John Abate, president MSM Canadian Transport, on surviving the downturn and growing in the upturn
MT: MSM is heavily involved in transborder trade, yet the recovery appears to be taking hold in the US at a very slow pace. What’s your view of the new normal in the transborder freight business?
Abate: There is still strong pricing pressure, but service is again becoming the focus of our customers. Our customers are getting busier – there is growing optimism from our customers. Any business operating in North America has been driven to look for cost savings and efficiencies with an understanding that the current business volumes are more important today than in the past. They are not about to jeopardize those customers they have left. Customers are planning ahead and are now looking for long-term solutions with solid companies – many have been burnt by the deal of the day. Customers are starting to realize that no one has a magic formula and you get what you pay for – value is driving the agenda.
MT: Does capacity remain an issue for transborder carriers? How do you see that being resolved?
Abate: Slow or low Canadian exports has reduced the number of trucks available in the US to return to Canada for the growing import trade. This puts upward pressure on inbound rates to Canada. The easy solution would be the strengthening of the US dollar. As the two currencies remain close to par, Canadian exports to the US will continue to struggle and of course affect the balance of trucks being able to get down into the US. It’s tough to get a truck out of Canada right now. It will also help when the financial institutions that are holding the paper get some confidence in the market and pull the plug on the carriers that they are allowing to stay in business, because there is no market for their used trucks right now. Too many carriers are in business today that have no right being in business. MT