Canada's State of Trade and Investment Update 2009
Canada's State of Trade: Trade and Investment Update 2009 is prepared by the Federal Government's Department of Foreign Affairs and International Trade. Canada's annual flagship report provides an overview of Canada's international trade and investment at home an abroad in 2008. Backgrounder information and an Executive Summary can be found at: http://www.international.gc.ca/economist-economiste/performance/state-point/2009.aspx
Friday, June 5, 2009
MEXPRESS TO COMMENCE SERVICE FROM PORT SAN ANTONIO
SAN ANTONIO, TEXAS – Mexpress Transportation, Inc. a road feeder air cargo company, will commence service from Port San Antonio (SKF) to airports in Monterrey (MTY), Guadalajara (GDL), and Mexico City (MEX) in June, 2009. At this time service is scheduled to run three times a week catering to air cargo shippers and receivers. The service will also cater to small and medium size companies shipping less than a trailer load.
Operational Technologies (OpTech), who is the current foreign trade zone operator at the Port, will host the service for Mexpress who has appointed LOGITEX USA, as its sales agent. An added value to this operation will be the availability of Mexico customs clearance at the designated Mexico airports as well as Port San Antonio.
Those involved with this operation foresee this service eventually connecting to other markets in Mexico and Central America while acting as a feeder to and from Asia through international air cargo hubs. “We are opening new trade horizons in dealing with Port San Antonio.” Remarked Carlos Duron, President of Mexpress Transportation, Inc.
“We look forward to working for Mexpress” said Javier Smith, President LOGITEX, USA. “The Market seems to be reacting favorably to this service.”
Jorge Canavati, Vice President of Business Development for Port San Antonio, says that this service will be a valued asset to those businesses who put it to use. “This service will be very important to companies in need of air cargo transport between our region and the strategic cargo centers in Mexico. At the same time it is an efficient tool for small and medium sized companies that need to ship a pallet or two at a time”.
Operational Technologies (OpTech), who is the current foreign trade zone operator at the Port, will host the service for Mexpress who has appointed LOGITEX USA, as its sales agent. An added value to this operation will be the availability of Mexico customs clearance at the designated Mexico airports as well as Port San Antonio.
Those involved with this operation foresee this service eventually connecting to other markets in Mexico and Central America while acting as a feeder to and from Asia through international air cargo hubs. “We are opening new trade horizons in dealing with Port San Antonio.” Remarked Carlos Duron, President of Mexpress Transportation, Inc.
“We look forward to working for Mexpress” said Javier Smith, President LOGITEX, USA. “The Market seems to be reacting favorably to this service.”
Jorge Canavati, Vice President of Business Development for Port San Antonio, says that this service will be a valued asset to those businesses who put it to use. “This service will be very important to companies in need of air cargo transport between our region and the strategic cargo centers in Mexico. At the same time it is an efficient tool for small and medium sized companies that need to ship a pallet or two at a time”.
Wednesday, June 3, 2009
HORIZON LINES ANNOUNCES RESULTS OF 2009 ANNUAL STOCKHOLDER MEETING
CHARLOTTE, N.C. (June 3, 2009) - Horizon Lines, Inc. (NYSE: HRZ)announced that shareholders at the company's annual meeting yesterday re-elected three Class I directors, approved the company's 2009 Incentive Compensation and Employee Stock Purchase plans and ratified the appointment of Horizon Lines' public accounting firm.
Approximately 90% of company's 30.8 million shares outstanding were represented in the voting, which was open to shareholders of record as of April 13, 2009.
Additionally, the Board of Directors re-elected Chief Executive Officer Charles G. Raymond, 65, as its chairman. "We are gratified that our shareholders overwhelmingly approved all of the proposals put before them," Mr. Raymond said. "We also are honored that our board continues to be represented by dedicated individuals with significant industry experience, organizational leadership and financial expertise."
