COMPETITION WATCH: Pricing pressures plague Mullen Group

Truck News

OKOTOKS, Alta. — Mullen Group’s 2009 revenue was down 25.6% and its net income down 19.6% in 2009 as a 50% reduction in western Canada drilling activity and economic pressures on the trucking/logistics segment took their toll.

For the fourth quarter, Mullen’s revenue dropped 34.2% but its net income improved 56.3% to $11.1 million.

In its financial filings, Mullen Group attributed the decline in its trucking/logistics revenue to the slowing economy and decreasing demand for freight services, particularly in western Canada as well as a drop in fuel surcharge revenue.

“The operating environment during 2009 was extremely challenging due to the combined impact of the slowing economy coupled with a significant decrease in drilling activity in western Canada,” said Steve Lockwood, president and co-CEO of Mullen Group.

The company said it’s fighting pricing pressures on the trucking/logistics side of its business and has had to abandon some work.

“The challenging operating environment we experienced through the third quarter of 2009 continued in the fourth quarter. Business activity remained soft resulting in competitive pricing pressures for most of our business units,” Lockwood said. “In fact, there were several instances where long-term contract pricing fell to levels we considered unacceptable leaving us with no choice but to decline the work. We have consistently taken the position in all our businesses that we will price competitively, however we will not engage in predatory pricing nor provide services without receiving a reasonable return.”

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