By Brian Dunn
It’s the Monday after Mother’s Day and ACS Logistics President and founder Dan Gleason looks concerned as he stares at his computer screen checking quotes from various trucking companies in the U.S. “This should be a busy time for us, but it’s the quietest I’ve seen in a long time. Prices are OK, but nobody’s booking. Something’s going on.”
As if to make his point, he mentions the number of ‘For Rent’ signs (or ‘À Louer’ signs here in Montreal) along the Trans-Canada Highway next to his office in the suburb of Dollard des Ormeaux. It seems every third or fourth building has a ‘For Rent’ sign on it, an indication that business isn’t exactly booming, Gleason added.
Things have certainly changed since he and a partner (no longer with the company) started ACS in 1986, or 25 years ago this June, to be exact.
To illustrate what he means, Gleason hauls out the June 30, 1986, edition of Canadian Sailings in which his photo appeared along with the announced opening of the first ACS office in downtown Montreal.
“There were probably ten times more ads from carriers in those days, and probably 60 to 70 per cent of those carriers no longer serve Canada. We rely on the capability of ocean carriers to provide service to us. The challenge is that there are fewer and fewer carriers serving the Canadian market.”
That’s because the Canadian market is too small and too expensive, Gleason explained, and many carriers are turning their attention to markets in South America where companies rely less on moving goods inland by rail.
“With fewer carriers, you would think rates would go up, but the main reason why they can’t increase rates is because of the operating expenses of servicing the Canadian market. That’s why the movement of containers is so expensive. If rates were to increase, Canadian goods would not be competitive on world markets.”
Another change in the business since 1986 is the level of professionalism in the industry.
“I was at a Canada Maritime Conference in Montreal in September and I was surprised to see so many schools offering courses in transportation and logistics. Twenty five years ago, there was no formal education required to get into this business.”
ACS is in the business of primarily importing frozen beef and lamb and exporting frozen pork, seafood, potatoes and berries. Initially, the company handled only a few hundred reefers of containers out of Montreal through lines like MSC which grew their reefer business along with ACS. Last year, out of two Montreal offices, one in Halifax, one in Toronto and another in New Jersey, the company handled over 10,000 TEUs, a number it hopes to match in 2012, “if we’re lucky,” Gleason added.
In the past few years, ACS has established an NVOCC dry cargo division in conjunction with agents in over 50 countries world wide. ACS represents seven shipping services in Canada, namely Bermuda International Shipping Line, Cuba Container Line, Artik Route Line, Owl World Lines, Reefer Container Line, Royal African Lind and World Star Line.
About half of its business is generated from reefer cargo on both the import and export side and another half comes from agency business and NVOCC.
“While some NVOCCs and forwarders appear to be doing less and less temperature controlled container business, we are determined to counter that trend and increase our position in that sector by being more creative in the rates end, and in overall services that we can provide,” said Gleason.
“But the growth aspect bothers me. A lot of Canadian goods are too expensive for world markets. And in the last six months, we’ve concentrated more on exporting dry cargo from the U.S.”
Gleason is expecting a turnaround in the next six months as the Loonie appears to be loosing strength against the greenback which should boost Canadian exports, including his reefer business.
“Our biggest export markets for pork are Japan, China, Russia, Korea and Australia. And our biggest competition comes from the U.S., Denmark and Chile.”
Exports should also get a boost from the federal government’s efforts to open new markets, but exporters need to follow through by offering competitive products, said Gleason.
“Everything can be manufactured more cheaply elsewhere, but I still believe the Canadian label is an important selling tool worldwide. Pork and beef produced in Canada is second to none and China and India are two markets we’ve been concentrating on growing.”
The New Jersey office was opened in 2010 to handle Canadian-controlled U.S. origin cargo and vice versa.
“We do a lot of business in the U.S.” Gleason added.
In terms of marketing the company, ACS advertises in Canadian Sailings and promotes itself to active customers, but is marketing more through government agencies and foreign trade commission offices in Canada.
“We also rely on our agents worldwide to allow us to quote on certain goods.”
In addition, the company positions itself as Canadian based and Canadian owned that “ships at the best price and is backed by 15 professionals (out of a total staff of 18 company wide) who have over 150 accumulated years of reefer handling experience. We also have reefer logistics specialists cooperating with us at all major ports,” Gleason pointed out.
Two staffers are his daughters Kimberly, who is an accountant at the company’s other office in Chateauguay, QC, and Tracy, Vice-President who works in the same office as her father.
Gleason sees a shift away from reefer bulk carriers in Canada to more refrigerated containerization and both Canadian ports and shipping companies are gearing up for the transition with improved facilities.
“But the rate structure to move containers inland is more expensive and some shippers expect their customers to provide their own equipment. We have a concern with rail prices. For example, it takes 60 days to transport a container from Montreal to Manila. Using a combination of rail and sea voyage, it takes half that time via Vancouver, but at double the price. The differential in cost is all railway costs. That’s why we are looking at other options such as U.S. ports like New York and Philadelphia.”
Recently, ACS has delved into new growth opportunities, including shipping used cars to Africa (which prompted a visit by the RCMP to ensure none of the cars was stolen) and a new business related to biofuels which Gleason wouldn’t divulge for competitive reasons.
But he doesn’t want to stray too far from his area of expertise.
“We try to max out the human resources that we have and not grow beyond our capabilities. Like they say, ‘you can’t marry all the pretty girls.’ “