During the annual meeting, shareholders re-elected Class I directors James G. Cameron, Alex J. Mandl, and Norman Y. Mineta.
Mr. Cameron, 63, has served as a director since July 2004 and was previously an executive with Statia Terminals Group N.V. Mr. Mandl, 65, has served as a director since June 2007 and has been the Chairman of Gemalto, a global leader in digital security, since December 2007.
Mr. Mineta, 77, a director of the company since 2006, served as Secretary of Transportation under President George W. Bush, and as Secretary of Commerce under President Bill Clinton. He currently is Vice Chairman of Hill & Knowlton, one of the world's premier communications consultancies.
About Horizon Lines
Horizon Lines, Inc. is the nation's leading domestic ocean shipping and integrated logistics company comprised of two primary operating subsidiaries. Horizon Lines, LLC, owns or leases a fleet of 21 U.S.-flag containerships and operates 5 port terminals linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico. Horizon Logistics, LLC, offers customized logistics solutions to shippers from a suite of transportation and distribution management services, information technology developed by Horizon Services Group and intermodal trucking and warehousing services provided by Sea-Logix. Horizon Lines, Inc. is based in Charlotte, NC, and trades on the New York Stock Exchange under the ticker symbol HRZ.
Approximately 90% of company's 30.8 million shares outstanding were represented in the voting, which was open to shareholders of record as of April 13, 2009.
Additionally, the Board of Directors re-elected Chief Executive Officer Charles G. Raymond, 65, as its chairman. "We are gratified that our shareholders overwhelmingly approved all of the proposals put before them," Mr. Raymond said. "We also are honored that our board continues to be represented by dedicated individuals with significant industry experience, organizational leadership and financial expertise."
During the annual meeting, shareholders re-elected Class I directors James G. Cameron, Alex J. Mandl, and Norman Y. Mineta.
Mr. Cameron, 63, has served as a director since July 2004 and was previously an executive with Statia Terminals Group N.V. Mr. Mandl, 65, has served as a director since June 2007 and has been the Chairman of Gemalto, a global leader in digital security, since December 2007.
Mr. Mineta, 77, a director of the company since 2006, served as Secretary of Transportation under President George W. Bush, and as Secretary of Commerce under President Bill Clinton. He currently is Vice Chairman of Hill & Knowlton, one of the world's premier communications consultancies.
About Horizon Lines
Horizon Lines, Inc. is the nation's leading domestic ocean shipping and integrated logistics company comprised of two primary operating subsidiaries. Horizon Lines, LLC, owns or leases a fleet of 21 U.S.-flag containerships and operates 5 port terminals linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico. Horizon Logistics, LLC, offers customized logistics solutions to shippers from a suite of transportation and distribution management services, information technology developed by Horizon Services Group and intermodal trucking and warehousing services provided by Sea-Logix. Horizon Lines, Inc. is based in Charlotte, NC, and trades on the New York Stock Exchange under the ticker symbol HRZ.
Canadian Pacific to address Bank of America and Merrill Lynch 2009 Global Transportation Conference
CALGARY, June 3 /CNW/ - Brian Grassby, Vice President and Controller, Canadian Pacific (TSX/NYSE: CP) will address the Bank of America and Merrill Lynch 2009 Global Transportation Conference on Thursday, June 11 at 10:30 AM Eastern Time.
Mr. Grassby's presentation will provide highlights of CP's current performance and business initiatives. The conference will be held at the Crowne Plaza Times Square, New York City.
There will be a live audio webcast of Mr. Grassby's presentation. A replay of the webcast, as well as the presentation materials, will be available in the Investor section of CP's website, http://www.cpr.ca.
About Canadian Pacific:
Canadian Pacific, through the ingenuity of its employees located across Canada and in the United States, remains committed to being the safest, most fluid railway in North America. Our people are the key to delivering innovative transportation solutions to our customers and to ensuring the safe operation of our trains through the more than 900 communities where we operate.
