‘Price will increase are almost a given,’ says bullish Mullen Group CEO


“You can’t put any more cargo on our dock,” Mullen Group CEO Murray Mullen told analysts on a call this week to discuss second quarter results. He stopped by on-site visits to newly acquired companies and was pleased that the warehouse was almost at full capacity. “Now we’re working with our business units to say what kind of cargo ends up on our dock?”

Price leverage is emerging in the Canadian market, he said, noting that new drivers are difficult to find and the supply chain has been disrupted by disruptions and changing consumer habits. Expect more, but smaller goods shipped direct to consumers in smaller boxes, Mullen said, which will be a boon for LTL shippers and warehouse providers.

Just-in-time inventory management is changing to just-in-case management, Mullen said, which requires better planning and more inventory.

(Photo: Greg Decker)

Mullen’s financial highlights in the second quarter included: Consolidated revenue growth of $ 55 million, or 21.4%, led by logistics and warehousing (up 45.7%) and LTL (up 24.3%); but net income declined $ 1.3 million to $ 21.7 million, mainly due to net exchange rate fluctuations and lower returns on stock investments.

However, Mullen described the quarter as one of the busiest in history, with five acquisitions announced during the quarter. And these acquisitions are paying off faster than expected; The company increased its revenue forecast from the acquisitions from $ 355 million to approximately $ 400 million per year.

“It all seemed to fit together this quarter,” said Mullen. “These are good companies that are geared towards our strategic thinking.”

The company spent around $ 185 million on the deals. Moving forward, Mullen said, attention will be directed to incorporating them and focusing on smaller tuck-ins. The deals bring Mullen closer to its goal of becoming a $ 2 billion company ahead of schedule.

Mullen was optimistic about the economy as Canada joined the “exclusive club” to vaccinate the majority of its population against Covid-19. “The consumer got the upper hand on everything,” he said, noting how demand shifted from pallets delivered to storefronts to small boxes delivered to homes, benefiting the last mile segment . “Nothing seems to stop the insatiable appetite of consumers.”

Freight demand is the best in several quarters, Mullen said, with June being the best month recently.

Meanwhile, the heavily affected segment of specialized and industrial services for the oil and gas industry is now benefiting from higher raw material prices, with natural gas drilling activities increasing sharply year-on-year.

“If you can’t hire more people, take the freight that makes more money and put your good people in.”

Murray Mullen

Looking ahead, Mullen said the company will focus on “getting in and out” in the second half of the year. But he’s optimistic about the future of the industry.

“I don’t know if I could be more confident,” he said of his view of the economy. “In general, I am quite positive for freight demand and the economy will be robust.”

Supply chain bottlenecks and the inability to find more drivers will give freight forwarders a pricing power that in Canada lags behind the US, he added.

“If this market continues the way it does, rate hikes are almost a given,” he said. “If you can’t hire more people, take the freight that makes more money and put your good people in.”

Meanwhile, the company is expanding into the US market with its first acquisition – a 3PL company called QuadExpress that is planning to rebrand. It came with its own technology platform, which Mullen says the new owner will invest heavily in.

“We’re going to put this technology platform on steroids and invest like crazy,” he said. “3PL is a business we like, but 3PL with technology – otherwise it’s just freight brokerage and we are not interested in freight brokerage.”