Wellington Group expands into U.S. market

GUELPH, Ont. – A fast-growing Ontario freight hauler has expanded into the U.S. and says it isn’t yet done expanding.

Wellington Group of Companies recently announced the acquisition of Hudson, Wisc.-based Trucking Proz, adding 25 tractors and 42 trailers to its growing fleet. Wellington is a relatively new name to the M&A landscape, but has made two purchases since its formation less than six years ago. It didn’t even have an asset-based fleet until 2018, when its brokerage struggled to find capacity.

It now operates 85 tractors and 140 trailers and is on a continuing quest to diversify. It bought Karmar Delivery Services in August 2019, rebranding it Wellington Supply Chain and adding a fleet of medium-duty trucks and Sprinter vans for local e-commerce delivery services. The move into the U.S. is another measure taken to diversify, according to president and CEO Derek Koza.

“We had aspirations of wanting to grow in the U.S. domestic market, due to the sheer population density of the U.S. market,” Koza told Today’s Trucking. This was partly due to increasing competition – especially from Driver Inc.-modeled fleets on the Montreal-Toronto lane – and east-west routes, where more freight is moving to rail.

Trucking Proz is a young fleet in its own right, founded by Jason Nesbitt in 2018. Nesbitt and Koza worked together at Trans-X in the past, and shared certain business philosophies.

“We’ve known each other for 15 years,” Koza said of their friendship.

There was a mutual admiration between the two companies.

“I would say we are both very operationally in tune with each other,” Nesbitt said in an interview, noting he grew the fleet from one truck to 25 by nurturing relationships with customers and giving drivers consistent freight over favorable routes. “They’re touching the same customers on the same days of the week at the same times, and that brings a level of service to our customers.”

Wellington, for its part, runs dedicated lanes to give drivers familiarity with the routes and customers, which Koza said enhances safety.

He added, “There’s a tremendous amount of respect and trust (between the companies). We felt we have an operational leader we trust with Trucking Proz, and we feel we can work alongside Jason.”

Already, Wellington has brought its fuel supplier and other relationships to the business.

Wellington Motor Freight was named one of the Top 20 Best Fleets to Drive For by the Truckload Carriers Association this year, because of measures including salaried compensation and dedicated lanes. Koza hopes to bring some of that to the U.S. operation. Nesbitt said discussions are underway with customers to see if those models can be adopted there.

Wellington has ambitious plans to grow the Trucking Proz fleet, and may even make another U.S. acquisition.

“We will look to scale up that operation and branch off into other U.S. markets in the next 12 to 24 months,” Koza said, adding funding is already in place to add another 20 tractors to the Trucking Proz fleet in the next 90 to 100 days. It’s also looking to roll out a lease-op program at Trucking Proz.

“We do have a waiting list of drivers, so we feel we’re going to be able to satisfy those growth plans,” he added.

In addition to organic growth, the company is also contemplating further acquisitions, and has been approached by two fleets and a brokerage as its name has gotten out as a potential buyer. Koza said those discussions will resume in the summer.

“We anticipate a bullish market for capacity in 2021.” – Derek Koza, Wellington Group of Companies

With Trucking Proz brought into the family, Wellington Group says it now derives 25% of its revenues from direct asset management. The remainder comes from its 3PL operation, including brokerage, rail, air, ocean and warehousing. It aims to balance that ratio out to 50-50 by the end of this year.

“We anticipate a bullish market for capacity in 2021,” Koza said, citing the U.S. election result, a new trade deal with the U.S. and Mexico, and a subsiding trade war between the U.S. and China. Closer to home the company is banking on a Driver Inc. crackdown, the end of the coronavirus outbreak, and an electronic logging device mandate to further reduce capacity and improve market conditions.

“And finally, with all the insurance pressure carriers are up against, we feel that the weaker-financial carriers will be eliminated from the marketplace through 2020,” he added. “For those reasons, having more capacity under our direct asset control is a key focus.”

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James Menzies is editor of Today's Trucking. He has been covering the Canadian trucking industry for more than 20 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.

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