Mr. Grassby's presentation will provide highlights of CP's current performance and business initiatives. The conference will be held at the Crowne Plaza Times Square, New York City.
There will be a live audio webcast of Mr. Grassby's presentation. A replay of the webcast, as well as the presentation materials, will be available in the Investor section of CP's website, http://www.cpr.ca.
About Canadian Pacific:
Canadian Pacific, through the ingenuity of its employees located across Canada and in the United States, remains committed to being the safest, most fluid railway in North America. Our people are the key to delivering innovative transportation solutions to our customers and to ensuring the safe operation of our trains through the more than 900 communities where we operate.
Monday, June 1, 2009
Transportation and logistics M&A activity drastically slows in first quarter 200
Transportation and logistics M&A activity drastically slows in first quarter 2009, finds PwC
Average deal values decline from US$513 million to US$159 million
JUNE 1, 2009 — Deal activity dropped significantly during first quarter 2009 in the global transportation and logistics (T&L) industry, according to a report released today by PricewaterhouseCoopers LLP (PwC): Intersections: First-quarter 2009 mergers and acquisitions analysis.
Eighteen deals were announced at a disclosed value of at least US$50 million each, down from 43 such deals in fourth quarter 2008.
Activity continued to increase among non-US parties which made up 94% of deal volume for T&L targets in the first quarter, up from 71% in 2007 and 81% in 2008.
Average deal values declined significantly, from US$513 million in 2008 to US$159 million in first quarter 2009 (for deals with a value of at least US$50 million). In place of large deals worth at least US$1 billion were minority stake purchases, accounting for 39% of deals, up from 30% of the total deals announced in 2008.
The continued slowdown of M&A activity for the Global T&L sector during the first quarter of 2009 presented interesting changes in behaviour among deal participants, said Todd Thornton, Canadian T&L sector leader at PwC in Canada. Most notable is the shift toward minority stake purchases, which can be attributed to tight credit and strategic buyers’ aversion to risk. We expect these factors will lead to minority stake purchases continuing to make up a large percentage of deals announced during the rest of the year.
Canadian M&A activity during the first quarter of 2009 was no different then what we saw globallyâ€, Thornton said. While activity is down, we did see some action in the various sectors. CargoJet Airways’ acquired the remaining 49% interest in Prince Edward Air Ltd. In trucking, we saw purchases by a strategic investor and in rail, Canadian National (CN) Railway sold to GO Transit, the Toronto area commuter rail agency, CN’s Weston division for expanded GO service between Union Station and the regions northwest of the city.
Intersections reports that passenger air and logistics sectors globally saw the most deal activity in value during first quarter 2009, a change from past years when shipping took the lead. Passenger air accounted for 34% of M&A activity, compared with 17% in 2008 and 27% in 2007. Deal activity for logistics targets also increased over previous years, accounting for 32% of activity during first quarter 2009 compared with 13% in 2008 and 14% in 2007.
Strategic investors continued to account for the majority of deals for the T&L industry, as previously predicted by earlier editions of Intersections. Strategic investors accounted for more than 80% (15 deals) for first quarter 2009, up from approximately 60% of deals announced in 2007 and 2008. There was an overall absence of deals in the shipping sector by financial investors during the first quarter. In previous quarters, financial investors have shown more interest in shipping than other transportation modes.
The pace of deal activity, as measured by the number of deals announced for T&L targets, has declined significantly, with just 18 deals in first quarter 2009. Large deals (with a disclosed value of US$1 billion or more) were nonexistent for the T&L sector during the first quarter. This marks a huge drop from the 22 large deals announced in 2008 and 17 in 2007. A focus on capital preservation by potential buyers contributed to the absence of large deal activity. The difficult financing environment witnessed in 2009 has caused well-capitalized strategic buyers to engage in smaller deals, including minority stakes, divested assets, and distressed targets. It is likely that this trend will continue, with a general lack of large deals being made in the T&L sector throughout 2009 and possibly beyond.
