Fastfrate Group’s Acquisition of Challenger Creates New Synergies

Today’s announced closing of the Fastfrate Group’s acquisition of the Challenger Group will give rise to one of Canada’s largest, most diverse and integrated trucking companies, say the leaders of both operations.

As a private company, Fastfrate does not release specific financial terms of deals, but buying Challenger is said to add 1200 tractors, 3000 trailers and 300 chassis to Fastfrate’s fleet – for a total of well over 2000 tractors, 4000 trailers, 900 chassis and about 5000 employees and owner operators, plus 45 facilities. That would make it Canada’s sixth largest for-hire fleet by size (when measured against Today’s Trucking’s 2021 top 100 fleet list) and arguably a top five carrier by revenue.

Fastfrate chair, Ron Tepper, told OTA that when the opportunity arose to grow by acquiring a North American truckload carrier with a solid asset-base and a fleet as well run as Challenger, he couldn’t pass it up.

“From a Canadian LTL perspective, we are about as big as we are going to get, and growth will be more around GDP,” he tells OTA. “But that growth is not enough for us. Fastfrate has been a strategic partner with CP Rail for over 50 years, and our facilities are co-located with CP intermodal terminals in every province from Quebec to BC.

“Also relative to our size, we are kind of a non asset-based carrier; our costs are somewhat variable and we have room to create an asset base trucking business where we have control of the equipment, and driver issues that so many are facing, and get reach into the USA,” he continued. “The Challenger Group provides us exactly that. The synergies we bring to each other are incredible – we both have a third party logistics group. Fastfrate Logistics is predominately rail based while Challenger Logistics is predominately truck based, so we bring to each other incredible opportunities to cross-sell on a large scale using each other’s relationships.”

“Most important to us was how well managed the Challenger Group is. The equipment is extremely well maintained, their safety record is impeccable and has been for years; the driver turnover is very low especially compared to industry standards. That does not happen by accident; it happens because drivers are comfortable with how their company is being managed.”

Challenger Group founder Dan Einwechter said that although he has been approached with many M&A options over the years, it wasn’t until Roger Poirier of the Whiteshell Group proposed a deal with the Fastfrate Group, that he truly started to take seriously the idea of selling the company he founded in the 1970s.

“The more we talked about it and explored it, the more I liked the idea and the more excited I got,” Einwechter told OTA. “I liked it because there is no overlap of what we do. We can feed freight into the Fastfrate network and can provide over-the-road and expedited services for Fastfrate’s clients who may need additional resources and services.

“Our two companies are extremely complementary, and it gives us a great avenue for my great and loyal employees to express themselves in a bigger forum. And that was important to me,” said Einwechter. “I did not want to do a private equity deal because their history, in many cases, is to tear companies apart. For me, it was very important that I chose a company that has proven to have the same attitude and appreciation for their employees as I have for mine.”

“This will now become a situation where there will be job opportunities, not job losses, which is a part of my thinking to move forward,” said Einwechter.

Both Tepper and Einwechter stress that the fleets will continue to be run and branded separately with Challenger’s management and infrastructure remaining intact. Einwechter will retain a significant minority position and act as a non-executive chairman of Challenger Group and will join the board of the Fastfrate Group.

“They are really such a well-managed company,” said Tepper. “We love what they have done over the last few years, despite the obstacles throughout the pandemic and the supply chain issues we are all so aware of. The companies’ cultures are very similar. We both recognize our businesses are a compilation of people. We both have long tenured employees and we are both very proud of that.”

When it comes to finding solutions and creating dialogue around industry challenges like the driver shortage and other persistent issues, it is not lost on Tepper that Challenger, and Einwechter in particular, have a proud history of involvement in OTA.

While Fastfrate is also a long-standing OTA member, Tepper says he plans on increasing his own personal visibility within the association. He is certainly aware that Challenger is consistently at the forefront of many industry issues and welcomes the enhanced exposure within the trucking community and at the government relations level.

“I know Dan has been such a strong supporter of OTA and admittedly perhaps we haven’t been as active as we should and could be, mainly because of the rail focused business we are in. But I look forward to Dan continuing doing what he has done and Fastfrate increasing our presence as well. I think it’s important to us and to the industry.”

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