Mullen Group achieved its best ever quarterly revenue in the third quarter, bolstered by recent acquisitions.

“Very pleased to report that we have achieved record revenues for the quarter, in fact for any quarter. The main reason is acquisitions that were completed earlier this year,” said Murray Mullen, chairman and CEO.

“Not only have these quality companies contributed to our revenue growth, they operate in sectors of the economy that we view as having the best potential for growth. Everyone knows that the economy is driven by consumer spending but in today’s economy the trend has never been more evident which is precisely why we have invested significant capital to acquire companies that provide logistics solutions to this sector of the economy.”

Total revenue was $432.5 million, up 48% year over year from $290 million. LTL revenue grew 50%, logistics and warehousing 41.4%, and specialized and industrial services declined 7.3%. Mullen’s move into the U.S. with 3PL provider Haulistic added $57 million in new revenue.

Net income slipped by $8.7 million to $17.5 million, due mostly to an increase in amortization of intangible assets (a non-cash item).

On a conference call with analysts, Mullen said there are signs pricing leverage is coming to the Canadian market, particularly in the logistics/warehousing and truckload segments.

“We haven’t hit our full stride as of yet,” Mullen said of those segments. “We have not seen the pricing increases that are both required and inevitable as capacity here in Canada tightens, but it’s coming. As capital goods start moving again, we are telling customers ‘We can service your logistics needs, but you need to pay our price.’ This may be the new normal, especially given the driver shortage facing our industry. There is precious little the industry can do to drive growth.”

Mullen said U.S.-type price increases are in the early days of coming to the Canadian market.

“Our business units have heard me loud and clear, prices must rise,” said Mullen, adding 5-10% price increases could be “the new normal.”

He expressed concern about supply chain disruptions and labor shortages, both within trucking and within the broader labor market. And he feels they could contribute to inflationary pressures.

“In our case, we know it is difficult to recruit and hire truck drivers, dockworkers, mechanics and other frontline workers,” Mullen said. “Where did they go? I’m not sure. Here’s the rub: along with higher wages and higher costs comes higher pricing. This all sounds inflationary to me.”

Mullen said the company will continue to grow through acquisition. It bought six businesses so far this year, and the third quarter was the first to fully reflect their revenue contributions. He said integration of those companies and improving their profitability remains an ongoing mission.

“We acquire good companies, then we improve their performance, which is precisely what we will do with each of these companies we acquired this year,” Mullen said.

He also revealed a previously unannounced small acquisition made Oct. 1, DirectIT, a small Calgary courier company.

“It does foretell what we are thinking strategically,” he said of the deal. “This is a platform I believe we can use to enter new metropolitan markets.”

He said it’s a scalable business that uses its own technology platform and relies on independent delivery drivers, operating smaller vehicles. Mullen said the deal gives it access to a growing e-commerce market covering packages too small to be efficiently delivered via LTL.

Mullen anticipates more attractive M&A opportunities will emerge as the Canada Emergency Wage Subsidy (CEWS) winds down.

“Everybody in Canada got money and it protected every business unit,” he said of CEWS. “We got money too…If there was no CEWS, we probably would’ve picked up some really good companies at really good discount prices. Everybody survived, but CEWS is running out. Now they have to survive without CEWS and you have rising costs. It’s only a matter of time until that catches up in this market.”

He said companies that don’t adjust their pricing will be in trouble in 2022.

The group’s LTL business, which Mullen describes as “the bellwether when it comes to consumer activity,” was strong through Q3 but beginning to feel the impact of supply chain disruptions.

“Freight volumes appear to have peaked in the short term due to supply chain issues,” Mullen said. “I’m beginning to wonder if supply chain problems may be the Achilles heel of future growth in the economy.”

Mullen Group’s specialized and industrial segment took a hit in the quarter, due to stalled pipeline projects. But oil and gas drilling activity is rising, and Mullen said that should bode well for the segment going forward.

Looking forward, Mullen feels the Canadian economy will remain on solid footing, but growth will be hampered by supply chain disruptions and the labor shortage. “Quite simply, there are too many bottlenecks for the system to be productive,” he said.