No Haliburton Here

No Haliburton Here

Copyright 2004, Traffic World, Inc.

Indianapolis-based Celadon Group, a major north-south truckload carrier that made its mark hauling in and out of Mexico, is aiming to help rebuild war-torn Iraq.

Celadon says it will manage a trucking operation based in Kuwait formed to provide transportation services to suppliers involved with the rebuilding efforts in Iraq. The joint venture was formed by Celadon and a Kuwaiti investment group. Celadon is providing transportation management expertise and the Kuwaiti investment group is providing all the capital needed to organize and operate the joint venture, Celadon said. The joint venture will operate under the name Celadon East Transport. Terms of the deal were not disclosed.

Celadon is believed to be the first major U.S. trucking carrier to win a contract of any magnitude in the U.S. government''s first $87 billion installment effort to rebuild Iraq.

"I wouldn''t be so bold to say we''re the only one but we''re the only one I''m aware of. Certainly we are the only asset-based carrier over there," said David Shatto, Celadon executive vice president of corporate development.

Under the arrangement, Celadon will provide all operational, marketing, logistics, and management of the venture. In exchange, Celadon gets a portion of the venture''s operating income, a monthly management fee and recovery of costs.

Celadon has an option to acquire up to 49 percent interest in the venture, according to Shatto. The Kuwaiti investment group has agreed to provide all funding for the joint venture, including all start-up costs, capital investments, and operating expenses, he added.

Shatto said Celadon''s experience with its Mexican operations served it well in its run-up to the Kuwaiti deal. "We certainly can''t be as bold to think we can do business in the Gulf region as we do in North America," Shatto said. "But certainly our experience has sensitized us to cultural differences and adaptability to environmental differences."

Asked if Haliburton officials have contacted Celadon yet, Shatto said: "We have had some very fine conversations with Haliburton and the other large primary contractors participating in the rebuild effort."

Celadon acquired Richmond, Va.-based Highway Express last year. John Hekman, previously vice president of administration at Highway Express, will direct the development of the Gulf region operations and will be responsible for the venture''s government and military contracting activities. A former logistics and procurement officer in the U. S. Navy, Hekman is a retired Rear Admiral with 34 years of Navy experience.

"As you can imagine, to do a project of this magnitude requires a bunch of pieces to come together," Shatto said. "John Hekman is a key part of that as is the Kuwaiti investment group and our international group."

When Celadon first considered this opportunity, there were three principles that were very important, according to Celadon Chairman and CEO Steve Russell.

"First, the effort could not involve any commitment of management time that would distract from the improvements currently underway in our North American operations," Russell said. "Second, we did not wish to invest capital outside our core operations. Third, we required a current return on efforts."

Other than Shatto''s stateside management and Hekman''s overseas assignment, Russell said Celadon would not transfer any employees or have other resources from its North American operations engaged in the Kuwait venture.