BY KEITH NORBURY
About six months after Toronto-based XTL Transport Inc. bought the refrigeration assets of Quebec City’s Transport Savoie, the new owner is happy with its acquisition. “We’re pleased with the early results and have identified many growth opportunities in the region through the evolution of service offerings,” said Craig Germain, XTL’s Chief Operating Officer, in an interview with Canadian Sailings. “One example is refrigerated logistics.”
XTL, which now has eight locations across Canada including the one location of the since renamed Savoie Express Inc., began its refrigerated growth strategy back in 2018. That primarily consisted of organic growth from Ontario to the U.S. and back to Ontario, Mr. Germain said. “As we continued to build out this plan over the next couple of years, we recognized the next expansion would be in Quebec,” Mr. Germain said. “Our initial growth in Quebec came organically, but we felt we could advance this with a more aggressive and sustainable way through acquisition.”
Two other recent cool acquisitions
XTL isn’t the only Canadian company in refrigerated transportation that made acquisitions in 2021. In January, Canada Cartage acquired Ottawa-based City Transfer, whose assets include refrigerated trailers. That same month, Winnipeg-headquartered James Richardson & Sons Limited acquired Bison Transport, another Winnipeg-based company. Representatives of Canada Cartage and Bison Transport didn’t respond to interview requests.
Canada Cartage said in a news release that it would maintain virtually all of City Transfer’s employees and its owner and general manager Val Milio. “This acquisition will help to continue to grow their business, and also expand Canada Cartage’s services in Eastern Ontario and Ottawa,” the news release quoted Jeff Lindsay, Canada Cartage President and CEO.
Today’s Trucking, meanwhile, reported that City Transfer’s assets include heated and refrigerated trailers, as well as offices in Montreal, Hamilton, Toronto and Ottawa. According to a video on the Canada Cartage website, founder Robert Leslie started the firm in 1914 with one horse and one cart. Today the company has more than 4,000 trucks and trailers and 3,500 employees across Canada.
Founded in 1969, Bison has more than 3,700 employees and contractors operating 2,100 tractors and 6,000 trailers across North America, noted a news release announcing its sale. The Bison fleet includes Thermo King reefer trailers, according to its website.
“We never react”
Are expansions among competitors in the temperature-controlled freight space having any impact on XTL’s plans? “We never react to what’s going on in the marketplace,” Mr. Germain said. “For us, it’s about identifying the best growth strategy for XTL. Acquisition is something new to us. We’ve had a successful 36 years of organic growth. But it’s really been this year where we’ve looked at that market more favourably.”
A driving force in the market in 2020 and 2021 has been the COVID-19 pandemic, which has caused operators to evaluate their futures, he said. “Our industry is made up of a lot of family businesses, operators that grew the business to a certain level, and you get to where the succession plans maybe aren’t clear,” Mr. Germain said. “So we do keep an eye out. We respect a lot of the larger public companies and what their acquisition strategies are, and we benchmark from them. But we very much are doing what we feel is best for XTL now and for the future.” The pandemic has been a win-and-loss proposition for the temperature-controlled part of XTL’s business, he said. “If you want to look at the grocery side, or people home-consuming food products at the expense of restaurants or the food-service segment, it’s definitely a growing segment within our business,” Mr. Germain said. “Demand for fresh and frozen food products increased over the pandemic as people and family stocked up on goods and spent more time cooking at home. We’ve also seen an increase in demand for temperature controlled freight within the pharmaceutical (sector). As vaccine rates rise, we expect this to continue to grow.”
Reefer trailer operation doubled
XTL’s purchase of Savoie brings nearly 40 power units into its fleet, which Mr. Germain said represents about 10 per cent growth in its driving fleet. “Other key factors for this purchase is the nearly 40 drivers that operate that equipment, and the 50 refrigerated trailers,” he said. “That nearly doubles our refrigerated trailer operation, our tandem fleet operation, for the cross-border space.” Mr. Germain said the Savoie acquisition should position XTL for further expansion, potentially even into the U.S. “However, due to the confidential nature associated with NDAs (non-disclosure agreements) around acquisitions, we can only say at this time we’ve identified additional strategic fits in North America that we look forward to sharing publicly in the future,” Mr. Germain said.
He stressed that XTL has only served the cross-border market since 2018. That was initially to the Eastern and Midwest U.S., primarily from Ontario. “The Savoie acquisition helped us increase our service from Quebec.”
Also in 2021, XTL started servicing the refrigerated market in the Western and Midwestern U.S. from Alberta and B.C. “Over the next few years, the cross-border U.S. footprint will expand significantly for XTL, both through organic and strategic acquisition growth,” Mr. Germain said.
Primary focus is cool
The refrigerated and temperature-controlled business is the primary focus behind XTL’s current and future transportation growth strategy, he added. “Although we have serviced this segment for the past 25 years, and also in Western Canada for the past 14, this service was primarily dedicated to a dedicated customer and domestic Canada application.”
At XTL’s major centres in Toronto, Montreal, Calgary and Vancouver, the company has three diverse service offerings: transport, logistics, and distribution.
“But as far as the transportation side of our business, 40 per cent of our revenues that we manage is in refrigerated/temp-controlled,” Mr. Germain said.y to run the truck itself.”