T&L deals shifted tremendously during first quarter 2009 away from North America, with acquirer and target parties focused heavily in the United Kingdom-Eurozone and Asia-Oceania regions. Deals in these regions were up to nearly 80%, in comparison with 55% in 2007. A decline in activity in South America was due to a reduction in deals for Brazilian targets, which had been a primary contributor to regional deals in past quarters. BRIC (Brazil, Russia, India, and China) targets’ deal activity consisted of two deals in Brazil and one deal in China during the first quarter.
Local-market deals in all nations increased to 80% during first quarter 2009, compared with approximately 60% in 2007 and 2008, showing that the predicted trend of globalization leading to increased cross-border consolidation did not hold true. This is likely attributable to a preference by the buyers to build scale in their own markets versus expansion into new geographies during this difficult operating environment for T&L companies.
While the overall number of deals was drastically reduced during the first quarter, deal activity in the transportation and logistics industry as a whole can nonetheless be considered robust, especially when compared with this sector a€™s activity over the past 20 years, said Klaus-Dieter Ruske, global T&L sector leader, PricewaterhouseCoopers. While this is a positive sign, we believe that financing and overall economic sentiment will continue to discourage a rebound in T&L deal activity. Moving forward, we will likely see M&A activity driven by need because a significant increase in deal activity will likely not occur until we see substantial recovery in economies around the globe.
This edition of Intersections includes commentary on the privatization of infrastructure, which discusses the future of global and U.S. transportation infrastructure privatization deals with a heavy focus on the United States.
Additionally, this issue of Intersections contains a special report, "T&L companies find auto woes are contagious," which includes executive commentary on the effect of the current auto industry restructuring and its impact on the global transportation and logistics sector. For information and to access the full report, visit www.pwc.com/transport.
About PricewaterhouseCoopers LLP
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 155,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 5,200 partners and staff in offices across the country.
Average deal values decline from US$513 million to US$159 million
JUNE 1, 2009 — Deal activity dropped significantly during first quarter 2009 in the global transportation and logistics (T&L) industry, according to a report released today by PricewaterhouseCoopers LLP (PwC): Intersections: First-quarter 2009 mergers and acquisitions analysis.
Eighteen deals were announced at a disclosed value of at least US$50 million each, down from 43 such deals in fourth quarter 2008.
Activity continued to increase among non-US parties which made up 94% of deal volume for T&L targets in the first quarter, up from 71% in 2007 and 81% in 2008.
Average deal values declined significantly, from US$513 million in 2008 to US$159 million in first quarter 2009 (for deals with a value of at least US$50 million). In place of large deals worth at least US$1 billion were minority stake purchases, accounting for 39% of deals, up from 30% of the total deals announced in 2008.
The continued slowdown of M&A activity for the Global T&L sector during the first quarter of 2009 presented interesting changes in behaviour among deal participants, said Todd Thornton, Canadian T&L sector leader at PwC in Canada. Most notable is the shift toward minority stake purchases, which can be attributed to tight credit and strategic buyers’ aversion to risk. We expect these factors will lead to minority stake purchases continuing to make up a large percentage of deals announced during the rest of the year.
Canadian M&A activity during the first quarter of 2009 was no different then what we saw globallyâ€, Thornton said. While activity is down, we did see some action in the various sectors. CargoJet Airways’ acquired the remaining 49% interest in Prince Edward Air Ltd. In trucking, we saw purchases by a strategic investor and in rail, Canadian National (CN) Railway sold to GO Transit, the Toronto area commuter rail agency, CN’s Weston division for expanded GO service between Union Station and the regions northwest of the city.
Intersections reports that passenger air and logistics sectors globally saw the most deal activity in value during first quarter 2009, a change from past years when shipping took the lead. Passenger air accounted for 34% of M&A activity, compared with 17% in 2008 and 27% in 2007. Deal activity for logistics targets also increased over previous years, accounting for 32% of activity during first quarter 2009 compared with 13% in 2008 and 14% in 2007.
