The cross-border (Canada-U.S.) LTL market has long been one of the most profitable segments of the freight business. Only a select few carriers with deep pockets (Yellow, Roadway, ABF, Fedex), have been able to establish a network of terminals throughout the United States and Canada. In Canada, these companies have located their operations in the major cities (Toronto, Montreal, Calgary) and excluded less populated cities and provinces (Prince Edward Island, Newfoundland, Saskatchewan) from their terminal coverage locations. For most other companies seeking to serve this lucrative market, this creates a significant challenge.

Canada has a population roughly equal to the state of California. Much of this population is locatated within a one hundred mile radius of the U.S. border with a heavy concentration of the people living along the Windsor, Ontario to Quebec City, Quebec corridor. While Montreal and Toronto are located close to major U.S. markets (e.g. Chicago, Detroit, New York, New England), most of the other major centres in Canada are located hundreds or thousands of miles away in Winnipeg, Edmonton, Calgary and Vancouver. The key issue for American truckers seeking to provide service in Canada is whether to focus on Canada’s largest trade corridor or incur the costs of locating terminals, trucks and drivers in what would be the equivalent of small or mid-size U.S. markets.

For a Canadian carrier seeking to establish an American terminal network, the task is very daunting. The cost of purchasing a carrier with 20, 30 or 40 state coverage is enormous. The time and cost of opening company owned or even agent terminals in even a select few markets (e.g. Chicago, New York, Los Angeles) is a significant undertaking. Since the Canadian market is only one tenth of the size of the U.S. market, a Canadian company seeking to acquire a U.S. carrier, forces the purchaser to commit to entering and serving the domestic U.S. market. The process of acquiring a series of small LTL carriers and knitting the network together (e.g. Vitran), is a multi year project. While some carriers over the years have tried to do this, very few have been successful.

The formation of operating and/or marketing alliances has been a popular method of serving LTL shippers across North America for many years. The partnerships frequently come and go. If the partners’ objectives, capabilities or work ethic vary, this often leads to disappointment, failure and a termination of the arrangement.

Two recent partnerships caught my attention and highlight the different approaches that carriers may take. New England Motor Freight has formed what appears to be an operational partnership with Toronto based Concord Transportation. Under the terms of the agreement, Concord will receive NEMF freight in Chicago for delivery to Western Canada, in Toronto for Ontario deliveries, and in Montreal for shipments to Quebec and Atlantic Canada. To complete the exchange, Concord freight destined for the northeast United States will flow through NEMF. NEMF will continue to operate their existing facilities in Toronto and Montreal. The two companies will link their IT systems.

Lakeville Motor Express, a Minnesota based north central states carrier, has dissolved its alliance with Estes Express, a super regional carrier and has formed a new alliance with Land Air Express of New England, Pitt Ohio Express (mid-Atlantic states), Averitt Express (south and southeast USA), DATS Trucking (southwest USA) and Canadian Freightways/Epic Express. This will take effect on March 1.

Meanwhile Estes Express will retain its ExpressLINK with TST Overland Express while opening terminals in North and South Dakota, Nebraska, Iowa, Minnesota and Wisconsin, effectively fulfilling its goal of providing direct service coverage to shippers in all 50 states. Estes will now partner with one member of the Transforce Income Fund while a sister Transforce company, Canadian Freightways, will partner with a separate grouping of companies.

Carrier partnerships, particulaly those with a strong joint marketing component, have the potential to work, for a period of time, if the partners:

a) establish line haul arrangements and superior service to what is currently available.
b) link the computer systems of the two companies to provide seamless service,
c) train each others’ sales forces on an ongoing basis,
d) provide a knowledgeable and skilled sales resource or resources to make joint calls,
e) establish cross-border sales revenue targets that are measured on a consistent basis,
f) create an effective sales lead program with timely follow up and
g) compensate the reps on both teams on their pay for performance programs.

Like a marriage, the key to a successful LTL partnership is picking the right partner, establishing good communication and committing to make the relationship work. Time will tell how well these partnerships work out.