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Case Study: Melting away the competition: How The Arctic Group leverages a leasing strategy to fuel its expansion

When Robert Nagy purchased the Arctic Ice Company back in 1986, it was just one of hundreds of small regional ice manufacturers scattered across Canada. Fifteen years later, Winnipeg-based The Arctic ...

When Robert Nagy purchased the Arctic Ice Company back in 1986, it was just one of hundreds of small regional ice manufacturers scattered across Canada. Fifteen years later, Winnipeg-based The Arctic Group, Inc. is the second largest packaged ice manufacturer and marketer in North America, serving 35,000 retail customers from 50 ice production and distribution facilities in Canada and the US.

What started as one small ice company in the Canadian Prairie expanded through a series of strategic acquisitions throughout western Canada. Today, the company continues its expansion into the central US, becoming a serious contender in the $3.75 billion North American packaged ice business.

Operating under the trade name, Arctic Glacier, the company supplies grocery and convenience stores across all four western provinces and in 10 states. In Canada alone, the company operates 350 refrigerated trucks from May to September and 200 route trucks the remainder of the year, many on full-service lease through PacLease. This fleet is supplemented during peak summer demand with up to 150 rental trucks.

“In our business, a missed or late delivery is the kiss of death,” says CEO Nagy, explaining the importance of customer service in his business. “Sixty percent of our business is done during the summer months. We can be perfect all year, but if we have just one late delivery during this peak time, our customer will never forget.”

With regional production facilities serving widespread areas, The Arctic Group relies on truck drivers to play an essential role in sales, determining company routing and production strategy in any given delivery area. The company became one of the first major North American ice manufacturers to issue drivers hand-held computers, commonly used in beverage and snack food distribution. The system allows drivers to make sales calls more productive while controlling inventory, reducing administrative paperwork and data entry.

“We are building a routing database from real-time information,” explained Nagy. “Drivers upload customer location data and volume of ice purchased, including what they expect the customer to buy in the future. This gives us the information to determine if we need to increase or decrease deliveries, and it allows us to make smart equipment decisions.”

According to Nagy, hand-held computers are being adopted in response to the company’s challenge of integrating newly acquired ice companies into The Arctic Group family. With quality facilities in new markets and customer service conforming to company standards, The Arctic Group has benefited from economies of scale, allowing it to introduce innovative marketing strategies to further the company’s growth momentum.

According to Mike Pyle, The Arctic Group’s chief operating officer, rapid growth requires that the company remain focused on its core business. “We are in the business of producing and marketing a premium product,” he explained. “Distribution is certainly a key part of customer service, but dealing with trucks is not our business. We leave that to PacLease.”

Leasing Kenworth T300s through PacLease, notes Pyle, gives his company expertly spec’d vehicles that provide a high degree of reliability. Roughly half are single-axle units, powered by Cummins ISC engines rated at 260 to 300 hp and driven through Eaton-Fuller RTX117-10B 10-speed transmissions. These straight trucks feature bodies ranging in length from 20 to 26 feet, supplied by Intercontinental Truck Body, and equipped with Thermo King KD-11 50 SR units.

Spec’d with 13,200-pound Eaton front axles, Pyle adds that his T300s can easily handle heavy payloads of up to 34,400 pounds – tough duty for most medium duty trucks. “We demand a lot from our equipment,” he said. “We make upwards of 30 to 40 stops a day, so both the trucks and the reefers get quite a workout.”

PacLease works closely with The Arctic Group, providing a myriad of services after the trucks are in service, including regular preventive maintenance on both the trucks and reefers. “We maintain everything on the trucks,” says Kerry Davies, lease manager of PacLease Winnipeg. “We track mileage and keep the trucks on a strict preventive maintenance program. In addition, we provide tires, truck wash, emergency over-the-road service (PacCentral), replacement vehicles and additional trucks when needed.”

As The Arctic Group continues to expand the Arctic Glacier brand across Canada and into the U.S., the company will continue to acquire ice manufacturers in regions bordering existing distribution areas. And according to Nagy, the nationwide presence and capabilities of PacLease make it an ideal business partner to be its single-source supplier of T300s. “We sell a product, but we also sell a service,” he said. “When people need ice, they need it now, not tomorrow. Clearly, trucking is a key part of this. That’s why we outsource our truck operations to PacLease.”

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