DC Velocity - January 2012

newsworthy

The “Purolator” name has a long history in the transportation business. But for newcomers to the field, the name would likely elicit only blank stares.

The original Purolator operation in the United States disappeared in 1989, after the old Consolidated Freightways bought Emery Worldwide, which had acquired Purolator two years earlier. But after a lengthy hiatus, the Purolator brand is making a quiet return to the domestic market with what its U.S. boss says is a unique value proposition for U.S. shippers looking to expand cross-border trade with Canada.

Purolator International Inc., the U.S. arm of Mississauga, Ontario-based Purolator Inc., is angling for a large chunk of the nearly $8 billion-a-year market for transportation and logistics services from the United States to Canada. The model is built on combining the subsidiary’s growing U.S. capabilities with the parent’s core business of serving the transborder and intra-Canadian markets, according to John T. Costanzo, president of “Our mission is selling Canadian distribution services to U.S. businesses,” Costanzo said in an interview with DC VELOCITY. Costanzo said the subsidiary would also work with its parent to support Canadian companies looking to expand into the United States.

The U.S. unit has no plans to enter the domestic U.S. market, according to Costanzo.

It’s baaack: Purolator returns to U.S. market

DEEP CANADIAN ROOTS

Purolator’s transport roots are deeply Canadian. The company was organized as Trans Canada Couriers Ltd., before being acquired in 1967 by Purolator, a U.S.-based air and oil filter maker, and rebranded as Purolator Courier Corp. On the day of Purolator Courier’s 1987 sale to Emery, Purolator’s Canadian operation was spun off to a Canadian private equity firm. In the early 1990s, the Canadian operation was sold to Canada Post, which today controls about 94 percent of the total company.

Purolator Inc. generates about $1.7 billion in annual revenue and has about a 30-percent share of the intra-Canada small-package market, according to Costanzo. Its Canadian network is bigger than the combined networks of FedEx Corp. and UPS Inc., which Costanzo said are Purolator’s two chief rivals.

The breadth of the Canadian operation, and the U.S. subsidiary’s ability to leverage it, are the key selling points to U.S. businesses, Costanzo said. “We are pretty unique when it comes to this,” he said.

Purolator International expected to have 20 U.S. offices in place by the end of 2011. Costanzo said the company plans to add 10 U.S. offices during 2012. The U.S. operation currently has $150 million in annual sales and is growing at a 30-percent annualized rate, Costanzo said.

Costanzo said the subsidiary plans to expand into Mexico, where it will target U.S.-based businesses with services linking Canada and Mexico. It also plans to export its model to Europe, pursuing companies on the continent that might be interested in entering or expanding into Canada, which is the world’s ninth largest economy.

Our motto is “We Deliver Canada,’” he said. ;

Driver turnover at the nation’s large truckload carriers hit 89 percent in the third quarter, the highest level of driver turnover since the first quarter of 2008, the American Trucking Associations (ATA) said in mid-December.

The third-quarter number represents a 10-percentage-point increase over the prior quarter’s 79-percent turnover rate, according to ATA. Since bottoming out at 39 percent in the first quarter of 2010, turnover at large truckload fleets has risen by 50 percentage points, an unprecedented increase, according to Bob Costello, the trade group’s chief economist.

The turnover rate at small truckload fleets, defined by ATA as carriers with under $30 million in annual revenue, jumped 10 points in the third quarter to 57 percent, the highest level since the third quarter of 2008, ATA said. Turnover in the less-than-truckload (LTL) segment remained relatively low at 10 percent, a reflection of the generally shorter hauls in this sector of the industry, which enable drivers to achieve a better work-life balance than their truckload counterparts.

In addition, LTL drivers are generally better paid than truckload drivers. According to recent data from consultancy FTR Associates, the median LTL driver’s salary is about $58,000 a year, compared with $48,000 a year, on average, for truckload drivers.

For large truckload fleets, the highest turnover level on record was 134 percent, set in the fourth quarter of 2005, which was the tail end of the last great driver shortage cycle and the dawn of what would become a four-year freight recession that devastated the industry.

In a statement, Costello reiterated ATA’s long-held warning that an increase in freight tonnage, combined with the impact of federal safety regulations that will force marginal drivers off the road, will make it even harder for trucking companies to attract and retain high-quality drivers. ;