By Brian Dunn

McKeil Marine of Burlington, ON, has been chosen as one of Canada’s Best Managed Companies in 2018 by Deloitte Canada’s leading business awards program, which recognizes excellence in privately-owned Canadian companies.

For over 60 years (celebrating its 60th anniversary in 2016), McKeil has been providing marine transportation and project services for bulk and project shipments throughout the Great Lakes, St. Lawrence River, East Coast and Arctic. It recently moved its head office to Burlington from Hamilton and has sales offices in Montreal, Rothesay, NB, and St. John’s, Newfoundland and Labrador.

The company’s annual growth rate is typically in the low double digits, according to President and CEO Steve Fletcher who attributes the Deloitte award to hard work and dedication of its 375 shore-based, sailing and seasonal workers. Treating crew (employees) like family and driving forward as a high-performance team is always a focus for McKeil. This is how we have and will continue to operate.”

Most of the company’s growth comes from long-term contracts with existing clients in what Mr. Fletcher calls a cyclical business. For example, McKeil completed a project last year after 3 1/2 years of providing construction support for the Hebron oilfield Project Gravity Based Structure in Bull Arm, NL. It is currently completing an assignment using two barges to move workers and construction material for 27 Siemens turbines being built on Amherst Island off Kingston which are expected to produce 75 megawatts of generating capacity.

“We really don’t have one operating base,” said Mr. Fletcher. “We go where we’re needed and do repair work and dry-docking during the off season where we end a project before winter, or where we expect to be working in the spring. McKeil’s Amherst assets were originally on the East Coast, for example, and will go back there once the turbine project is finished.”

McKeil has considered acquisitions to grow the business, but is sticking to its core competence which is moving smaller loads in the 10,000-15,000-tonnes range. “We’re not competing with Algoma or CSL. We try to secure smaller niche cargos like specialty coal used in the refinery business. We may do four trips a year moving 10,000 tonnes per trip, which makes it easier for clients to manage inventory, rather than moving it all at once.”

McKeil is seeing moderate growth in various industries such as the steel industry, specialty raw materials, slabs and cement. It also transports niche size cargo loads in the agri-sector. “One silo may contain 12,000 tonnes of grain which we might transport in a single load. Transporting 25,000 tonnes in a single load would be far more difficult because there can be congestion on the St. Lawrence and it might be hard to accommodate 25,000 tonnes. We’re often competing against rail and truck, so we try to be cost competitive to gain a few percentage points of new business.”

The steel and aluminum business is doing well, except for the uncertainty of potential U.S. tariffs which could leave producers exposed to a sudden change in U.S. trade policy.

“There’s a great deal of iron ore being exported to China which is attractive for Algoma and CSL, and which allows us to pick up marginal business that is not cost effective for them,” said Mr. Fletcher.

In October, 2016, McKeil sold a majority share of the company to TorQuest Partners, which specializes in mid-market companies and manages more than $2 billion in equity capital. Without taking on too much debt, the deal allowed McKeil to purchase Ardita, a 139-metre bulk carrier previously used to carry grain and soybeans, and to convert it into a cement carrier at a cost of more than $20 million. McKeil began transporting cement on this vessel for its client Lehigh Cement to customers along Lake Ontario and Lake Erie earlier this year. “In order for the company to grow, we realized we needed additional capital. TorQuest has deep pockets which allow us to build the business and we get good insight from seasoned veterans in the investment community. We basically got financial capital and intellectual capital together.”

With the acquisition of Ardita, the company now operates four bulk carriers, 22 tugs and 30 barges. It is not necessarily the company’s intention to acquire more vessels. It will probably add more tugs and barges before another bulk carrier.

“But it will be based on opportunities. Certain cargo is best suited for barges and others for ship.”

Most of McKeil’s business is short-sea operations where it will usually transport cargo to a rail depot to continue the journey. A major client continues to be Aluminerie Alouette of Sept-Îles for whom McKeil transports aluminum to Oswego, NY, Toledo and Detroit.

Some of the challenges facing the company are regulatory changes, and the company’s limited capability to compete effectively with federal pilotage authorities to retain experienced employees. “We need to find a more cost effective way to provide services on an underutilized St. Lawrence Seaway. And the Pilotage Authority is recruiting from our industry which makes it challenging for us, as our crews are extremely experienced and are very familiar with the handling characteristics of our vessels.”