Strategic investors continued to account for the majority of deals for the T&L industry, as previously predicted by earlier editions of Intersections. Strategic investors accounted for more than 80% (15 deals) for first quarter 2009, up from approximately 60% of deals announced in 2007 and 2008. There was an overall absence of deals in the shipping sector by financial investors during the first quarter. In previous quarters, financial investors have shown more interest in shipping than other transportation modes.
The pace of deal activity, as measured by the number of deals announced for T&L targets, has declined significantly, with just 18 deals in first quarter 2009. Large deals (with a disclosed value of US$1 billion or more) were nonexistent for the T&L sector during the first quarter. This marks a huge drop from the 22 large deals announced in 2008 and 17 in 2007. A focus on capital preservation by potential buyers contributed to the absence of large deal activity. The difficult financing environment witnessed in 2009 has caused well-capitalized strategic buyers to engage in smaller deals, including minority stakes, divested assets, and distressed targets. It is likely that this trend will continue, with a general lack of large deals being made in the T&L sector throughout 2009 and possibly beyond.
T&L deals shifted tremendously during first quarter 2009 away from North America, with acquirer and target parties focused heavily in the United Kingdom-Eurozone and Asia-Oceania regions. Deals in these regions were up to nearly 80%, in comparison with 55% in 2007. A decline in activity in South America was due to a reduction in deals for Brazilian targets, which had been a primary contributor to regional deals in past quarters. BRIC (Brazil, Russia, India, and China) targets’ deal activity consisted of two deals in Brazil and one deal in China during the first quarter.
Local-market deals in all nations increased to 80% during first quarter 2009, compared with approximately 60% in 2007 and 2008, showing that the predicted trend of globalization leading to increased cross-border consolidation did not hold true. This is likely attributable to a preference by the buyers to build scale in their own markets versus expansion into new geographies during this difficult operating environment for T&L companies.
While the overall number of deals was drastically reduced during the first quarter, deal activity in the transportation and logistics industry as a whole can nonetheless be considered robust, especially when compared with this sector a€™s activity over the past 20 years, said Klaus-Dieter Ruske, global T&L sector leader, PricewaterhouseCoopers. While this is a positive sign, we believe that financing and overall economic sentiment will continue to discourage a rebound in T&L deal activity. Moving forward, we will likely see M&A activity driven by need because a significant increase in deal activity will likely not occur until we see substantial recovery in economies around the globe.
This edition of Intersections includes commentary on the privatization of infrastructure, which discusses the future of global and U.S. transportation infrastructure privatization deals with a heavy focus on the United States.
Additionally, this issue of Intersections contains a special report, "T&L companies find auto woes are contagious," which includes executive commentary on the effect of the current auto industry restructuring and its impact on the global transportation and logistics sector. For information and to access the full report, visit www.pwc.com/transport.
About PricewaterhouseCoopers LLP
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 155,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 5,200 partners and staff in offices across the country.
MCAA Announces 2009-2010 Board of Directors and Officers
MCAA Announces 2009-2010 Board of Directors and Officers:
Mike Gualtieri Re-Elected President
Lauth, Seiter and O’Hara elected as incoming Directors
WASHINGTON, D.C., May 2009 – The Messenger Courier Association of the Americas (MCAA) announced its Officers and Directors for 2009-2010 after elections that took place at its Annual Meeting held recently at the Red Rock Resort in Las Vegas, Nevada.
MCAA’s Officers for 2009-2010 are the following:
President: Mike Gualtieri, ProCourier Connecticut, Inc. -
First-Vice President: Chris MacKrell, Custom Courier Solutions, Inc.,
Second Vice-President: Rob Johnstone, Priority Express,
Treasurer: Rob Hackbarth, Hackbarth Delivery,
Secretary: Kirk Godby, Corporate Couriers,
Immediate Past President: Rob Slack, National Delivery.com, Inc.
