ONLINE EXCLUSIVE: Kleysen gives Mullen new intermodal track, pres says

WINNIPEG — When he took over family fleet Kleysen Transport from his father years ago, Tom Kleysen made a deliberate decision to avoid the spotlight — limited media; no ‘Best Managed’ company lists; even respectfully declining to be in Today’s Trucking’s annual Top 100 For-Hire Carriers issue.

Now, after being acquired yesterday by the Mullen Group, one of Canada’s largest and most public trucking companies, Tom Kleysen admits he might have to liberalize, at least slightly, his “compete quietly” strategy.

Not that it hasn’t worked to this point. In the last six years, the Winnipeg-based carrier has more than doubled its revenue — from $45 million to over $100 million. The 70 year-old company has come a long way since it first hit the road in 1935, but things really took off in 2000 when Kleysen chose to withdraw from the volatile over-the-road van and temp-control sector in order to focus on more specialized businesses.

Kleysen’s transload biz caught Mullen’s eye

The company is now a diversified national carrier and logistics firm, which specializes in bulk, flatdeck, multi-commodity transload, and intermodal services. It also offers warehousing and inventory management and distribution for products such as lumber, steel, aluminum coils, construction and agricultural equipment, oilfield supplies, and other bulk products.

“We’re at the top of our game right now,” company president Tom Kleysen told TodaysTrucking.com in an exclusive interview.

Kleysen says its growing cross-dock transload and intermodal business — which includes a number of strategic terminals and rail applications in Calgary and Edmonton — was what really caught Mullen’s eye.

“We have a flatdeck and a bulk division, and Mullen has that, so they had been almost competing businesses,” says Kleysen. “I believe we became very attractive because one of the things we bring to the Mullen Group which didn’t exist in their operation is the whole intermodal and rail piece. I think it’s going to create a tremendous amount of synergy across their businesses and [enhance] what they can offer collectively in the marketplace.”

As reported yesterday by TodaysTrucking.com, Mullen now becomes Canada’s second-largest for-hire carrier with the Kleysen acquisition, behind TransForce and ahead of Vitran. Kleysen brings to Mullen 250 tractors, 526 trailers and 518 containers, for a total of 7,920 vehicles across its operations. Other assets from Kleysen include lifting cranes and intermodal chassis.

So what’s in it for Kleysen? Well, says the company’s president, the opportunity to be part of an income trust at this point in the firm’s history became very appealing.

Income trusts, which are popular among some of Canada’s larger trucking and logistics firms, basically distribute free cash flow (mostly profit) from the business to investors in a tax-friendly manner. The income-trust structure suits mature and established businesses with steady cash flow and a limited need for capital re-investment for growth. But mainly the structure reduces or eliminates corporate tax, allowing for greater distribution.

“The income trust has facilitated an exit strategy for family businesses that hasn’t existed in the last 20 or 30 years that I can think of,” says Kleysen. “Ten years ago, all you could expect from a trucking company was their assets and a little bit of goodwill.”

Kleysen is the latest in a series of fleet acquisitions by Mullen over the last 15 months. In February, Mullen and Producers Oilfield Services (an oilfield logistics business Mullen created in 2001 and later spun off) announced a merger agreement worth close to $1 billion.

Beyond half-a-dozen other acquisitions of smaller, medium-sized fleets dating back to early 2005, Mullen also bought all outstanding shares of flatbed carrier, and Kleysen’s Winnipeg neighbor, Payne Transportation, in the summer of 2005.