Back in Business

When he gave up everything and walked away from the only company he’d ever worked for to start some-thing new, John Magee was unsure of his next steps. Could he find success in the face of uncertainty and troubled economic times?

“Looking back, that first year after we resigned was a defining period for our company ... It gave us a chance to sit back, assess the industry, and then decide how we wanted to be different and carve out a niche for ourselves.” —John Magee

Fresh out of college, John Magee joined Eagle Global Logistics (EGL) as one of the company’s first management trainees. Fourteen years later, the company made the move to go private after being publically held, and endured a hostile takeover in 2007. Dissatisfied over the planned direction of the new owners, and with significant changes to the company’s corporate culture looming, Magee left EGL to embark on a new venture with several of his former coworkers. Little did he know, as he was planning the launch of a new company—Crane Worldwide Logistics—that he would also be navigating one of the worst recessions in history. Regardless, Magee, who serves as the company’s president, has turned the tide in his favor: Crane Worldwide Logistics is now a $500 million business that’s challenging industry norms.

The showdown

In 1994, the decade-old EGL was a rapidly expanding business. “I was their first management trainee—their goal was to train new grads, then relocate them as the company grew,” Magee says. And the company did take off, growing from $80 million to $800 million in Magee’s first six years with the company.

As EGL grew to more than $3 billion in annual revenue, owner Jim Crane decided to take the company private. Publicly held for 12 years, industry regulations were annually costing the company $30 million in audit fees; however, Crane’s biggest cost came when he lost his company in a hostile takeover by a private equity firm who wanted to merge EGL with a European company.

“I knew there would be significant changes, but the idea to start something fresh did not come to me until I went to lunch one day with our chief administrative officer,” Magee says. “We discovered we’d both been talking to headhunters, and realized that several other leaders were in the same boat of wanting to leave. So, the next thought was rather than splitting up, why didn’t we try doing something together?”

“Why” quickly turned into “why not.” The takeover deal closed on August 2, 2007, and the following Monday, nine senior-level leaders resigned. With no plan, but with a strong mix of confidence and contacts, the group set out on a journey to take their experience and leverage it into success.

The set up

“The day we quit, we weren’t exactly sure what we were going to do, but we felt we had a great nucleus,” Magee recalls. “We didn’t know if we wanted to go back into the same industry or go in a different direction, but we did know we did not want to be EGL 2.0.”

Group members met in Chicago a few weeks after resigning and talked about fields where they saw growth and opportunities. “At the time, our team was literally spread around the globe, and the one decision we did make was to not bring everyone back to the US, because we felt we would lose the value of our international contacts,” Magee says.

Eventually, the group decided to go back into the same business—a full-service transportation, logistics, and brokerage company—but to do things differently. The group also had to comply with 12-month nonsolicitation agreements, so they embraced the opportunity to build a strategic, detailed business plan. What they found was an industry doing more than $250 billion in revenue annually with a top tier consisting of a couple dozen companies in the $5 billion-plus a year range. There was another, larger group in the $5 million to $50 million range. “Between the companies who were trying to be everything to everybody and what I call the ‘local heroes,’ we saw that there was a noticeable gap,” Magee says. “So, we concentrated on being a global, midsize company that focuses on high-touch, high-value, and high-service business.”

With a solid plan and financial backing from Jim Crane, the group launched Crane Worldwide Logistics by purchasing three small companies—two in the United States and one in China—establishing 12 offices and $40 million in annual revenue. Then, the team watched the global financial crisis of 2008 unfold.

“The timing was what it was, but to be honest, it actually helped us,” Magee says. “As a non-asset-based company, all of sudden there wasn’t as much demand for shipping, so capacity on the planes, vessels, and trucks increased. This allowed us to get our foot in the door, provide great service and IT, and still save clients money. Carriers rationalized the imbalance of supply and demand and prices. By the time things started to turn around, we had a stable client base.”

Staying the course

When he talks about what Crane Worldwide Logistics has accomplished, Magee says it “blows people away. Since the minute we started, we’ve had a headwind.” He credits Crane’s success to solid financial backing, the combined expertise of the initial leadership team, and an exceptional team of global employees. “I am aware, every day, that we are in a service business and our greatest
asset is our people,” Magee adds. “We attract the best, give them the tools to succeed, and reward them for results. Our commitment to our people is reflected in being recently
recognized for the second time as a ‘best place to work.’”

Long term, Magee would like to see the company grow 20 percent per year over the next five years, with an aim of 135 offices in 35 countries, but he notes that expansion is dictated and driven by clients. As far as the value Crane Worldwide Logistics brings to customers, Magee sums it up in three words: technology, transparency, and service. “We have the best technology in the business, hands down,” he says. “But, more importantly, we have integrity. We highlight every failure we make. We are so proud of our service, we’re not afraid to show our failures.”