A Year of Transportation Industry Acquisitions
Key players in Alaska under new ownership
Lynden’s acquisition of Northland Services enables the company to expand services to Western Alaska. Here, the company is delivering cargo to Skagway in Southeast.
© Dimitra Lavrakas
Alaska’s transportation industry is undergoing changes in ownership of some of its key players. It all started about a year ago when American Fast Freight (AFF) was acquired by The Resolute Fund II, L.P., an affiliate of The Jordan Company, a middle-market private equity firm managing more than $5 billion of committed capital across several industries. The company is headquartered in New York with offices in Chicago and Shanghai.
Though AFF is headquartered in Washington state, its business is extensive in Alaska and the company is operating out of a new 30,000 sq. ft., forty-nine door, open-beamed, warehouse with a high pile storage chill/freeze area with the receiving doors in the coolers, the only one of its kind in Alaska. The new facility, designed by Gary Peterson of GPARCH Architects and built by Watterson Construction, became AFF’s Alaska operations base in November 2012.
“The AFF team has built a premium asset-light freight forwarding business differentiated by its scale, expertise, and long-standing customer relationships. By consistently providing its customers with the value-added services they demand, AFF has earned its reputation as a leader in its marketplace,” said Brian Higgins, principal, The Jordan Company, at the time of the acquisition in January 2013. “We look forward to partnering with the AFF leadership team in continuing to build its business, both organically and through acquisition.”
All in the Family
In May last year Carlile Transportation Systems, one of the largest trucking and logistics companies in Alaska, was bought by Seattle-based Saltchuk Resources.
“We have had consistent intentions in Alaska for over thirty years: find very high quality companies that share our culture and values; get to know their owners and build a trusting relationship that, when the time is right, could lead to a successful transaction; [and] reinvest heavily into the companies we own with a multi-generational time horizon,” says Mark Tabbutt, chairman of Saltchuk Resources.
Both companies are family owned and are no strangers to each other, Tabbutt says.
“Our growth in Alaska has primarily been through acquiring family businesses,” he says. “Delta Western, Inlet Petroleum, Northern Air Cargo, and Carlile were all family owned when we purchased them. We find that the cultures of family owned businesses are closely aligned with our own. Our goal is to keep Harry and John [McDonald] engaged as long as they want to. There is a huge benefit to our broader organization to have both of them continuing to provide us input and let us know if we are moving in any direction that is not forward and positive.”
Carlile’s 700 employees will join Saltchuk’s 5,500 employees spread across the country. Tabbutt believes the acquisition will boost the company’s profits within the year.
“We expect our overall business will grow by 15 percent in 2013—both in terms of revenue and total assets,” Tabbutt says. “Due to the Carlile acquisition, we expect our business in Alaska to grow 25 percent in 2013.”
And they’re looking at Alaskans’ favorite playground—Hawaii.
“We believe the state of Hawaii is a great consumer for Alaska LNG,” Tabbutt says. “Hawaii faces the challenges of many island economies in their reliance of burning petroleum to generate electricity, causing high utility costs and hurting their economy. We have been out in the market promoting our abilities to build, own, and operate LNG tankers for our domestic market.”
Carlile will become a part of TOTE Logistics, boosting Saltchuk’s presence in cargo consolidation, warehousing, trucking, and other logistics in North America, the company says. Carlile’s terminals serve Alaska from Anchorage, Fairbanks, Kenai, Kodiak, Prudhoe Bay, and Seward, as well as out of state in Seattle; Houston; Blaine, Minnesota; and Edmonton, Alberta, Canada.
And the Alaska Arctic will also see Carlile on it’s horizon. “We are building three Arctic class SOLAS ocean tugboats that will support oil and gas exploration in the Arctic,” Tabbutt says.
Crowley’s Southeast Foray
Crowley Maritime Corporation acquired family owned oil distribution companies Ketchikan’s Anderes Oil in July and Juneau’s Taku Oil in September.
