DARTMOUTH, N.S. - Classic Freight Systems, a 25-truck self-described "boutique" fleet out of Dartmouth, N.S. is a little like an ambitious university student who has moved out from their parents' place and sees nothing but opportunity in the...
DARTMOUTH, N.S. – Classic Freight Systems, a 25-truck self-described “boutique” fleet out of Dartmouth, N.S. is a little like an ambitious university student who has moved out from their parents’ place and sees nothing but opportunity in the world around them.
The company is wholly owned by East Coast steel conglomerate The Cherubini Group, yet over the last four years has broadened its horizons and is now functioning as an open market transport provider.
“Cherubini Group used to contribute about 80% to every dollar of our revenue, but now that would be about 10-15%,” Blair Clark, general manager of Classic Freight Systems told Truck News during a recent visit to the carrier’s Nova Scotia yard. Classic Freight was initially acquired by Cherubini to handle its own specialty transportation requirements, mainly hauling oversized metal structures like bridge beams and supports – loads weighing up to 130,000 lbs – to construction sites. Now, Clark said, the company has rolled its expertise in transporting heavy metal structures out to the open market – including for some of Cherubini’s competitors – and has launched a container and freight division as well.
“We walk a fine line where Cherubini Group’s competitors use us because of our in-house knowledge,” Clark explained. “Because of our affiliation with Cherubini, we understand job sites, we understand working with cranes, we’re used to big, long, heavy loads and we’re used to going into the steel yards and delivering on-site.”
Classic Freight Systems still shares a facility with its parent group, but now operates at “arm’s length” and tries to be entirely self-sustaining. That means that, despite the strong financial backing, Classic struggles with the same issues faced by most small carriers.
“Maintaining cash flow is a challenge,” Clark admitted. “It’s not a complete inhibitor because we have strong financial backing behind us. But every truck you put on the road arguably consumes $40,000-$50,000 in cash reserves and when you look at the payment cycle to the fuel company and the driver, which is accounting for close to 70% of your revenue, that cycle is one week to two weeks and the reality is it’s 45 days to get money in off the street.”
Clark likes to talk numbers. He came to trucking from a business background and has been charged with growing the fleet and making it less dependent on its parent company. Clark said the fleet grew 36% last year and is on pace to grow another 25% this year, primarily through the addition of lease-ops or through corporate acquisitions. Clark said Classic is currently in the process of evaluating potential acquisitions, which is a big deal for a 25-truck fleet.
“We’re looking for comparable sized carriers, especially four to 10-truck fleets where we can bring them in and relieve some of their pressure on administration and cash flow but take in their in-house knowledge,” Clark revealed. He said assessing the corporate culture of a potential acquisition is as important – and time consuming – as determining a fair market price for its assets.
“We’re spending as much time looking at the cultural mix as to what revenue they’re going to bring in,” he said. Classic Freight has an interesting mix of drivers and lease-ops; there’s a surprisingly high percentage of younger drivers (aged 28-35 years) and then the typical over-50 crowd. Clark said the fleet has had success attracting younger drivers because they relish the challenges of hauling oversized loads.
“A lot of our younger drivers want to come here to handle the big, ugly loads,” Clark said. “They like the diversity of open deck because if you’re driving van, your primary job is driving and if you’re doing open deck, it’s a blend of about 30% working the load and 70% driving. It helps the mind too, just go get out for a little while and work the load and the rate should reflect that too.”
Clark contended Classic Freight’s drivers and lease-ops earn above-average wages, which also helps.
“Our lease-operators are making as good or better money than anywhere,” he insisted. “We’re busy, we’re fortunate and even with that, it’s difficult to attract owner/operators.”
A dearth of owner/operators has forced Classic to shift its balance more heavily towards company trucks in recent years. Because of its rapid growth and the growing lead-time requirements for new truck orders, the company has been adding used trucks to its fleet.
