Consolidated Fastfrate president and CEO Ron Tepper discusses how the “arms and legs” of CP Rail is engaging customers with new problem-solving services in an exclusive interview.
TN: Consolidated Fastfrate has come a long way from its beginnings back in 1966 serving a single route. What has been key to your growth and success?
Tepper: Our success is directly attributable to attracting and retaining the right people. To succeed you must find people who want to be challenged and then create a challenging environment for them. I think we’ve done a good job of creating such an environment. Much of what we do is new and out-of-the-box thinking and the right people thrive in that environment. We also have very strong relationships with our customers and work with them to improve supply chain management. Finally we have very strong supplier relationships with our bank, for example, which has allowed us to double our size in a three-year span, and our partner carriers, which have a vested interest in our success for their own growth.
TN: You’ve said in the past that FastFrate’s success "has been enhanced by the company we keep." It’s notable that you have very few partners and they are long term. What do you look for in a partner?
Tepper: Partnership is a word bandied about quite liberally these days. We take partnership very seriously. First and foremost we look for integrity and honesty and companies which can enhance our service offerings. We are providing a menu of services and as we grow our business we need to grow our coverage. When doing that we attach ourselves closely to companies, as we’ve done with Armour Transport and Koch and CP Rail, to increase our coverage and we make sure the chemistry is right.
TN: Your 10-year, $400-million contract with CPR is a huge commitment for both companies. How do you keep the relationship healthy and growing and avoid stepping on each other’s toes?
Tepper: We never step on each other’s toes. We have the flexibility to do the things CPR doesn’t do. We pick up and deliver, we consolidate and deconsolidate, we warehouse and tranship. And CP has the ability to move 9,500 feet of train to every city every night. We have a better service collectively than either of us has individually. As a result of discussions at various levels we don’t step on each other’s toes ever. We strategize on a number of CP Rail and Fastfrate requirements and we do some joint marketing. In fact, their salespeople are currently selling our LTL service as an add-on to their own menu. We are joined at the hip.
TN: Supply chain visibility is becoming increasingly important for supply chain managers. How do you work with CPR and your other partners to maintain the necessary degree of visibility as shipments change mode and network?
Tepper: This is an ongoing initiative. In working with CPR, there is ongoing discussion about how to make shipments more visible. They can make the container visible and track it and we can reconcile the shipments in that container and make them visible. We have technology today we only dreamed of having a few years ago. We track and trace virtually everything. We image every bill of lading, we have information and metrics on everything we do. We make it all visible to our customers in whatever format they may want it. Granted it’s a two-edged sword. The more visibility we give to our customers, the more critical it is that our service is perfect because when it’s not, it’s very visible. We have a lot of discussion with our customers and we work to cater technology so that our package is specific to their needs. In fact, we see ourselves more as a technology company providing a service than we view ourselves as a service company with technology.
TN: Intermodalism as a modal option has come under considerable criticism over the past year due to delays. You’ve clearly hitched your wagon to this mode through your 10-year, $400-million partnership with CPR. Is demand for intermodalism growing faster than the infrastructure can keep up?
Tepper: There’s no doubt the growth curve in intermodal freight is extremely high. I know CP is dealing with this growth in several ways. They are extending their train lengths to 9,500 feet and they are not moving the train until they’ve reached that. They’ve taken trailers off the train completely and are moving only containers. You put those two items together and they have two-and-a-half times the capacity that they used to have. There are also issues of traffic flow. With the onslaught of Asian freight at the Port of Vancouver, traditional headhaul from east to west is way out of balance and has become backhaul. This is where our partnership with CP really shines as we load the empty marine containers with our freight. This helps the railway and the marine companies to reposition the empty containers back where they should be. I think intermodal is going to continue to grow at a healthy pace and I think CPR is well positioned to manage that growth and we are going to play a role in helping them. The railways are big companies, with a lot of money, and they are going to find ways to manage that growth. You get growth in spurts and at the front end of the growth it’s difficult but at the back end it usually smoothes out.
TN: You’ve mentioned in the past that you encourage a culture of innovation to reduce supply chain costs. Can you outline a couple of the best examples that are helping your customers reduce supply chain costs?
