“Market evolving dramatically” for transportation providers: Day & Ross COO
May 16, 2013
MISSISSAUGA, Ont. -- Doug Harrison, COO, Day & Ross Transportation Group, led a session at Supply Chain Canada’s 46th annual conference in Mississauga, Ont. on May 15 that focused on the evolution of today’s transportation...
MISSISSAUGA, Ont. — Doug Harrison, COO, Day & Ross Transportation Group, led a session at Supply Chain Canada’s 46th annual conference in Mississauga, Ont. on May 15 that focused on the evolution of today’s transportation provider.
Harrison said that some of the old rules have gone by the wayside as carriers look to more global markets.
“Our view is that the Canadian market has been slower to change than the global market, and our customers are demanding far more services, more information, more capabilities, than the market is able to provide today,” said Harrison.
Day & Ross has spent a lot of time looking at hardcore data and facts. Within its network it buys $120 million dollars of transportation and logistics services as well as being a transportation provider.
The company, with annual revenues of $800 million, now has four distinct divisions: general freight, Supply Chain Solutions (4PL), dedicated logistics (3PL), and the sameday division of retail fulfillment, home delivery, healthcare, expedited and under 500-lb specialists.
“We see the market evolving dramatically. The 3PL market in North America has seen lower growth than traditionally, 18% a year over the last two years vs. 25% in previous years. But this is still tremendous growth. The focus is on outsourcing – we see far more of this going forward as a response to what going on in industry in general as companies get back to core competencies,” said Harrison.
In terms of trends, Harrison said exits and bankruptcies are now declining, but there are more global competitors as supply chains become more global.
Successful companies are taking one of two approaches: specialized or focused service offerings, and bundled solutions.
“Customers are saying ‘bring more capability to the market’,” he said. You will see far more RFIs qualifying to RFPs, Harrison added.
“We’re seeing far more complexity and more dramatic shifts in the supply chain, so what can we do even in a transactional sense, to add more value to the partnership? As our customers come out with RFIs they are coming forward with softer requirements around HR practices, what do your financials look like, what are you doing around technology development, and asking us to prove it. We’re seeing more customers wanting to know what our green policies and our safety practices are,” said Harrison.
Fewer and fewer carriers today are investing in assets. They have become more focused on the market and its capacity and when they will invest in equipment, he said.
“The other big issue we’re building towards is the whole capability viewpoint of human capital in the industry. The Conference Board of Canada has pointed out that the provider of tomorrow will spend more time on human talent going forward, because human talent won’t exist,” said Harrison.
Two years ago Day & Ross began a strategic process built around “visioning” and “living in the future” while executing today. Teams were taught to execute within “work streams,” with evolution focused on execution and results, culture and strategy.
“It’s a several year process. True change takes time. In a positive sense, people outside the industry are coaching us so we’re thinking outside the industry. I’d say our coaches have been challenging us and we’ve spent time teaching our coaches to really ramp up. A year and a half in, we’re starting to see some of the results we’ve been looking for around metrics and turnover,” said Harrison.
He is predicting a “dramatic consolidation in the market” over the next few years.
“The only thing that is holding back consolidation today is buyer and seller aligning over what the price is,” he said.
Asked to point to some reasons around this consolidation, Harrison said: “We’re seeing new entrants into the Canadian market and into the North American market who may take a strategy of making more acquisitions. The other thing is a lot of Canadian service providers have been bought by private equity firms and there is a window within which there has to be a sale. I think this will drive a round of consolidation. Finally, it’s been a tough several years in the industry, and if you have an aging fleet, with aging technology, the right thing to do may be to sell.”
Advanced providers will become more focused on their service offerings, whether multi or single line.
“I think as we go forward the issue of finding great talent comes down to having a culture that makes great talent find you, to building succession plans, to providing rewards that may not be monetary. I think we have to be prepared for a workforce that’s going to be even more mobile. We better have
a lot of technology built in to get people up to speed quickly and get their optimal performance.”
Harrison sits on the Board of the Mohawk Community College and said the talent out there is great, but that it’s a demanding group.
“They will change us, we won’t change them.”
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