“There’s a lag now of three to four months in purchasing new equipment, so some of our jumps have been through buying two- to four-year-old pieces of equipment,” Clark explained. However, the company will soon be marking another milestone and placing an order for four brand new company trucks, complete with the latest generation emissions systems. Classic Freight Systems services all of North America and played a role in the construction of many notable projects, including the Triborough, Manhattan and Roosevelt Island Bridges in New York City as well as the Newark Airport and Port Authority Bus Terminal expansions in the same region.
“We were hauling a lot of freight down there and working with the NYC Police, marshalling in Yonkers and then going into the city in the nighttime,” Clark recalled. “They were pretty neat projects.”
Closer to home, when Truck News visited, Classic was planning deliveries of bridge beams to Ottawa for a major project there and the company is also very bullish about Newfoundland.
“There’s going to be a tremendous economic engine drive there with the oil and gas industry and with Muskrat Falls and some of the other mining projects they’ve got coming on-board,” Clark said of Newfoundland. “We’re extremely versed and capable of moving machinery, pipe and fabricated structures and just the knowledge of travelling to Newfoundland and some of the logistics issues there, position us as a very strong supplier to Newfoundland.”
Despite its ambitious growth plan, Clark said Classic Freight is not looking to undercut existing service providers or to lowball rates.
“We’re more into co-opetition than competition,” he stressed. “We’ve got our own business, we’re happy with it and we don’t need to be stealing freight from anybody.”
Despite offering above-average driver wages and an appealing variety of work, Clark predicted the driver shortage will continue to be among its biggest challenges as it looks to expand. He said the trucking industry once enjoyed a “heyday” of available labour thanks to the collapse of the fishing and farming industries and the sudden availability of mechanically-inclined, hard working young men. But that has been replaced with a newer generation of workers that are “more adept at using a Wii or Gameboy than how to adjust a carburetor, so to speak,” Clark acknowledged.
The key to attracting today’s worker is to build a corporate culture around honesty and transparency, Clark has found. “We’re small enough that we can concentrate on transparency with everybody,” he said. “We know all the drivers and we know most of their spouses and if you were to ask what the common culture her is, it’s honesty. We want to let people know what the load is, how long they can expect to be there, what the pay is and what you see is what you get. We get a lot of feedback that people like that.”
Providing a positive workplace is one step, but Clark acknowledged more must be done to make the trucking industry an appealing place for skilled workers; and that may include a shift towards an hourly pay structure.
“I would suggest our industry is going to go through a major transformation where – possibly within my career – we’re going to see rate-per-mile shift to rate-per-hour,” he predicted. “The driver shortage is going to drive how we deal with interpersonal issues and how we pay people.”
HR challenges aside, Clark also expressed concern about an “auction-based environment for loads,” which sees too much freight auctioned off to the lowest bidder.
“It is up to
us as trucking professionals to show that value to the customer, that ‘We will be on time, the product won’t be damaged and you’ll be dealing with safe people,’ and try to get them to buy into that value proposition,” he said. Coming from outside the trucking industry, Clark was shocked to learn first-hand about the patchwork of regulations that govern the trucking industry from coast to coast, especially as a transporter of oversized loads. “We should be able to start up a truck in Newfoundland and haul to Vancouver,” Clark said. “But right now there are so many differing regulations – what the weights are, what the escorts are, the permits you need – I think as a whole, Canadian business needs to learn to be more competitive and I think that’s a real impediment to the competitiveness of our Canadian companies.”
Despite the litany of challenges, Clark sees unlimited opportunity for Classic Freight.
He’s already talking about moving the company into a bigger facility with its own wash bay and service shop. (It currently is run out of a rudimentary yard and shares a shop with Cherubini Group).
He said the fleet has built a small but dedicated team that has bought into the future vision of the company and is committed to its growth strategy.
That, along with the available resources of a financially strong parent company, mean Classic Freight Systems may well be a company to watch.