New 4-Elements CEO brings business to Memphis

The Commercial Appeal
January 21, 2008
By Jane Roberts

Paul Stewart, longtime executive and attorney in the logistics sector, is the new chief executive of 4-Elements Inc., the soon-to-be-Memphis-based third-party logistics firm that grew revenue 400 percent in a sluggish 2007 economy.

4-E reported a jump from $4 million to $19.5 million after it opened three branch offices last year, giving it a total of eight in the eastern half of the United States.

This year, Stewart intends to add three more offices -- creating a nationwide network -- and increase revenue by $30.5 million.

"Every day in 2007 reflected sequential growth. I account for it by hiring the best of the best," said Stewart, who has attracted a contingent of young logistics experts (average age, 32), put them in charge of branches and sweetened the stakes with an equity share in the firm to burnish growth.

4-E was incorporated in late 2005 in Bentonville, Ark., to serve Wal-Mart vendors concentrated in the area.

In November, New York hedge fund Vision Capital Advisers purchased it and put Stewart in charge.

Within six months, Stewart intends to move the headquarters to Southwind.

Each branch offers third-party logistics services, including truck brokerage, warehousing and distribution, and international forwarding.

4-E brokers the asset space. Instead of owning trucks, it has contracts with 10,000 carriers nationwide, three warehousing partners, several custom houses and non-vessel operating carriers, or sea freight forwarders that book space on steamships in large quantities and sell the space to smaller shippers.

Because these operators consolidate small loads into containers that move under one bill of lading, they can pass better rates on to their customers.

Most third-party logistics companies operate under the same model, including leader C.H. Robinson, the $6-billion giant in the field.

Stewart, longtime senior manager at GST Corp., which was later was purchased by NYK Logistics (Americas), knows the strengths and weaknesses of the sector from years of overseeing mergers and acquisitions as general counsel at GST.

"I worked with 50 to 100 similar companies. I would say most were fragmented by agents working in their own interest."

By assembling his own team, Stewart has been able to choose college-educated logistics grads with an average of 12 years of industry experience.

"I watch the e-mail chatter between them, Stewart said, glancing for a second at the computer on his desk. "We had one branch with a load that needed to be loaded in two hours. Immediately, other branches started sending help, saying they had a driver in the area who could run over and help.

"What helps is that the guys all know each other and like each other and pitch in to help."

As they gain the confidence of customers through transportation, Stewart says, "they will move up the supply chain totem pole."

Mike Bruns, head of Comtrak Logistics here, said inner dynamics play a tremendous role in the success of brokerage companies.

"It's very easy for the agents to begin competing among themselves to get business. It's very important that they get along."

The third-party industry, now worth about $120 billion, has grown 15-18 percent every year for the past five years as Fortune 500 companies have chosen to focus on their core business and outsource transportation and supply chain management.

Many, including 4-E, offer customers a single point of contact for all modes of transportation, including air cargo and less-than-truckload carriers, with a single Web site to track the progress.

4-E negotiates price with carriers and saves customers money with space discounts and efficiency.

--Jane Roberts: 529-2512

More info:

4-Elements Inc.

CEO: Paul Stewart

Address: 1002 S.W. Park Drive, Bentonville, Ark.

2007 sales: $19.5 million

Phone: 752-8781

Web: 4elogistics.com