Bolton, ON – Titanium Transportation Group’s Q3 earnings were actually a tale of two quarters.
In the first half of the quarter, a slumping U.S. dollar negatively impacted revenue from U.S.-based customers, while the second part of the quarter saw a recovery of the dollar as well as improving volumes and tightening capacity.
“The conversion rate for us crashed very quickly,” Titanium CEO Ted Daniel said this morning on a conference all with analysts, when discussing the effect of the weakening U.S. dollar. “We do expect our conversion rates for 2018 are going to remain fairly stable. The dollar is where it needs to be for us right now. We hope it stays where it is.”
Daniel said he’s optimistic about the company’s performance in 2018, as it is having success implementing rate increases for the year ahead.
“We are heavily in what we call RFQ season,” Daniel said. “A lot of the rates we are seeing are increasing, and I think there’s a need for an increase in rates in this industry.”
Chief operating officer Marilyn Daniel said contracts for 2018 are coming up for renewal, and that the shipper segment understands the need for rate increases.
“(Shippers) are very aware the industry is looking for increases today,” she said, noting the cost of obtaining quality drivers is increasing. She noted a 5-10% increase in rates could be seen next year.
And the coming electronic logging device (ELD) mandate in the U.S. could put more upward pressure on rates, Ted Daniel added, as some fleets will have trouble adapting.
“It’s not the cost of the ELD per se,” he explained. “It’s more in terms of your ability to plan alongside shippers, to be a real partner with shippers. We have been going through that learning curve over the last one or two years.”
Daniel said the acquisition this year of Windsor, Ont.-based Xpress Group has gone well, and integration will soon be completed. This gives the company additional capacity out of its Windsor terminal. It will replace about 19 Xpress Group trucks in the fourth quarter, and will add 16 new trucks of its own in the first half of 2018. The company already added 10 new tractors this year.
In terms of mergers and acquisitions, Daniel said they remain in the plans. Daniel said the recent tough pricing environment has driven down valuations of trucking companies to levels that make purchases more viable, when a good fit can be identified.
“This is what we’ve been preparing for,” Daniel said of the current M&A environment. “This is the time. At this point in time, we have the infrastructure, we have the people, we have the technology, and we’ve got the experience. We’ve done 10 acquisitions of different types and we feel there’s a lot of opportunity out there right now for acquisitions.”