New kid on the block Nov 06 2017

Rodair International is embracing innovation and looking for creative ways to evolve in a fast-moving industry, as Ian Putzger discovers

Young recruits to forwarding companies usually do not expect to be given unfettered leeway to look at potential new business developments, but this scenario is playing out at Rodair International, a mid-sized Canadian logistics firm based in Toronto.

“I was talking with this bright kid in my company, a recent graduate, and I suddenly found myself wondering if I had the next Bill Gates in my office, or maybe the next Mark Zuckerberg, so I decided to let him explore a bunch of stuff like 3D printing or blockchain and then look how this plays out in the logistics world, and see where we can go with that,” says Jeff Cullen, Chief Executive Officer at Rodair.

“I don’t know where this is going to end up, but it’s not an infinite run. By January I want to get some focus on where to drill in on this and then see if we can build a viable business.”

A CEO with such an approach obviously does not see his business model as set in stone. “I see us becoming more of a tech company that does logistics than a logistics company that has the technology,” he reflects. Cullen recalls how at a week-long CEO workshop at Harvard he attended, one of the instructors stated: “If you are not a technology company today, you aren’t going to be a company tomorrow.”

“I don’t subscribe to that entirely, but it got me thinking,” he says.

His company has a track record of moving into uncharted territory. Around the turn of the millennium it set up a transatlantic joint venture with UK-based forwarder Bellville International.

With four shareholding partners at the helm, two each from either side of the Atlantic, the venture grew to 27 offices in 17 countries and kept going until 2013, when the British partners decided to sell their portion to OIA Global Logistics. By 2011 it had become evident to the partners that that their perceptions of future growth paths were diverging, Cullen remembers.

His outfit decided to concentrate chiefly on inbound logistics into Canada, with a heavy focus on the retail and fashion sectors. At the same time, it broadened its scope from forwarding into logistics, with a greater emphasis on elements like warehousing and specialised skills.

Another area of attention for Rodair has been the automotive sector. In the past this was predominantly luxury cars, but in the wake of the separation from Bellville this has become a minor activity. Today, Rodair deals more with parts and the aftermarket, including a substantial contract with a large US car manufacturer. And while the company’s overall focus is more on North America these days, it remains active on a global scale. It does vendor-managed inventory (VMI) for Canada-based automotive companies in Sweden and Germany, as well as some VMI activity from China to Germany and Sweden.

Project cargo used to be another strong suit, with 20 staff in Houston, but the split from Bellville reduced the company’s activity in that arena, and the downturn in the Canadian oil and gas sector did not help. Lately this has came back to life, with more enquiries coming up, Cullen reports, adding that the mining business is also showing signs of emerging from its slump.

On the retail side, Rodair’s strongest vertical, the company has diversified from fashion into non-apparel sectors, chiefly at the luxury end of the market. The retail sector has not had its best year in Canada in 2017, which Cullen attributes chiefly to an excessive build-up of stores over the past couple of years, but his clientele is signalling great expectations for 2018, he says.

This looks set to squeeze Rodair’s warehousing capacity, already stretched after growth in traffic this year.

“We are considering expanding our facilities. We’re completely full. We’re firing on all cylinders and growing,” Cullen remarks.

Contrary to widespread perception, the retail business has brought a lot of project work for Rodair associated with the setting up of stores. At the higher end of the sector, physical outlets and direct customer service is still very important, Cullen notes.

By the same token, the oft-described swing from physical stores to online channels has not played out so much in this field. “We are not seeing the major pivot. Online is perhaps seven, eight or ten percent of their business. The luxury segment still depends a lot on bricks and mortar,” he comments.

 

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