rail throughout the United States, Canada and Mexico. The Transportation Logistics segment’s rail intermodal service capabilities include trailer on flat car, container on flat car, box car and railcar.
Air and Ocean Services
The Transportation Logistics segment provides domestic and international air services and ocean services to its customers. The company executes international air freight transportation as an International Air Transport Association (‘IATA’) certified Indirect Air Carrier (‘IAC’) and international ocean freight transportation as an Ocean Transportation Intermediary (‘OTI’) licensed by the Federal Maritime Commission (‘FMC’) as a non-vessel operating common carrier (‘NVOCC’) and ocean freight forwarder. Through its network of independent commission sales agents, relationships within a global network of foreign transportation intermediaries and contracts with a number of airlines and ocean lines, the Transportation Logistics segment provides efficient door-to-door transportation to most points in the world for a vast array of cargo types, such as over-sized break bulk, consolidations, full container loads, less-than container loads and refrigerated freight.
Insurance segment
The Insurance segment is consisted of Signature Insurance Company (‘Signature’), a wholly owned offshore insurance subsidiary, and Risk Management Claim Services, Inc. (‘RMCS’). The Insurance segment provides risk and claims management services to certain of Landstar’s Operating Subsidiaries. In addition, it reinsures certain risks of the company’s BCO Independent Contractors and provides certain property and casualty insurance directly to certain of Landstar’s Operating Subsidiaries. Revenue at the Insurance segment represents reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk of loss is ultimately borne by Signature.
Agent Network
The company’s primary day-to-day contact with its customers is through its network of independent commission sales agents and, to a lesser extent, through employees of the company. The typical Landstar independent commission sales agent maintains a relationship with a number of shippers and services these shippers utilizing the company’s digital technologies and extensive network of third party capacity that provides various modes of transportation services to the company.
The company provides assistance to the agents in developing additional relationships with shippers and enhancing agent and Company relationships with larger shippers through the company’s field employees, located throughout the United States and Canada. The Operating Subsidiaries provide programs to support the agents’ operations and tools and data to assist agents in establishing pricing for freight hauled by the various modes of transportation available to the agents. It is important to note that the Operating Subsidiaries, and not the company’s agents, contract directly with customers and generally assume the related credit risk and potential liability for freight losses or damages when the company is providing transportation services as a motor carrier.
The company has more independent commission sales agents than any other asset-light integrated transportation management solutions company in the United States. Landstar’s vast network of independent commission sales agent locations provides the company regular contact with shippers at the local level and the capability to be highly responsive to shippers’ changing needs. The company’s large network of available capacity provides independent commission sales agents with the resources needed to service both large and small shippers. Through its agent network, the company offers smaller shippers a level of service comparable to that typically enjoyed only by larger customers. Examples include the ability to provide transportation services on short notice, multiple pick-up and delivery points, automated information flow, access to specialized equipment, spotted van trailers and drop-and-hook operations. While the majority of the agents in the company’s network arrange truck transportation services for shippers, a number of the company’s agents specialize in certain types of freight and transportation services (such as oversized or heavy loads and/or rail, air and international freight transportation). Each independent commission sales agent has the opportunity to market all of the services provided by the Transportation Logistics segment.
The independent commission sales agents use a variety of digital technologies provided by the company to service the requirements of shippers. For truckload services, the company’s independent commission sales agents primarily use Landstar proprietary software which enables agents to enter available freight, dispatch capacity and process most administrative tasks and then communicate that information to Landstar and its capacity providers through cloud-based applications. The company’s cloud-based available truck information system provides a listing of available truck capacity to the company’s independent commission sales agents. The company also offers independent commission sales agents a variety of proprietary pricing, operational and financial tools via web or mobile applications. For modes of transportation other than truckload, the independent commission sales agents utilize both proprietary and third party information technology applications provided by the company.
The company had 524 agents during fiscal year 2023.
Third Party Capacity
The company relies exclusively on independent third parties for its hauling capacity other than for trailing equipment owned or leased by the company and utilized primarily by the BCO Independent Contractors. These third party transportation capacity providers consist of BCO Independent Contractors, Truck Brokerage Carriers, air and ocean cargo carriers and railroads. During fiscal year 2023, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 38%, 53% and 2%, respectively, of the company’s consolidated revenue. Collectively, revenue generated by air and ocean cargo carriers represented approximately 5% of the company’s consolidated revenue during fiscal year 2023.
BCO Independent Contractors. The company has the largest fleet of truckload BCO Independent Contractors in the United States. BCO Independent Contractors provide truck capacity to the company under exclusive lease arrangements. Each BCO Independent Contractor operates under the motor carrier operating authority issued by the U.S. Department of Transportation (‘DOT’) to Landstar’s Operating Subsidiary to which such BCO Independent Contractor provides services and has leased his or her equipment. The company’s network of BCO Independent Contractors provides marketing, operating, customer service, safety, recruiting and retention advantages to the company.
