OKOTOKS, Alta. – Mullen Group’s increase in revenue was “all on the back of the trucking/logistics segment,” according to chairman and CEO Murray Mullen when discussing Q2 results with analysts today.
The company’s trucking/logistics segment achieved its highest ever quarterly revenue. However, the gains were offset in part by lower revenue in the oilfield services segment. Mullen, however, thinks the oil and gas industry has bottomed and is ready for recovery.
“There’s a recovery occurring in most producing regions in the world,” Mullen said of the oil and gas industry. “Canada is lagging in terms of this recovery because of government policy and an unwillingness to support growth in this sector.”
However, Mullen said headwinds are subsiding and that “at the very least, there’s more hopeful optimism here today.”
The company recently completed several acquisitions to ready itself for the expected uptick in demand.
“We are probably at rock bottom and that is a decent time to start looking at positioning yourself for the next couple of years,” Mullen said.
As for trucking/logistics, the company was able to achieve pricing gains. Mullen said it is being driven by a slowly growing economy. He anticipates demand for trucking services to remain strong but is worried about the possibility of trade wars and tariffs.
“Consumer spending is resilient. We’re nearing full employment. It’s very difficult to grow our business because the labor pool is so tight. Those are the primary reasons I think pricing gains will be retained,” Mullen said.
However, he also said the pricing leverage seen in Canada is not as strong as in the U.S., where truck tonnage is up 7.8% year-over-year, coupled with the electronic logging device (ELD) mandate which stripped some capacity from the market. South of the border, rates are up by double digits and the average truck driver has seen his or her earnings increase by US$8,000 to $10,000.
“The supply chain is very tight in the U.S. market and trucking is doing very well, not just okay like we are here in Canada,” Mullen said.
Any bump in the Canadian economy would likely force further rate increases, just to keep pace with rising costs, Mullen said. He said the potential fallout from tariffs, the exchange rate, and a tight labor pool will all have an impact on costs, and he said any boost to the Canadian economy would see drivers realizing pay increases similar to in the U.S.
“If we had any economic growth, our employees would do exceptionally well,” he said.
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