MCAA’s Directors for 2009-2010 are the following:
(*denotes a newly elected Director)
John Benko, MANKO Delivery Systems, Inc.,
Rich Chase, OnTrac,
Charles Chiusano, Avant Business Services,
*John Lauth, Courier Connections, Inc.,
Chuck Moyer, Express Courier, Inc.,
*Monte O’Hara, Capital Express, Inc.,
*Matt Seiter, Relay Express, Inc.,
Ken Tunnell, Ace Expediters,
Larry Zogby, RDS Delivery Service.
President Gualtieri thanked retiring Board Members Larry Swartz and Barry Greer stating “I also want to thank outgoing MCAA Board members Barry Greer and Larry Swartz and appreciate their long and distinguished service to the industry – none of which is greater than their enthusiasm for this organization and the industry it serves.”
About the MCAA
MCAA is a trade association of approximately 500 mostly locally owned courier companies. Founded in 1987, MCAA has worked to promote and advance the common interests of those engaged in the same day delivery industry throughout the United States and abroad. The Association provides legislative and regulatory activities, educational programs, member benefit programs, increased agent work opportunities, and a quarterly magazine. MCAA holds an annual resort-based Convention and an Executive Roundtable Series conference. For more information, visit www.mcaa.com.
Mike Gualtieri Re-Elected President
Lauth, Seiter and O’Hara elected as incoming Directors
WASHINGTON, D.C., May 2009 – The Messenger Courier Association of the Americas (MCAA) announced its Officers and Directors for 2009-2010 after elections that took place at its Annual Meeting held recently at the Red Rock Resort in Las Vegas, Nevada.
MCAA’s Officers for 2009-2010 are the following:
President: Mike Gualtieri, ProCourier Connecticut, Inc. -
First-Vice President: Chris MacKrell, Custom Courier Solutions, Inc.,
Second Vice-President: Rob Johnstone, Priority Express,
Treasurer: Rob Hackbarth, Hackbarth Delivery,
Secretary: Kirk Godby, Corporate Couriers,
Immediate Past President: Rob Slack, National Delivery.com, Inc.
MCAA’s Directors for 2009-2010 are the following:
(*denotes a newly elected Director)
John Benko, MANKO Delivery Systems, Inc.,
Rich Chase, OnTrac,
Charles Chiusano, Avant Business Services,
*John Lauth, Courier Connections, Inc.,
Chuck Moyer, Express Courier, Inc.,
*Monte O’Hara, Capital Express, Inc.,
*Matt Seiter, Relay Express, Inc.,
Ken Tunnell, Ace Expediters,
Larry Zogby, RDS Delivery Service.
President Gualtieri thanked retiring Board Members Larry Swartz and Barry Greer stating “I also want to thank outgoing MCAA Board members Barry Greer and Larry Swartz and appreciate their long and distinguished service to the industry – none of which is greater than their enthusiasm for this organization and the industry it serves.”
About the MCAA
MCAA is a trade association of approximately 500 mostly locally owned courier companies. Founded in 1987, MCAA has worked to promote and advance the common interests of those engaged in the same day delivery industry throughout the United States and abroad. The Association provides legislative and regulatory activities, educational programs, member benefit programs, increased agent work opportunities, and a quarterly magazine. MCAA holds an annual resort-based Convention and an Executive Roundtable Series conference. For more information, visit www.mcaa.com.
Michigan Shore Railroad Wins Prestigious Industry Award
VASSAR, Mich. (June 1, 2009) – The Michigan Shore Railroad (MSR), a RailAmerica property, has won the Rail Business 2009 Win-Win Award. The award honors the best railroad-shipper partnerships in the industry. Winners were recognized at the North American Rail Shippers Association conference May 27 – 28.
