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A chilling reality

One thing that has always struck me about this industry over the decade or so that I've been part of it, is that "advice" -- whether coming from the manufacturers, the carriers or us, the media -- is ...


One thing that has always struck me about this industry over the decade or so that I’ve been part of it, is that “advice” — whether coming from the manufacturers, the carriers or us, the media — is never in short supply. Sound advice, however, is. And hence why I always look forward to the start of the new year and speaking with the motor carrier executives whose companies are named to the prestigious list of Canada’s 50 Best Managed Companies. We profile those companies in this issue (see page 14), and I personally found the comments of their leaders particularly poignant this year.

Let me tell you why.

Shortly after picking the brains of Challenger Motor Freight President Dan Einwechter, Consolidated FastFrate President and CEO Ron Tepper and Bison Transport President and CEO Don Streuber, I had the opportunity to view market reality from the other side of the fence, so to speak. I had a lengthy and engaging conversation with Jim Higginbottom, the man in charge of buying transportation and logistics services for one of the nation’s larger shippers, Alcan. So, in other words, I was afforded the opportunity to see how well the corporate strategies and directions employed by our best carriers matched with the corporate strategies and directions of one of Canada’s major shippers.

Higginbottom, in a career that is stretching towards 30 years at Alcan, has orchestrated an innovative and daring approach to transportation management. It has earned his company, which ships more than three million tonnes a year of aluminum ingot and the raw materials necessary for the production of the metal, by rail, ship and truck, considerable savings and, for Higginbottom, the personal distinction of being named this year’s Distribution Executive of the Year. But what Higginbottom has been up to at Alcan is not for the faint of heart or those attached to the “business as usual” way of doing things. His most daring move involves a particularly aggressive approach to the core carrier concept, a strategy Alcan initiated in its Canadian operations and is in the process of rolling out North America wide. Alcan employed more than 100 carriers in Canada alone before adopting its core carrier strategy. That was initially pared down to 20. Now, on the LTL side, Higginbottom has cut that back to eight – for the entire continent. He’ll likely do the same for TL.

What drove Higginbottom towards the core carrier concept is his own market reality: when the base price of your company’s product is up to the daily whims of the metals exchange, how you balance the total cost and quality of service in getting product to market becomes essential to not only differentiating your product in the market place but in providing the internal cost savings necesary to turn a profit. In short, Higginbottom needed great service at a competitive price and he was willing to leverage his company’s shipment volumes to get it.

What does that mean for carriers? The actions of Challenger Motor Freight’s Dan Einwechter spring to mind. His fleet, despite its very modest beginnings in the mid 70s, has dared to be a pioneer in adopting information technology, understanding that such investments can be leveraged to not only attract clients but provide his people with the visibility and information necessary to reduce his own internal costs. Ron Tepper has employed the same strategy at Consolidated FastFrate and added his own twist. The nation’s largest LTL carrier has been willing to concede that certain types of hauls over 800 miles are more efficiently moved by rail than truck and has chosen to instead become the “arms and legs” of CPR’s quickly growing intermodal operation.

In the end, Bison’s Don Streuber, sums it up best. Bison has been named to the list of the 50 Best Managed Companies for seven straight years but Streuber refuses to be satisfied with the status quo. In his words, “if we just preserve the status quo, we take away the challenge, the fun, and the energy of the business. Status quo is not an option.”

Lou Smyrlis,

MCILT

Editor

lsmyrlis@corporate. southam.ca


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