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A Chat With New LML Firm Prestige Logistics Group About Their Market Strategy & Ops

We recently caught up with the management team of new and growing frac sand hauler that is making a fresh strategic push in the last mile category.

Michael Collins, Tim Townhill, Darrin Lee, and Brad Belanger are all ex-CIG management team members and they’ve teamed up again to “run it back” after leaving CIG under a new banner: PLG (Prestige Logistics Group). The fresh start has given the PLG team a blank slate to create a last mile service tailored to current and future market needs unencumbered by legacy assets.

2 Key Differentiators For PLG

PLG began operations in 2021 and the business differentiates itself in the fragmented sand hauling market in two key ways:

  1. new bottom-drop trailers only – their entire fleet is comprised of high capacity Timpte bottom-drop trailers

  2. asset light – PLG only owns the trailers and back office function, running sand with 100% owner/operator drivers that bring the power units.

More On Point 1 – Belly Dump Only

The management team is building the company on the back of the industry move where more wellsites have storage systems outfitted with belly-dump offloading.

Their current trailer is the Timpte Roughneck (other manufacturers are being evaluated as well), which is a flexible solution capable of working with any bottom drop wellsite receiving system. The company was an early adopter of the technology and built scale ahead of some other groups putting in orders with 10-12 month lead times.

A typical movement in these trailers is 27 tons of sand, but in some cases they are getting a bit over that (i.e. 30 tons) if the routes allow them to avoid weight-constrained roadways.

A Chat With New LML Firm Prestige Logistics Group About Their Market Strategy & Ops

Everything they’ve done is based on the idea that the frac industry will increasingly transition towards the bottom drop trailer market, and PLG subscribes to the view that pneumatic obsolesce is accelerating.

With the push to reduce drivers on the road accelerating both for cost and ESG reasons, management believes belly dump loads are the future of last mile logistics in frac sand and is investing in their fleet accordingly.

Well documented top-fill system growth fits the trend PLG is built around. Examples include Solaris (on their conference call several weeks ago they said they have grown from just a couple top-fill base systems a year ago to more than 30 operating in the field today) and WereWolf (new tech that makes boxes compatible with belly-dump trailers) fit the trend that PLG is built around.

More On Point 2 – Asset Light

From the beginning, PLG management set about to build a trucking model that was asset light. They own the trailers, but go out to carriers who have the power and drivers.

Management takes the view that doing anything in the frac sand market with high fixed costs makes it tough to weather the downturnds, so they built the business to minimize their fixed costs. The company acknowledges that there is an inflection point in scale where bringing in power units drivers may make sense, but they aren’t there yet.

If you look in FMSCA records for PLG, you’ll find an active DOT number but no power units. Their model is to own the customer through delivery (including dispatch and responsibility for the load) while their carriers drive under their own authority.

To attract and retain owner operators, they offer competitive terms of trade (i.e. fast pay) – PLG is well capitalized and thinks that differentiates them vs. some of the other outfits competing for owner operators. And because they are all belly-dump trailers, this can be more attractive for drivers – 5-min drop-off time means more loads per day plus drivers don’t exit the cab to move hoses around for pneumatic offloading and thus need less certification which broadens the market they can pull from.

Size & Growth

When PLG got started in 2021, the challenge was twofold: a) getting trailers, and b) slower than expected rollouts of belly-dump storage systems. So PLG ramped a bit slower than expected initially but is catching momentum now.

During 2022, were able to add units faster. As 2023 began, they were running 100 trailers serving most of the wellsite systems utilizing bottom-drop technology at the wellsite. Also, top fill system roll outs accelerated in 2022 – expanding PLG’s addressable market.

PLG has established a yard in Monahans where they keep their trailers and handle maintenance / inspection activity.

Like other last mile service providers, PLG is working on a mileage band pricing model, but said they’ll defer to what customers want, and are open to being can be creative on dayrate or dedicated trucks or term work.

The company believes the growth in their fleet and model justifies what they’ve done and continues to invest. The company has moved from 1 customer initially to 6 now. Client relationships include direct sourcing E&Ps, oil service providers, wellsite storage system providers, and other carriers. PLG management thinks they have visibility on demand for 200 trailers in their fleet, which would double their size – a level they could be at by 2024.

As far as basins, PLG is just in the Permian for now (with a fleet of 100 trailers and a single frac crew needing up to a third of that, it’s difficult to be in several basins at this size). As the company’s fleet approached the 200-trailer mark, however, they could see themselves starting to do some work in South Texas as well.

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