Tepper: We have quite a number of examples. I’ll give you a very specific one. Because of the onslaught of freight from Asia we opened a transload centre in Vancouver two years ago that allows us to de-stuff or deconsolidate marine containers and put the product in domestic containers, saving repositioning costs for our customers. We also have an intra-west trucking division so that when we de-stuff the containers, product that is destined for the western provinces moves direct with our trucks. That saves our customers the handling and shipping of the freight to Toronto, which used to be the case when the final destination was western Canada. It was going to Toronto first and back again. It also takes a lot of stress off the railway in terms of reducing volumes because everything that is destined for western Canada doesn’t have to get on the railway. Our technology allows us to receive the documentation directly from the vendor overseas or the steamship line and allows us to clear the freight with Canada Customs. And it gives our customers visibility from the moment we receive the paperwork as opposed to before when they would have visibility only when the product hit the port of Vancouver. That allows a retailer, for example, to plan for the product to go to a store as opposed to going to a warehouse and being handled again. We are into our third year at this transload centre and we are up to over 20,000 containers a year and we are predicting over 40% growth a year based on what our customers are telling us.
TN: I understand you are also expanding your operations in Vancouver?
Tepper: We started a company in Vancouver to perform drayage services to and from the Port of Vancouver. Also, through Canadian Tire, one of our largest customers, we have entered into an agreement with the Department of Homeland Security. We’ve been cleared as a qualified clearinghouse and DHS is testing with us — we are the only ones they are doing this with in Vancouver — certain technologies for sealing of containers and reading the electronic seal. DHS is doing a test on shipments from Thailand and all product coming in has electronic seals on it. In order for it to be unsealed it has to come into our building, because we have the technology. We don’t know where this is going to go; it’s one of a number of studies, but we are honored that DHS chose us and Canadian Tire as the test case.
TN: Last May you opened a 120,000 sq ft cross-dock and warehouse facility next to CPR’s Calgary Intermodal location. How is this
facility helping you better meet shipper’s needs?
Tepper: Our view of opening a warehouse in Calgary was quite simple if we build it they will come. On a per unit basis it’s obviously cheaper to ship more than it is to ship less and so that requires some sort of consolidation point, which is what the Calgary warehouse has become. Calgary allows us to ship inventory, pick orders and distribute them on behalf of our customers. That building was roughly 120,000 sq ft and it’s full to the rafters. We just bought the adjacent land and the shovel is going into the ground in the spring for an additional 100,00 sq ft. It should be up and running no later than Labor Day. We are doing it without having any commitment from customers but we believe it will be sold out before the construction is even finished. That’s how valuable this Calgary project has become and it’s also a template for future projects. We have one that we are working on in Edmonton and possibly Winnipeg. We will probably replicate what we are doing in Calgary in our other western branches.
TN: Last time we spoke you were planning to offer service between eastern and western Canada to Chicago and also service from Chicago to points in central and western U.S. How has that worked out?
Tepper: It hasn’t happened yet. We are currently in discussions with a party in Chicago and another in Los Angeles. The Los Angeles project is more along the lines of what we are doing in Vancouver with a transload centre and Calgary we are combining the concepts of warehousing and de-stuffing in California. We’ve been in negotiations in Chicago for some time. Being a Canadian company operating in this space has its challenges and it’s taking a little longer than we had initially expected but negotiations are ongoing.
TN: Please explain the strategy behind your latest acquisition, Network Logistics, and your long-term plans for that company.
Tepper: We acquired it two years ago. We purchased it as a kind of 3PL and we’ve converted it into a solution for difficult transport moves, for example wide load. It’s non-asset based but piggybacks on the assets of Fastfrate. We are trying to create within Fastfrate a menu of services and this is another addition to our menu; another means outside of Fastfrate’s core competencies that will allow customers to attach to us to solve problems.
TN: What should customers expect to see from Consolidate Fastfrate in the near future?
Tepper: We are a different company today. We have new, larger and more modern facilities in many major urban centres in Canada. We are attached to CP at all of those terminals. We have a menu of services that includes LTL and intermodal. We have warehousing and transloading, intra-west trucking and drayage. We have cross-border LTL, we own a third-party logistics provider. We have intra Ontario, Quebec and Maritimes trucking and we recently added dock to delivery service at our terminals. That will help a U.S. or Canadian trucker that has to deal with the new U.S. hours of service rules. They can drop their loads off at any one of our facilities for delivery, allowing their drivers to work within the hours of service. I think you are going to see more of this type of service from us. As long as the service is part of our core competency, we want to offer a menu of services that will provide our customers with choices.
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