Shippers expect competitive pricing but not at the expense of service. M-O Freightworks president Doug Munro outlines the art of pulling off the fine balancing act, in an exlusive interview.
TN: Congratulations on being named to the 50 Best Managed Companies list. What would you say it takes for a trucking company to be included in such a prestigious award?
Munro: I think it takes managing the day-to-day business in a manner that provides high quality service that meets customer expectations while achieving a solid track record of sales and profit growth. At the end of the day, customers want competitive prices but they don’t want them at the expense of service. It’s a balancing act and the only way you can pull it off is by being more efficient. We are a mid-sized company which can provide the same service as the larger carriers, while at the same time providing the personal touch of a smaller company. Our management group is surprisingly small and we are very hands-on. We continually seek out operational initiatives to drive efficiencies. Combined, those efforts allow us to be profitable yet also competitively priced.
TN: How have you evolved your service offerings in recent years to stay in tune with customer needs and what further changes do you anticipate?
Munro: There are several things we’ve done in recent years to evolve our service offering. Our Freightworks logistics loading gives us a strong competitive advantage. Our containers and trailers are equipped with logistic posts in order to increase utilization, reduce handling and prevent lost or damaged shipments. Over the years less-than-truckload carriers have had to resort to breaking down pallets to optimize the cube in their trailers but our method of logistics loading means that a pallet is not broken down. Customers know that when they ship with us that loss and damage claims are dramatically reduced. Once a regional carrier, we’ve expanded on a national basis and offer our Freightworks service from coast to coast. Our intent in the near future is to provide our Freightworks’ concept North America wide.
TN: The market seems ripe for acquisitions. Are you actively looking to add to your capacity through acquisition?
Munro: If an opportunity came along that was complimentary we would definitely take a look at it. But our corporate philosophy has been to grow our markets from within. This to date has worked well for us.
TN: I noted you have 127,000 square feet of warehouse space in your Brampton facility but that you have a rather unique set-up. Can you elaborate?
Munro: The facility is a hybrid of a cross docking terminal and a distribution centre, by no means is it a warehouse as we don’t store product long term. We consolidate freight but generally that freight will move within 24 hours. Our distribution centre is 170 feet wide, which is much wider than a conventional cross dock. This extra width allows precision staging of freight for consolidations, and maximizing cube utilization on outbound trailers.
TN: Supply chain visibility is becoming increasingly important for supply chain managers. How do you work with the railroads to maintain the necessary degree of visibility as shipments change mode and network?
Munro: Shippers are busy managing their own businesses and they don’t want to worry about the movement. We monitor that process all the way through and manage it to make sure that it is moving properly. For example, our intermodal equipment has GPS tracking. We don’t simply rely on the railroads’electronic data; our people monitor our satellite information at all times to ensure we don’t get any surprises. If something does go awry, we are usually able to catch it and correct it so that it doesn’t affect the customer. In addition, M-O is unique in that we have alliances with both CN and CP, which gives us greater flexibility in servicing our customers’ requirements.
TN: Anything else new with your technology offerings?
Munro: We’ve got a few things on the board that we are working on. With respect to our logistic loading, we are working on a system using RFID that will allow us to give our customers traceability right down to the pallet. We are also working on a method of customer-direct pay whereby if customers pre-pay the freight electronically they are given a significant discount. This will help reduce administrative and handling costs on our end and give customers a savings for helping us accomplish that.
TN: You have chosen to concentrate on domestic freight. What kind of growth do you expect in your operations and do you anticipate the same kind of capacity shortages as expected for the U.S. market?
Munro: We are looking at about 15% growth per year, which is what we have been growing at historically. I don’t think the capacity in Canada is nearly as tight as it is in the U.S. The challenge we have as a domestic carrier is operating in a very competitive market with too much capacity, which places strong pressure on prices. However, I believe with the U.S. and Canadian economies showing signs of strengthening, it is probable there will be a bigger capacity shortage. The trucking business is more difficult to get into than it once was and this is leading to a decreased number of newcomers to the industry. Prohibitive insurance premiums are forcing many out and are preventing new entrants from coming on board. Tougher security requirements and more stringent safety enforcement are also contributing factors. With a shrinking and aging workforce in Canada, the driver shortage is likely to become more challenging in the foreseeable future. It’s imperative that our industry strengthens our efforts to attract new drivers/owner-operators while continuing to form strong alliances with the railroads.
TN: How would you like this company positioned for the future?
Munro: I would like M-O to be known as a multi-modal carrier providing quality of service and best value pricing. Wal-Mart is a very good example. They provide very good prices and good selection. In today’s marketplace, if you want to grow you can’t charge excessive prices because customers are also under tough budget constraints and demand competitive rates. We can help our customers realize bottom line cost savings by providing them with a more efficient means to move their freight . Our ultimate goal is to provide best value solutions.
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