MacKinnon Transport CEO Evan MacKinnon explains why his company’s growth plans go beyond the traditionl van and flatbed services in an exclusive interview.
CT&L: Congratulations on being named to the list of the 50 Best Managed Companies. In your view, what is it about your company’s evolution that helped you make it into this prestigious club?
MacKinnon: Our approach to our strategic planning and how we implement it plays an important role in our success. We establish a long-term vision for the company and we do a very good job of communicating that to our staff through quarterly meetings. All our managers are trained in effective management techniques. We conduct quarterly reviews with all none driving staff and annual reviews with our drivers and owner/operators. We also hold monthly bull sessions with our drivers to air any issues they may have. All of that is time consuming but if it’s done right, there are a lot fewer fires to put out. It’s all about effective communications. Our staff has the skills and training necessary, and is knowledgeable about how their roll contributes to the Company’s mission and vision. The recognition earned by being awarded one of Canada’s 50 Best Managed Companies is truly a company wide effort. This award belongs to all those who work at MacKinnon Transport.
CT&L: It’s often said that in the trucking industry, he who has the drivers wins. One of your most impressive achievements is being awarded the 2003 Best Retention Practices Award after reducing your turnover rate from 105% in 1996 to just 20%. How did you do it and why should shippers care about what you have achieved?
MacKinnon: One of the main things we do to attract and retain drivers here is live by our value statement: We Strive to Meet and Exceed the Expectations of All our Stakeholders, Backed by Full Accountability and Integrity in All our Dealings. That’s what makes people feel good about coming to work. Our low turnover rate allows us to invest more in training and education because we are confident the people we train will stay here. One of the biggest advantages our driver retention provides our shipper clients is consistency of service familiar faces showing up at their facilities. Our drivers get to know the shippers and their receivers and their company policies and safety requirements very well. And also because of their longevity with our company our drivers are better trained to handle a company’s specific product requirements and the needs of their customers.
CT&L: I understand you’ve also just won the Truckload Carriers Association’s national fleet safety award?
MacKinnon: Yes and it’s the third time we’ve earned this recognition. No other Canadian carrier has won this award more than once, and only one US carrier has won this award three times. It’s a very significant award and highly recognized in both Canada the U.S. This award makes a positive statement about our entire safety program and our Company wide safety first attitude.
CT&L: I also understand there have been some changes with your van and flatdeck divisions?
MacKinnon: A year ago we started putting a greater concentration on LTL freight on the van side. We consolidate it in our own warehouse in Guelph and we deliver right to the customer’s facility. It began by utilizing our TL traffic that was going to various locations throughout North America. Quite often we would have room for two or three skids on the back end. Now it has grown to the point where we dispatch a lot of trucks that are completely LTL. We concentrate primarily on western Canada and U.S, Florida and Texas with some Midwest coverage. We expanded LTL in our flatbed division as well and have had a lot of success with it. With the tandem flatbeds that we run into the U.S. there is quite often a lot of deck space available whether it’s a load of lumber or a coil of steel, we have space. We are also starting to run 53-foot flatbeds for the first time on international moves at the request of our customer base.
CT&L: Tell me about your warehouse facility. How does it fit into your existing operations?
MacKinnon: The building was our first attempt at warehousing and we are now going into our third year. The building is just one block away from our terminals and it’s 50,000 sq. ft with 12 docks and two drive-in bays. We run a pick and pack operation where we bring truckloads of freight in and the customer can ship them out in part shipments or part skids and we pick and pack what they want to go to specific sites. We also operate a load transfer service inside and outside for lumber and steel products. The warehouse complements our trucking services very well and has allowed us to bring in some accounts that we didn’t previously work for. We are planning on expanding this service by either purchasing or building another warehouse in the next few months.
CT&L: Looking at U.S. hours of service, what impact were you expecting this to have on your operations and how has the initial experience compared with your expectations?
MacKinnon: The area we thought we would see the greatest impact was on trips within a 500-mile radius and that is where we are seeing the impact. Those are the types of trips where it was a very full day’s work as it was prior to the hours of service changes. The issue with these lengths of hauls is the time spent at either the shipper, the receiver or at the border. We are FAST approved and about 45% of our drivers are FAST approved so that has alleviated part of the border delay issues. We are working with our customers and have been pleasantly surprised with their understanding of the issues. Respectable shippers are cooperating quite well, however there is room for improvement. Shippers will have to work closer with carriers and be realistic about the demands they are placing on drivers. They can’t delay the truck longer than necessary and expect the driver to make that time up overnight; the new hours of service won’t allow for that. If relationships are built on a commitment to work together, there is no reason we can’t continue to offer a very good service within the confines of the new hours of service regulations
CT&L: Capacity is a growing concern and the market seems ripe for acquisition. Are you actively looking to add to your capacity and/or service mix through acquisition?
MacKinnon: Growth by acquisition has been part of our strategy for about three years now. Since 2000 we’ve looked at about 60 different companies. But we are fussy. We do a good job at what we do and we want to make sure we bring something in that complements our vision. We are looking to grow our logistics division, which currently does in excess of $1 million a month. Logistics has become a large part of our business. We would also consider an acquisition that would allow us to penetrate a niche market; something we are not in right now.
CT&L: Much has been made of late about the need to raise rates. At the same time our own research of more than 700 Canadian shippers shows them to still be very concerned about costs. In your view, why should shippers be willing to agree to rate increases?
MacKinnon: The number one reason is the viability of the carriers they are using. We expect our suppliers to be competitive when we purchase products from them, however we are aware of the fact they also have to be viable and make a living doing so or they won’t be able to service us in the future. Obviously every Company has to be concerned about cost. Our customers are no different than us in that regard. Carriers that continue to charge rates less than compensatory will be forced to cut cost somewhere. The obvious two areas first to suffer are service levels and safety. I believe good business minded shippers don’t want to associate themselves and their company’s image with Carriers that cut corners in either of these areas. It’s poor business and ultimately the shipper’s customer will be the one to suffer.
CT&L: How do you see your company
evolving over the next decade?
MacKinnon: MacKinnon Transport doesn’t measure success solely by the number of trucks we have on the road. We evaluate every business opportunity thoroughly from an ROI standpoint and does it contribute to the Company’s chosen vision. Although we have budgeted for modest fleet size growth, we are concentrating on enhancing our warehousing and logistics operation. Today it contributes for about 20% of our sales and has allowed us to approach some very large shippers. Very few Canadian carriers have enough trucks and resources to look after all of their shippers’ needs. Our vision includes for continued growth in our logistics operation. In the future we anticipate our logistics operation to exceed our linehaul operation in both sales and margin dollars. I also believe the quality of people we employ will continue to be a focus for our continued success into the future.