The company maintains an ecosystem of digital technologies and applications through which BCO Independent Contractors can view a comprehensive listing of the company’s available freight, allowing them to consider rate, size, origin and destination when planning trips. The company’s LandstarOne mobile application provides BCO Independent Contractors information on loading opportunities, as well as fueling station locations, retail fuel prices, fuel prices net of Landstar-arranged discounts and applicable state fuel tax credits, and equipment inspection site locations. The Landstar Contractors’ Advantage Purchasing Program (‘LCAPP’) leverages Landstar’s purchasing power to provide discounts to eligible BCO Independent Contractors when they purchase equipment, fuel, tires and other items. In addition, Landstar Contractor Financing, Inc. provides a source of funds at competitive interest rates to the BCO Independent Contractors to purchase trailing equipment.
Truck Brokerage Carriers. At December 30, 2023, the company maintained a database of over 76,000 approved Truck Brokerage Carriers who provide truck capacity to the company. Truck Brokerage Carriers provide truck capacity to the company under non-exclusive contractual arrangements and each operates under its own DOT-issued motor carrier operating authority.
The company maintains an ecosystem of digital technologies and applications through which Truck Brokerage Carriers can view a listing of the company’s freight that is available to them. The Landstar Savings Plus Program leverages Landstar’s purchasing power to provide discounts to eligible Truck Brokerage Carriers when they purchase fuel and equipment and provides the Truck Brokerage Carriers with an electronic payment option.
Railroads and Air and Ocean Cargo Carriers. The company has contracts with Class 1 domestic and Canadian railroads, certain short-line railroads and domestic and international airlines and ocean lines. These relationships allow the company to pursue the freight best serviced by these forms of transportation capacity. Railroads and ocean cargo carriers are paid either a negotiated rate for each load hauled or a contractually agreed-upon fixed rate per load. Air cargo carriers are generally paid a negotiated rate for each load hauled. The company also contracts with other third party capacity providers, such as air charter service providers, when required by specific customer needs.
Trailing Equipment
The company offers its customers a large and diverse fleet of trailing equipment. The company also provides power-only services, as reported in other truck transportation revenue, utilizing trailing equipment generally provided by the shipper or other third party.
Specialized services offered by the company include those provided by a large fleet of flatbed trailers and multi-axle trailers capable of hauling extremely heavy or oversized loads. The company, along with its network of capacity providers, offers one of the largest fleets of heavy/specialized trailing equipment in North America.
At December 30, 2023, 14,270 of the trailers available to the BCO Independent Contractors were owned by the company and 319 were rented. In addition, at December 30, 2023, 3,428 trailers were provided by the BCO Independent Contractors. Approximately 25% of Landstar’s truck transportation revenue was generated on Landstar-provided trailing equipment during fiscal year 2023.
Customers
The company’s national account customers include the United States Department of Defense and many of the companies included in the Fortune 500. Large shippers also use third party logistics providers (‘3PLs’) to outsource the management and coordination of their transportation needs. 3PLs and other transportation companies also utilize the company’s available transportation capacity to satisfy their obligations to their shippers. There were 11 transportation service providers, including 3PLs, included in the company’s top 25 customers for fiscal year 2023.
Corporate Services
The company provides many administrative support services to its network of independent commission sales agents, third party capacity providers and customers. Management believes that the mobile and digital applications purchased or developed and maintained by the company and its administrative support services provide operational and financial advantages to its independent commission sales agents, third party capacity providers and customers. These, in turn, enhance the operational and financial efficiency of all aspects of the network.
Regulation
Certain of the Operating Subsidiaries are considered motor carriers and/or brokers authorized to arrange for transportation services by motor carriers which are regulated by the Federal Motor Carrier Safety Administration (the ‘FMCSA’) and by various state agencies.
Additionally, certain of the Operating Subsidiaries are licensed as Ocean Transportation Intermediaries by the U.S. Federal Maritime Commission as non-vessel-operating common carriers and/or as ocean freight forwarders. The company’s air transportation activities in the United States are subject to regulation by the U.S. Department of Transportation as an indirect air carrier. One of the Operating Subsidiaries is licensed by the U.S. Department of Homeland Security through the Bureau of U.S. Customs and Border Protection (‘U.S. Customs’) as a customs broker. The company is also subject to regulations and requirements relating to safety and security promulgated by, among others, the U.S. Department of Homeland Security through the U.S. Customs and the Transportation Security Administration, the Canada Border Services Agency and various state and local agencies and port authorities.
History
Landstar System, Inc. was incorporated in 1991 under the laws of the state of Delaware.
