Darshan’s Quest

No regrets. Darshan Kailly means it when he says the words. He leans forward in his leather chair, takes a sip from his coffee cup, and leans back again. He reflects for a couple seconds, then continues:

“Looking back, I’d be kidding you if at the moment there wasn’t disappointment. But in the final analysis,” says the president and CEO of Canadian Freightways (CF), “it all worked out how it [was meant] to.”

He’s talking, of course, about his near buyout of Calgary-based CF in 2003. How near? Well, the company’s former American parent, LTL giant Consolidated Freightways, had okayed a $90-million offer made by Kailly and a group of senior managers for the independently operated Canadian wing after Consolidated filed for bankruptcy and began liquidating assets.
A month later, Consolidated halted the sale due to administrative issues and began entertaining other bids. In swooped TransForce — Canada’s fastest-growing for-hire trucking company — which saw CF as its first major footprint in western Canada.

Kailly admits today to initial skepticism. After all, what did an income trust from Montreal know about the regional intricacies of intra-west trucking in the Stampede City?

And besides, Canadian Freightways liked to fly solo. It specifically didn’t drown along with the U.S. head office because it had always operated with a great deal of autonomy.

“When [Consolidated] went bankrupt, we were completely self-sustaining,” says Kailly. “We kept things separate, such as IT, so we could change with the flow rather than being part of a monolith that took six months to make changes that were meaningful to customers. We had to fight for that, but we got it.”

So, then, what would the new bosses from back east think of CF’s independent company culture?

It took about five minutes after a sit-down with TransForce President and CEO Alain Bédard for Kailly to find out. “I realized right away that we were attractive to TransForce because they were doing many of the same things that we were doing in the West,” says Kailly.

“For example, we started to recognize as a marketing group that customers needed more than just LTL and we started to diversify into truckload, specialized, and logistics.”

Diversification was the dominant theme of the day, and any company looking to stand out to large customers was expanding capacity in as many sectors as possible. TransForce, which was gobbling up small and medium carriers from across Ontario and Quebec, instantly realized the possible synergies with CF.

“We fit in really well with TransForce as they too were balancing their operations across many sectors,” Kailly recalls.

Furthermore, it was (and still is) TransForce’s corporate policy to stay out of most of its subsidiaries’ operational affairs. In fact, the trucking powerhouse specifically targets profitable companies that can function separately under the corporate umbrella, and routinely keeps existing captains in place.

“TransForce doesn’t want robots,” Kailly stresses. “Every one of its [fleet subsidiary] presidents is an entrepreneurial leader. Many are former owners entrusted to make the key decisions for their respective companies.

“In the end, joining TransForce paid off not just for all of us involved in trying to acquire the company, but for all our employees as well.”

DEEP ROOTS

It would be tough to come up with another medium-sized company in this industry that has weathered as many storms as Canadian Freightways. Its history stretches back to the Depression, when a Danish immigrant named Chris Mikkelsen began hauling daily papers from Calgary to Lethbridge. He then bought a $400 Pontiac, built a van for it, and started Chris Transport, servicing settlements between Lethbridge and Coutts. His first day’s revenue? A buck and a quarter.

Wealth in diversity: Early on CF realized
customers needed more than just LTL.

Chris Transport eventually became Canadian Freightways after Mikkelsen got involved in interlining freight from Consolidated Freight Lines in the U.S. to points in Alberta.

But in the 1950’s the Canadian arm was falling behind on paying the U.S. carrier’s freight charges, and was swallowed up as a wholly owned subsidiary of Consolidated. The next eight years were rough, as the company went through a different GM or president every 18 months.

In 1965, Consolidated sent one of their division managers, Len Huyser, north and gave him three options: Sell the Canadian operation; shut it down if he couldn’t pawn it off; or fix it. He chose door number three, and long story short, 20 years later Canadian Freightways had grown into a leading Western LTL carrier with several terminals and an impressive balance sheet.

Meanwhile, watching the company’s turnaround from a terminal in Vancouver during those years was a young part-time billing clerk who was putting himself through school.

He must have liked what he was learning at CF, because Darshan Kailly stuck around, working his way up to rate clerk and to traveling auditor. He was promoted to controller before being named treasurer, and then vice-president. He took over as president when Huyser retired in the early ’80s.
Talk about baptism by fire. Shortly after taking the reigns, the Trudeaupian National Energy Program devastated Alberta’s economy and with it, regional trucking rates. But as it had done many times before, CF persevered. Under Kailly’s direction, the company capitalized on deregulation; and later under NAFTA, it evolved into a robust cross-border hauler with solid north-south lanes.

Undoubtedly, Kailly is today regarded as one of the higher profile figures in Canadian trucking. He has a commanding presence at provincial and national trucking association meetings, adding his two cents on just about any issue — from controversial hours-of-service rules, speed limiters (which he supports), to environmental issues, to his steadfast support for regional truck driver rodeos.

Some of those who don’t know him might consider him intimidating. Maybe even some of those that do.

“So what’d ya want? We’re busy here,” are his first words to this scribe after an introductory handshake. True to (perceived) form? Not really. Turns out he’s a joker, too.

If you work for CF, then Darshan likely knows you. Preferring to be seen and heard, he isn’t one of those bosses who directs from behind the curtains of the corner office. He’s a fixture at driver meetings and personally hands out employee awards and accolades.

As former CF safety advisor Dennis Pettit once told this magazine, “It’s one thing to have safety policies written somewhere, and quite another to have the president of the company stand up in meetings and tell the drivers how important they are. It’s important for the president to reinforce his support. And ours does.”

BREAKING NEW GROUND

These days Calgary’s skyline is dotted with as many building cranes as actual standing structures. Inspired by a well-documented energy industry boom, Alberta is in true economic renaissance.

It wasn’t long after acquiring CF that TransForce joined the black gold rush, using its new western holding to scout oil and gas service fleets in the burgeoning Ft. McMurray area.

Over the last couple of years, the Quebec trucking giant has bought about half a dozen such haulers — all reporting to Kailly in Calgary. However, with demand and costs rapidly outpacing supply and infrastructure, the trick in Cowtown these days, it seems, is not getting left behind.

The company ensures it’ll be staying ahead of the curve this summer with the opening of a brand new, 30,000-sq-ft corporate office and 48,000-sq-ft cross-dock facility in southwest Calgary. With delivery appointments being the scourge of the trucking industry — especially in LTL — location has never been as important in these parts as it is today.

The new 62-door site is located near Calgary’s upcoming ring road and a major CN intermodal terminal. Real estate is going fast in the district as many businesses are relocating. “The growth there for commercial business and warehousing is just incredible,” says Kailly. “We’re in a good position for LTL growth in the next five years.”

The facility, which would double CF’s current freight-handling capacity, features the latest security and loading technology, such as hydraulic dock lifts.

“We needed the new facility just to maintain our ability to keep up with all the business,” Kailly says. “The Alberta economy is moving very well and we thought this is what we needed to maintain our leadership position.”
There’s few who would argue, competitors included, that CF — and Kailly in particular — exemplify leadership.

Recently, at the Alberta Motor Transport Association annual meeting in Banff, Kailly joined fellow pioneers Guy Blasetti of BigHorn Transport and Don Bietz of Economy Carriers in accepting the prestigious American Truck Historical Society Award, which was formed to preserve the history of trucks, the trucking industry, and its pioneers.

Kailly believes his standing in the industry is tied to the visibility he exhibits among customers and employees. “Being out there, talking to people, keeps them informed. It makes you trusted.

“You don’t necessarily need to be loved in this business. But you need to be fair. And when you’re fair, you’re respected.”