Profile: Pacer International Inc (PACR.OQ)

Pacer International Inc. (Pacer) is a asset-light transportation and global logistics service provider. The Company provides its transportation services from two operating segments: intermodal and logistics. Intermodal provides intermodal transportation services (the movement of freight through trailer or container using two or more modes of transportation, which include rail and truck segments) principally to beneficial cargo owners (end-user customers), transportation intermediaries and steamship lines who use intermodal transportation. Logistics segment provides highway brokerage, supply chain management services, international freight forwarding, ocean shipping, and warehousing and distribution services to a variety of end-user customers. It also provide an range of logistics solutions, including global international freight forwarding and non-vessel-operating common carrier (NVOCC) services, highway brokerage, warehousing and distribution and supply chain management services.

Intermodal Segment

The Company’s intermodal segment offers service door-to-door intermodal services to its customers, which include end-user customers, transportation intermediaries, such as intermodal marketing companies (IMCs) and steamship lines. The Company is engaged in the development and use of double-stack intermodal equipment and methodologies. Double-stack intermodal transportation consists of the movement of cargo containers stacked two high on special railcars.

The Company provides container capacity, local transportation services (also called local cartage or drayage), on-site operational services, door-to-door shipment management and customer service for its intermodal customers. The Company arranges for a container or trailer shipment to be picked up at origin by truck and transported to a site for loading onto a train. The shipment is then transported through railroad to a site for unloading from the train in the vicinity of the final destination. After the shipment has been unloaded and is available for pick-up, the Company arranges for the shipment to be transported by truck to the final destination. The Company provides customized electronic tracking and analysis of charges and its own negotiated rail, truck and intermodal rates, and it determines the optimal transportation routes. It also tracks and monitors shipments in transit, consolidate billing, handle claims for freight loss or damage on behalf of its customers, and manage the handling, consolidation and storage of freight throughout the process.

The Company serves its customers by seamlessly managing their intermodal moves on its extensive and integrated intermodal network, passing on economies of scale that it achieves as a volume buyer from railroads, trucking companies and other third party transportation providers, allocating container capacity from one of the private intermodal equipment fleets in North America to service the customers’ intermodal traffic, streamlining the paperwork and logistics of an intermodal move, and handling the majority of the local transportation services through its own trucking operations.

The Company through contracts or other arrangements with North American railroads, including Union Pacific, CSX, Kansas City Southern de Mexico (KCSM), Norfolk Southern and Canadian National Railroad, it has access to a North American rail network serving population and commercial centers in the United States, Canada and Mexico. The Company contracts with independent trucking owner-operators and maintain interchange agreements with many steamship lines, railroads and intermodal equipment providers for the interchange and use of equipment supplied by these providers. This network allows it to supply door-to-door transportation across the country for end-user customers, steamship lines and transportation intermediaries. As of December 31, 2011, approximately 975 owner-operator trucks are under contract with its trucking subsidiaries to haul freight for its customers.

The Company maintains fleet of double-stack railcars, containers and chassis, all of which are leased. As of December 31, 2011, its equipment fleet consisted of 1,592 double-stack railcars, 18,183 containers and 12,783 chassis (steel frames with rubber tires used to transport containers over the road). In addition, through arrangements with APL Limited and other shipping companies, it provides customers with access to a fleet of smaller International Standards Organization (ISO) international containers, allowing the Company to provide additional transportation capacity using these containers as they are being repositioned from destinations within North America back to the West Coast. It operates the intermodal segment from regional service centers in Dublin, OH; Los Angeles, CA; Jacksonville, FL; Rutherford, NJ, and Laredo, TX, and from local trucking facilities in 31 cities, as well as, from rail terminals and container yards throughout its rail network.

Logistics Segment

The Company arranges the movement of freight in containers or trailers by truck using a nationwide network of approximately 4,250 highway carriers. The Company provides highway brokerage services throughout North America through its customer service centers in Dublin, OH and Rutherford, NJ, and its network of independent agents and agencies. The Company manages all aspects of these services for its customers, including selecting qualified carriers, negotiating rates, tracking shipments, billing and resolving disputes. As an international freight forwarder, it provides freight forwarding and customs brokerage services that involve transportation of freight into or out of the United States. As a NVOCC, it manages international shipping for its customers and provides or connects them with the range of services necessary to run a global business. The Company also provides airfreight forwarding services as an indirect air carrier. Its international product offerings serve approximately 1,200 clients internationally.

The Company provides warehousing and distribution services primarily servicing the needs of importers looking to move their goods directly to a retailer or to an inland distribution point. It operates multiple facilities in the Los Angeles area that occupy approximately 700,000 square feet. It performs multiple services specifically designed for importers, including warehousing and distribution, value-added services, transloading, deconsolidation and consolidation.

The Company competes with Union Pacific, CSX Transportation, J.B. Hunt Transport, Schneider National, the Hub Group, C.H. Robinson, Expeditors International and UTi Worldwide, Inc.