COMPETITION WATCH: As economy improves, Challenger revs up
April 23, 2010
CAMBRIDGE, Ont. -- Dan Einwechter has seen the future, and the future is long. That's the conclusion one could arrive at following a recent visit to Challenger Motor Freight headquarters. Parked in the yard is a 2011 Volvo VN hooked to two...
Challenger Motor Freight plans to be a bigger player in the LCV world.
CAMBRIDGE, Ont. — Dan Einwechter has seen the future, and the future is long. That’s the conclusion one could arrive at following a recent visit to Challenger Motor Freight headquarters. Parked in the yard is a 2011 Volvo VN hooked to two shiny new 53-ft. Stoughton trailers.
This week, Challenger took delivery of 300 identically-spec’d Stoughton trailers supplied by Trailers Canada. Each one comes equipped with side fairings, wide-base tires and, not insignifcantly, a pintle hook. Einwechter said he’ll have 300 more such trailers by year end, providing capacity of up to 1,200 long combination vehicles (LCVs) if he should deploy each one as the lead trailer of an LCV configuration.
“From our perspective, we know we need to become a bigger player in the LCV business out west,” Challenger CEO Einwechter told Trucknews.com. “We needed some new trailers and because the trailer industry is still in a depressed state, it was the right time to buy the equipment at the right price.”
Current pricing may not last long. According to the latest State of the Industry: US Trailers report from ACT Research, commercial trailer net orders rose 168% year-over-year in February, reaching their highest levels in two years. Conny Weyers, president of Trailers Canada told Trucknews.com the Canadian trucking industry is sitting on a lot of older trailers and is being forced to rejuvenate itself. He also pointed out the strong Canadian dollar means a new trailer today costs less than it did in the ’90s.
The first of Challenger’s Ontario-based LCVs hit the road last week running Cambridge-Montreal, and Einwechter is hopeful the pilot project will be expanded.
“That’s our big hope,” he said. “Otherwise, we’ll be restricted to doing it from Manitoba to Alberta, but we’re hoping based on the performance the government has seen so far, that we will continue for the rest of this year in Ontario and they’ll follow through (after that), because it makes so much sense in so many ways and we’ll have a market that we can go from Windsor to Riviere du Loup, in essence, or from Winnipeg to Calgary.”
Challenger has also been buying new tractors to pull those trailers. The company has taken delivery of 150 Volvo VNs (with a mix of pre- and post-EPA2010 engines) and over the next few days will be placing orders for as many as 486 tractors to replace those coming due for replacement over the next 18 months.
Meanwhile, Challenger has also been investing in new equipment for its specialized divisions to haul windmill blades and other oversized equipment for an emerging industry.
“We have spent millions of dollars to buy equipment for the wind turbine industry,” Einwechter said. “We have quite a few nine-axle trailers, some blade trailers being delivered shortly, tri-drive tractors and we’re buying tandem tractors with pusher axles, so we have a lot of stuff going on this year.”
Even during the downturn, Challenger has made some key specialty acquisitions and the diversity has helped the company weather the storm, Einwechter said.
“When one area of the company suffers, another may be a little stronger. That has helped,” he said. “The acquisitions have all been done, not because there’s big money changing hands, but rather because it was time for those other players to exit the industry. They were good companies, just the wrong time.”
So should Challenger’s ambitious spending spree be taken as a signal the Canadian trucking industry has finally turned the corner?
“It signals I’ve lost my mind,” Einwechter joked, before adding: “We need to make investments in the future. At the end of the day, I tell everyone when times are tough it’s not the end of time, it’s a point in time. We definitely delayed our equipment trade cycles for quite some time but it was time to do it.”
Still, Einwechter isn’t ready to declare the difficulties of the past few years officially over, as excess capacity remains an issue.
“There’s still too many trucks,” he said. “I’ve talked to a bunch of US dealers and carriers and they’re all much more optimistic than I would be as a Canadian carrier. Do I see we have some uptick, some positive improvement? Absolutely. We think there still needs to be some tightening of supply here and the high Canadian dollar doesn’t help, but I still feel pretty optimistic about the balance of this year and next year.”
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