Truckers are afflicted these days with acquisitionitis." At least that's the term Dick Baker, president and chief executive officer of Canada Transport Group of Belleville, Ont., labels the buying fever that is gripping common carriers in North America.
Mr. Baker, himself, has got caught up in the acquisition game.In March, Canada Transport grabbed the Ryan Group of trucking companies of Livonia, Mich., for an undisclosed price. The three firms - Ryan Expediting Inc., Cavalier Cartage Inc. and Industrial Switching Inc. - all serve the automotive sector.
We've been looking for acquisitions for some time and this deal was particularly attractive. It's the right size, (about 500 pieces of equipment and 100 employees) and it's a good fit because we're already involved in the automotive industry," Mr. Baker says. About 55 percent of the carrier's estimated 1987 revenue of C$100 million come from servicing the auto sector. (As of July 10, US$1 was equal to C$1.3212.)
A major account happens to be General Motors of Canada, a company that Mr. Baker was associated with for nearly 20 years. In 1976, as GM's director of transportation, Mr. Baker heard that Canada Transport, originally a marine service between Belleville and Montreal, was up for sale. Along with two
financial partners, Mr. Baker bought the company.
My only regret," he says, is that I didn't do it sooner."
Aside from it's U.S. acquisition, Canada Transport's bailiwick is a 500- mile zone with its focal point in Belleville, Ont. From there, Canada Transport operates as a less-than-truckload (ltl) and truckload freight carrier, primarily serving eastern Ontario. As part of its ltl network, Canada Transport has terminals in Montreal and in Ottawa, Brockville, Belleville, Oshawa, Hamilton and Mississauga, Ont.
We don't go to Winnipeg or Moncton or any place like that. We have no desire to be anything else than a regional carrier," says the 48-year-old Mr. Baker. Our operating philosophy is that, big or small, you can only be aggressive in a limited number of areas."
He sees plenty of opportunity for his regional trucking company regardless of the regulatory changes. Mr. Baker believes, there won't be a violent industry shakeout because the regulatory framework in Canada is much more flexible than the system in the United States was at the time of U.S. deregulation in 1980. Since entry restrictions for carriers have eased considerably over the last five years, Mr. Baker doesn't anticipate any sudden, dramatic change when the Motor Vehicle Transport Act is finally proclaimed.
However, in the next three years, Mr. Baker expects more competition from new carriers and predicts increasing concentration among the big ltl carriers. Still, he doesn't expect to be swallowed by the giants. The keys to his survival, he says, are to find out exactly what the customer needs and then, provide that service more efficiently than others.
The big secret for the next decade is marketing. It's all going to depend on how you sell your services. You must be innovative. Instead of saying 'I truck and I'm here, so customer come and get me,' you better find out exactly what the customer wants," Mr. Baker said.
Service requirements are one thing, providing them at a suitable profit is something else altogether. As Mr. Baker puts it: There's no sense having the best prices in town and going broke. The day of having one kind of traffic subsidizing another kind of traffic is fast disappearing. Shippers know what they ought to be paying and they're not going to sit back and allow you to subsidize another business through higher rates."
Mr. Baker contends that many carriers don't really know their costs. As a result, a number of truckers just match a quoted tariff without realizing the impact on the bottom line.
Long ago," he explains, we realized what was coming (with deregulation) and made our people aware of it. We've attempted to negotiate our wage packages to be consistent with what the market will support. We're not out on a limb where we have to come back."
Mr. Baker hopes the vicious price wars in the United States don't spill over into Canada. In certain areas in the United States," he says, there is much deeper price cutting than in Canada. Some question whether it's predatory pricing."
The chief of Canada Transport declares he won't partake in killer pricing. Carriers have to sit back and ask can we afford to do it," Mr. Baker said.