“Anderes and Taku are really Crowley’s foray into the Southeast Alaska market, where we have not operated before,” says Rocky Smith, senior vice president and general manager, petroleum distribution and general manager.
The company is always looking for ways to stretch out and improve, and that requires finding and buying companies that would enhance its business. “Be aware that Crowley is buying up things about every month of the year in the world,” says Matt Jackson, vice president, LNG business development.
Crowley’s petroleum services group is entering the liquefied natural gas (LNG) market by acquiring Carib Energy LLC. Although Crowley is not looking into converting individual heating oil customers in Ketchikan or Juneau to LNG.
“It’s more likely those communities will someday be provided with gas distribution systems like Anchorage has,” Smith says.
“Carib is a combined distribution company with a focus on transporting LNG from distribution to its end customers, mostly industrial,” Jackson says. “Our increased market focus in the Caribbean and Central American locations is because, essentially, they have an export license with a non-federal trade agreement with any country that has a free trade agreement, like NAFTA or TAFTA, like the Dominican Republic, Panama, eastern Caribbean, or Costa Rica and such.
“That means our application license can be used to directly export LNG. Non-free trade countries are pretty much everything else, Bermuda, or the Bahamas. US Territories like the US Virgin Islands and Puerto Rico, where we can transport product out of the Lower 48 with no licensing required.”
Carib Energy, founded in 2011, is the first company to receive a small-scale, twenty-five-year, LNG export license from the US Department of Energy for LNG transportation from the United States into Free Trade Agreement countries.
Crowley uses forty-foot isolation tanks—also known as isotanks or ISO tank containers, which can safely carry and distribute hazardous liquids or non-hazardous liquids— to transport LNG that can hold it in a steady state for sixty days.
“It’s essentially a giant Thermos,” says Jackson.
Using LNG over diesel, Jackson says, can save a business or a small community 30 percent daily just on fuel savings. It goes to 50 percent if the customer uses more efficient technology to generate power.
“A direct industrial LNG customer could use anywhere from one tank a week to one tank a day, so we’re not talking large amounts of volume,” he says, adding, “Customers can take control of their energy costs.”
Like Alaska, electricity generation is expensive in the Caribbean with rates of 25 to 45 cents KWH.
“We can cut that 50 percent based on the models we’re using,” Jackson says. “This model is not unique. It was developed in Europe, and it can be transitioned very easily to the Arctic.”
Lynden and Northland Services
While many Outside companies are acquiring Alaska assets, Anchorage-based Lynden Inc. is increasing its family of companies in the state’s transportation industry. Lynden most recently acquired Northland Services, a marine transportation company that provides shipping between Seattle, Alaska, and Hawaii.
“Northland is a dynamic company with talented people and a great reputation,” Lynden President and CEO Jon Burdick said in a November press release announcing the acquisition. “Its barge capabilities to Hawaii and Western Alaska complement Lynden’s current service offerings and allow us to provide expanded services to our customers. We can now offer integrated service to more Alaska destinations, with more frequency and greater combined capabilities.”
Lynden reaches deeply into the state through its family of companies: Lynden Transport; LTI, Inc.; Alaska West Express; Alaska Marine Lines; Lynden Air Cargo; Lynden International; and now Northalnd Services.
In the 1970s, James J. Haagen started Northland Services in partnership with Dunlap Towing of La Conner, Washington, and Campbell Towing of Wrangell. So from the beginning, Northland established an Alaska base.
Combining Northland’s barge service from the Pacific Northwest to Hawaii greatly enhances Lynden’s ship and air services to the islands, and Northland’s Western Alaska barge services allows Lynden to access ports all over the state of Alaska.
“Lynden provides an ideal situation to better serve our customers, our employees, and the communities where we operate,” Northland President and CEO Larry Stauffer said in the November announcement. “We have seen significant growth in our business over the past decade, and bringing two great companies and teams together will help improve and expand service in the communities we serve.”
Freelance journalist Dimitra Lavrakas writes from Alaska and the East Coast.
Posted: January 1, 2014