As MSM Transportation continues to diversify its service offerings, managing partner Mike McCarron explains the strategy and the company’s future growth plans in an exclusive interview.
TN: Over the past couple of years you’ve been involved with a vertical integration strategy which has seen you launch several complimentary businesses. Which businesses are you now into and how is it all coming along?
McCarron: In addition to our LTL and brokerage businesses we are now also in trailer storage, dedicated trucking, consulting, cartage and distribution. This strategy gives our people more services to sell to customers and in markets with better margins. It also places our name in front of more customers, which positions us well to capture new business for our traditional services when it becomes available. As with growing any business we’ve had our share of struggles but we have the infrastructure and the administrative skills already here. We are basically starting sales and operations arms for these businesses and the rest is already taken care of.
TN:Is the company where you want it to be or do you see more room for growth in MSM’s future? Is growth by acquisition a main option?
McCarron: There s is still room for growth but right now we are concentrating on getting these ventures up and running and making them profitable. We’ve looked at acquisitions and will continue to do so. But it would to be a really special deal that fits in very well with what we do because there are far too many surprises.
TN: There is much concern among shippers about capacity in the trucking industry right now and particularly how things will be as the Canadian and American economies pick up. What’s your view of the situation?
McCarron: I think shippers are in for a rude awakening. We see it ourselves in our brokerage business the number of carriers going bankrupt, the number of carriers that are factoring, the number of carriers that don’t have proper insurance. Shippers really have to look at their landed cost of doing business because they are going to have to get used to the fact they will be paying more to move freight. The strong carriers are the ones surviving and because these are also the smarter carriers they won’t accept unfair rates.
TN: You have demonstrated an ability to use a combination of your own trucks and those of strategic business partners. Do you feel that puts in you in a better position to deal with the capacity crunch?
McCarron: It does allows us to deal with heavy fluctuations in traffic. If we get a really busy week we can handle the overflow because of our partnerships. But we are also finding that it is getting more difficult to find decent trucking partners. We are finding the same thing our customers are there are fewer and fewer trucks available and it’s costing more to move freight.
TN: For two years in a row MSM was given the top score for customer service by shippers in our Shippers Choice survey. Meeting customer service demands requires having a good handle on shipper needs. What would you consider to be the most important concern for your customers heading into the next few years?
McCarron: The good carriers are asking for more money but the weaker players aren’t, so I think there is a lot of uncertainty in the market place. Shippers are skeptical about the ability of our industry to meet their needs in the future. I would suggest our industry is in intensive care and the good traffic managers are concerned and the poor traffic managers are sticking to their same old cheap price, cheap price, cheap price demands.
TN: While most eastern-based carriers running into the U.S. concentrate on the eastern and central U.S. states, you have chosen to operate out of a 50,000 square foot facility in Los Angeles. What kind of growth are you expecting for the west coast and how are you growing your service to keep up?
McCarron: Our LTL service between Los Angeles and all points in Canada is growing at a very rapid pace. We are adding 15-20 new customers a month. But we are also looking to expand to other areas and services in the U.S. market. With the economics of the LTL market it doesn’t make sense not to. We will maintain our longhaul service out of Los Angeles because we have the established market and skills there. But over the longer term we will be looking aggressively at short haul. We are going to have short haul service to different parts of the U.S. soon.
TN: How are the new hours of service in the U.S. affecting your relations with shippers?
McCarron: We had to go to customers and discuss with them how certain parts of their operations were affecting our ability to meet the new hours of service regulations. We presented options and were willing to work with them to find solutions. This was also part of the reason we put in place a rate increase this year and our customers didn’t have a problem with it. What customers want is frank and open discussion with their business partners. What they don’t want is to have stuff rammed down their throat; what they don’t want are surprises where the service starts suffering and then you blame it on the hours of service. A big problem with this industry is that people don’t sit down and have business discussions. They don’t deal with problems.
TN: There are a lot of troubling issues ahead. But let’s look on the positive side. Looking at the next five years, what are you most enthusiastic about?
McCarron: I’m really excited about the market. Last year was a tough one but I saw it as an investment in this business to get rid of the bad operators and I think a lot of bad operators are out of business right now. I think truckers have learned a lot from these tough times and there will be lots of opportunities for hauling freight in the future.
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