Global Report

How Cain's risky decision helped it skip the credit crisis

Shipping company's calculated U.S. push paid off big

Truck driving along empty road

(Jodi Jacobsen/Getty)

Cain Express, based in Burlington, Ont., has been in business for 38 years. This logistics firm is the kind of company that forms the backbone of Canada’s SME sector: a family-owned and -managed business that is well regarded by longtime clients, and smart and cautious in its growth plans.

For years, Cain Express provided shipping and warehouse services for clients in consumer goods, electronics and foodservice. During Cain Express’s first two decades, the company worked mainly in southern Ontario, then in Quebec. The firm gradually expanded to include runs to customers located in U.S. border states such as New York, Ohio and Michigan. Cain Express’s export revenue began small, but grew steadily.

In 2006, Cain Express received an offer that rocked its “steady as she goes” world. The company was asked to provide just in time (JIT) shipping for AutoModular, a manufacturing firm that worked for Ford Motor Co. in Oakville, Ont. AutoModular builds engine components that need to be shipped in a specific sequence, and in accordance with a rigorous timetable, to Ford’s vast local assembly plant.

As anyone familiar with the auto industry knows, car makers don’t tolerate mistakes. Indeed, for the trucking firms shipping between parts makers and assembly plants, this kind of operation requires military-style precision, which drastically alters the way such firms run their loading and dispatch operations. JIT is a different business, with no room for error.

Cain Express CEO Patrick Cain—who co-owns the company that his father founded with his wife and sisters—says his firm decided to take the risk and master JIT shipping. The strategic decision was made to dedicate trucks and personnel to the AutoModular contract. Cain Express also developed special processes to guarantee that deliveries would be made according to Ford’s exacting standards.

The decision proved to be a turning point for Cain Express, which, in the years since, has seen a sharp increase in revenue growth, especially exports. The $10 million-a-year/70-employee firm ranks No. 462 on the PROFIT 500. Since 2007, its export sales have risen to 20% of total revenue from 7%. The company now ships deep into the U.S. to destinations in Texas, the Carolinas, Florida and Kentucky.

What’s more, Cain Express’s customer roster has grown to include several other auto-parts manufacturers that operate in the highly disciplined, supply-chain networks serving assembly plants in Oakville and Dearborn, Mich.

While Cain Express was new to the JIT business, the company learned quickly; both AutoModular and Ford were very satisfied with Cain Express’s performance. So much so, Ford’s Oakville logistics managers suggested to their counterparts at Ford U.S. that Cain Express could become a Tier 2 carrier for some of the auto-parts manufacturers supplying the Dearborn assembly plant.

As CEO Cain explains, the new contract required shipping materials to even larger auto-parts companies that assemble components, which, in turn, are sent to assembly plants. The JIT principle applies down the line. Like dominos, late shipments of those secondary materials—for example, the foam that goes into a car seat—could disrupt shipments of parts headed to the car makers. Some of those shipments, moreover, had to move across the Canada-U.S. border.

Thanks to Cain Express’s stellar performance with AutoModular, Ford U.S. logistics managers offered to mentor the trucking company. Cain Express once again proved it could meet the relentless timetables of the parts manufacturers. By last year, Cain says, the company had graduated to “direct carrier” status, meaning it can bid on jobs to ship parts and components directly to the assembly plants.

Cain Express also has experienced an increase in demand for its shipping services into the U.S. So, while the high Canadian dollar and the aftermath of the 2008 global credit crisis hit export-oriented Canadian manufacturers hard, Cain Express had plenty of business. Cain points out that the high dollar also has meant an increase in U.S.-to-Canada shipping, but the firm has had to turn away some requests from U.S. companies. The reason: Cain Express always tries to match a northbound shipment with a southbound one so the trucks aren’t driving empty.

Still, Cain says, his managers are aware that there’s unmet demand for high-performance shipping services south of the border. At the moment, Cain Express is forbidden by law to ship between U.S. destinations because the company doesn’t have a U.S. subsidiary or a U.S. base of operations with American employees.

However, that kind of investment, says Cain, may be the next phase in his company’s evolution. The possibility of a U.S. division now is part of Cain Express’s five-year plan. As is the case with freight for the firm’s auto-parts clients, Cain wants to make sure that his firm doesn’t arrive at its destination too soon. “We have to get to the point where we have a more significant amount of cross border business,” he notes. “It’s really about critical mass.”