“Shippers and carriers work together every day, often hammering out creative solutions that lead to better service, better rates and other mutually beneficial improvements,” said Abby Caplan, editor of Rail Business, a weekly publication for the railroad industry. “But for years, these ‘win-win’ innovations went virtually unnoticed, except in small circles. That’s why we instituted the annual Win-Win Awards in 1998.”
MSR was recognized for its role in developing a partnership that enabled its customer, the Sargent Sand Company, to transform an idle sand deposit into a now thriving business. Just one year ago, Sargent’s Ludington, Michigan, sand deposit was completely dormant. The company, which had processed and sold sand for glass polishing since the 1920s, had declined severely since the 1980s, when new German technology for making and polishing glass rendered its sand obsolete.
However, in the 1990s, through the use of a new technology, oil and natural gas companies began drilling new wells and recharging old wells to recover residue oil and natural gas. The new technology, called “fracing” (rhymes with “cracking”), involves forcing water and sand at very high pressure into wells to break rock and release gas or oil. The sand in Ludington met the specifications precisely for this application. The markets for the sand were located in the Southwest and Northeast.
As Sargent’s management began analyzing the opportunity, they faced two major challenges – the Ludington sand deposit was no longer rail-served, nor did the company possess the equipment to process the sand, including drying, screening out impurities and sizing the sand. Sargent’s management approached Mike Bobic, commercial manager for RailAmerica’s Michigan properties (including MSR), for help in spring 2008.
“This was a significant challenge,” said Bobic. “Sargent had the perfect product for fracing, but needed to find competitive, cost-efficient ways to process and get their product to market.”
One morning at 2 a.m., Bobic said “a light bulb went off.” Bobic developed a solution that Sargent’s management immediately described as “genius.” At the time, MSR served a long-time direct competitor of Sargent – Nugent Sand, a sand supplier in western Michigan. Nugent sold industrial sand, used mainly in automotive casting and manufacturing, which did not meet the specifications needed for frac sand. However, Nugent possessed the equipment Sargent needed to process its sand, and Nugent had capacity for additional processing.
Bobic facilitated introductions and assisted in negotiating an agreement between the two companies for Sargent to truck its sand from Ludington to Muskegon, Michigan, where it would be processed, loaded onto railcars, and shipped to end users.
Bobic then turned his attention to Sargent’s equipment needs. He reached out to MSR’s class-I partner CSXT, which had a surplus of the necessary equipment (covered hoppers) available. Bobic once again facilitated introductions and helped negotiate an agreement for CSXT to supply approximately 350 railcars for the operation.
Today, just one year after Sargent’s Ludington sand deposit sat completely unused, it is now a bustling business. Thanks to Bobic’s and MSR’s innovative solution, Sargent Sand is a competitive supplier of frac sand. Its first shipments began July 16, 2008, and have increased ever since. Annual projections exceed 3,000 carloads. Nugent and Sargent – former competitors – are working together in a successful partnership, and MSR and CSXT are collaborating seamlessly to fulfill the venture’s transportation needs.
“This is a perfect example of a shipper and rail carrier developing a creative solution that provides opportunities and benefits for everyone involved,” said Jim Thomas, RailAmerica’s assistant vice president of sales – Midwest Region. “Mike is a true customer advocate for Sargent. He focused on their challenge and didn’t stop until he found an option that worked.”
About RailAmerica, Inc.
RailAmerica is a leading owner and operator of North American regional and short-line railroads, including the Michigan Shore Railroad, located on the shore of Lake Michigan with two CSXT interchanges. Headquartered in Jacksonville, Fla., RailAmerica operates railroads in 26 states and three Canadian provinces, with more than 8,000 miles of track. RailAmerica is owned by funds managed by affiliates of Fortress Investment Group, a leading global alternative asset manager with approximately $34.3 billion in assets under management. For more information, visit www.railamerica.com and www.fortress.com.
