TSC acquisition ups Kenan Advantage Group chemical involvement
Apr 1, 2008 12:00 PM
Over the past five years, executives at Kenan Advantage Group Inc (KAG) had been working on plans to expand significantly the tank truck carrier's chemical hauling operations. They achieved a critical objective in that effort on February 29.
That was the day KAG completed its purchase of Transport Service Company (TSC), a chemical and foodgrade tank fleet based in Oak Brook, Illinois. Terms of the agreement were not announced, but KAG executives made it clear that TSC's leadership would remain in place and the company would continue to operate independently.
“Transport Service is a perfect fit to our business model of dedicated trucks, dedicated schedules, and dedicated contracts,” says Dennis Nash, KAG president and chief executive officer. “TSC also provides us with a stand-alone platform to further expand our chemical transportation operations while providing a tremendous opportunity to grow the foodgrade products line. Creating the stand-alone chemicals platform also will allow KAG to remain focused on growing its core business of delivering petroleum and renewable fuels.
“We're also thrilled to have the TSC management team join our staff. We wanted the management team as well as the fleet when we launched this acquisition. They are a good fit with our organization, and we know they will play an important role as the flagship in building the chemical and foodgrade hauling side of our business.”
Robert Schurer, TSC president, adds that the acquisition was a win for both carriers and their customers. “The partnering of our company with the Kenan Advantage Group will provide our employees further growth opportunities while adding services that will complement and grow our customer base,” he says. “Joining with KAG actually strengthened Transport Service for the future, because our shippers now see us as part of a larger company with more financial resources.”
As the core element of KAG's Specialty Products Group, TSC will gradually take over management of all KAG chemical hauling activities. “We have a lot of niche chemical business scattered throughout our organization,” Nash says. “Chemical hauling generates about $60 million in yearly revenue. We were a substantial chemical carrier even before the TSC purchase.”
Still the TSC acquisition makes KAG a much more substantial player on the chemical hauling side. It also boosts KAG's overall financial standing. Counting approximately $130 million in annual revenues for TSC, KAG becomes at least an $800 million tank truck carrier.
Founded in 1946, TSC operates primarily in the Midwest, Northeast, Southeast, and Gulf Coast regions of the United States. The chemical and foodgrade tank fleet also serves customers in Canada and Mexico. Operating from 18 terminals, TSC runs 550 company-owned tractors, 90 owner-operator tractors, and 1300 stainless steel tank trailers.
TSC was an attractive acquisition target for Nash and his management team for several reasons. Most importantly, TSC fits well with the KAG corporate model. “We're not as focused on the commodity as we are on the basic characteristics of operations that fit our current model,” Nash says. “We target relatively shorthaul activities, longterm contracts, and dedicated operations. We don't want to be a hauler predominantly running backhaul lanes.”
Nash adds that TSC has four critical attributes that caught the attention of KAG: an unwavering commitment to safety and high quality service, a strong management team, a solid employee base, and a great image in the industry.
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