“Shippers and carriers work together every day, often hammering out creative solutions that lead to better service, better rates and other mutually beneficial improvements,” said Abby Caplan, editor of Rail Business, a weekly publication for the railroad industry. “But for years, these ‘win-win’ innovations went virtually unnoticed, except in small circles. That’s why we instituted the annual Win-Win Awards in 1998.”
MSR was recognized for its role in developing a partnership that enabled its customer, the Sargent Sand Company, to transform an idle sand deposit into a now thriving business. Just one year ago, Sargent’s Ludington, Michigan, sand deposit was completely dormant. The company, which had processed and sold sand for glass polishing since the 1920s, had declined severely since the 1980s, when new German technology for making and polishing glass rendered its sand obsolete.
However, in the 1990s, through the use of a new technology, oil and natural gas companies began drilling new wells and recharging old wells to recover residue oil and natural gas. The new technology, called “fracing” (rhymes with “cracking”), involves forcing water and sand at very high pressure into wells to break rock and release gas or oil. The sand in Ludington met the specifications precisely for this application. The markets for the sand were located in the Southwest and Northeast.
As Sargent’s management began analyzing the opportunity, they faced two major challenges – the Ludington sand deposit was no longer rail-served, nor did the company possess the equipment to process the sand, including drying, screening out impurities and sizing the sand. Sargent’s management approached Mike Bobic, commercial manager for RailAmerica’s Michigan properties (including MSR), for help in spring 2008.
“This was a significant challenge,” said Bobic. “Sargent had the perfect product for fracing, but needed to find competitive, cost-efficient ways to process and get their product to market.”
One morning at 2 a.m., Bobic said “a light bulb went off.” Bobic developed a solution that Sargent’s management immediately described as “genius.” At the time, MSR served a long-time direct competitor of Sargent – Nugent Sand, a sand supplier in western Michigan. Nugent sold industrial sand, used mainly in automotive casting and manufacturing, which did not meet the specifications needed for frac sand. However, Nugent possessed the equipment Sargent needed to process its sand, and Nugent had capacity for additional processing.
Bobic facilitated introductions and assisted in negotiating an agreement between the two companies for Sargent to truck its sand from Ludington to Muskegon, Michigan, where it would be processed, loaded onto railcars, and shipped to end users.
Bobic then turned his attention to Sargent’s equipment needs. He reached out to MSR’s class-I partner CSXT, which had a surplus of the necessary equipment (covered hoppers) available. Bobic once again facilitated introductions and helped negotiate an agreement for CSXT to supply approximately 350 railcars for the operation.
Today, just one year after Sargent’s Ludington sand deposit sat completely unused, it is now a bustling business. Thanks to Bobic’s and MSR’s innovative solution, Sargent Sand is a competitive supplier of frac sand. Its first shipments began July 16, 2008, and have increased ever since. Annual projections exceed 3,000 carloads. Nugent and Sargent – former competitors – are working together in a successful partnership, and MSR and CSXT are collaborating seamlessly to fulfill the venture’s transportation needs.
“This is a perfect example of a shipper and rail carrier developing a creative solution that provides opportunities and benefits for everyone involved,” said Jim Thomas, RailAmerica’s assistant vice president of sales – Midwest Region. “Mike is a true customer advocate for Sargent. He focused on their challenge and didn’t stop until he found an option that worked.”
About RailAmerica, Inc.
RailAmerica is a leading owner and operator of North American regional and short-line railroads, including the Michigan Shore Railroad, located on the shore of Lake Michigan with two CSXT interchanges. Headquartered in Jacksonville, Fla., RailAmerica operates railroads in 26 states and three Canadian provinces, with more than 8,000 miles of track. RailAmerica is owned by funds managed by affiliates of Fortress Investment Group, a leading global alternative asset manager with approximately $34.3 billion in assets under management. For more information, visit www.railamerica.com and www.fortress.com.
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