QUALAWASH Holdings LLC's acquisition of PSC Container Services appears to be the largest and most significant consolidation in the cargo tank cleaning sector to date. It gives QualaWash the most comprehensive network of tank cleaning locations in North America.
Announced January 10, the purchase of PSC Container Services makes QualaWash the largest commercial wash rack operator in North America. The combined operation now includes 53 locations across the United States, with 21 of them coming from PSC Container Services.
“This acquisition brings much greater breadth and depth in our operations, which will benefit all of our customers,” says Terry O'Brien, QualaWash president. “We believe this merger will benefit the industry and will have its most significant impact onthe tank truck fleets.
“We are now truly a nationwide provider of tank cleaning services, and we have a much broader range of offerings. We had very few overlapping locations between QualaWash and PSC, and we also had relatively limited overlap in customers. We haven't closed any facilities since the deal was completed. Instead, we significantly expanded our total wash rack network.
“All of this gives us a greater ability to support our customers' growth in the future. Going forward, we believe they will have even less need to build their own terminal and/or tank wash facilities as they expand. We'll be able to give them the support they need as they move into new markets because many shipper/carrier contracts today are short term and don't justify major investments in new infrastructure.”
Busy time
The latest acquisition caps a busy year and a half for Tampa, Florida-based QualaWash Holding. “QualaWash really is actually a young company, effectively just a year and a half old,” O'Brien says.
QualaWash Holdings officially came into existence in October 2009 though an equity buyout funded by KLH Capital LP. Previously, QualaWash was a division of Quality Distribution Inc. From the outset, the leadership team for the new company emphasized that they were looking for growth opportunities.
Mike Bauer, QualaWash chief executive officer, said at the time that “QualaWash is excited for this opportunity to further enhance a valuable service to the bulk tank truck network across the United States. We are committed to being a premier provider of tank wash services.”
Mark Hunter, director of KLH Capital, added that QualaWash is backed by a private equity group eager to deploy additional financial resources to support QualaWash's growth initiatives. These initiatives could include selected acquisitions and geographic expansion.
With the strong financial backing of KLH Capital, the QualaWash management team certainly seems to be following a strategy of targeted acquisitions. First came the purchase of Manfredi Special Services (MSS), a Cleveland, Ohio, company that focused on cleaning, maintenance, management, and leasing of totes/intermediate bulk containers (IBCs).
Suddenly, QualaWash was a significant provider of IBC/tote services with sophisticated capabilities that included the MSS Asset Retrieval Management System (ARMS) internet-based tracking/management application. Prior to the August 2010 acquisition, QualaWash was primarily focused on chemical tank trailer cleaning.
PSC purchase
The next big move came with the purchase of PSC Container Services, which members of the QualaWash management team describe as a great fit. “This is a perfect combination of two companies with a commitment to safety and the environment,” Bauer says. “By bringing these two organizations together as one company, we have the opportunity to blend the talents of both teams, providing the bulk shipping industry with more logistics and service offerings.”
The PSC acquisition brought QualaWash a lot of management experience and expertise from top to bottom, especially in the areas of safety and environmental compliance, according to O'Brien.
“This business is becoming more complex by the day, and we need the very best managers to direct our safety and environmental efforts,” he says. “That is the best way to minimize the impact of increasingly expensive fees and surcharges.
“We're still optimizing the back office operations of the combined company. We hope to make greater use of technology to simplify billing and other activities. A majority of our customers are comfortable with the automation we're already using.”
Geographic expansion
While back office changes may not be very apparent to many customers, the increased geographic coverage that QualaWash gained with the acquisition is very evident. “We had gaps in some areas, but now we are in all of the major tank cleaning markets,” O'Brien says.
Previously, QualaWash's 32 facilities were found primarily in the eastern third of the United States, across the Gulf Coast, and in five western states. In contrast, PSC Container Services' 21 locations were concentrated east of the Rocky Mountains, especially in the Midwest, Southeast, and along the Gulf Coast.
Chemical tank cleaning remains the primary focus, but the PSC acquisition brought foodgrade tank wash capacity. “Foodgrade cleaning was one of the key reasons PSC Container Services was attractive to us,” O'Brien says. “This is an exciting and tremendous growth opportunity for us. QualaWash offered foodgrade cleaning services but not on PSC's scale. They handled a much broader range of products.”
PSC Container Services also was more involved with ISO tank containers. In addition to cleaning, a number of PSC locations provided depot and other tank container services. The major tank container depot locations that came with the PSC acquisition are in Chicago, Illinois; Detroit, Michigan; Charleston, South Carolina; and Jacksonville, Florida.
“We plan to add more ISO tank container depot services where it makes sense,” O'Brien says. “There just isn't demand for those services in every part of the country.”
More IBCs
PSC brought even more IBC service capability than QualaWash had gained with the MSS acquisition. “We doubled our IBC capability,” O'Brien says. “We believe that QualaWash has what is by far the largest IBC service footprint in the US marketplace. We clean and service all types of reusable IBCs, and we now offer our customers broader geographic access to cleaning locations. This means they should be able to significantly cut to cost of transporting IBCs to and from the cleaning locations. They should see quicker turnaround and more competitive pricing for IBC cleaning and reconditioning services.”
Railcar cleaning capability was added with the PSC acquisition. PSC ran a rail tankcar cleaning facility in Miles City, Montana for many years. Other specialized services include cleaning frac tanks and refrigerated trailers. Some of the newly acquired PSC locations also have hydro blasting capabilities for removing heavy sludges from tanks.
QualaWash gained a commercial wastewater treatment operation with the PSC acquisition. Facilities providing commercial wastewater treatment are in Baton Rouge, Louisiana; Charlotte, North Carolina; and Parker, Pennsylvania.
QualaWash now has equipment maintenance capabilities at all facilities. Both PSC and QualaWash offered contact tractor and trailer maintenance services at many locations. Providers include Brenner Tank LLC and Polar Tank Trailer Inc. “We plan to expand our involvement with third-party vehicle maintenance service providers,” O'Brien says.
Across all of its wash rack locations, QualaWash will continue to offer customers office rentals and equipment parking. In addition the company is working hard to enhance its driver amenities. This includes providing updated driver lounges, making available a range of refreshments, and providing assistance to drivers who are away from their home terminals. QualaWash facilities hold quarterly and monthly driver days with barbeques and other special activities.
“We know it is critical in today's operating environment to do everything we can to take care of our customers' drivers,” O'Brien says. “We know that we play a role in helping to ensure driver sustainability. We understand that driver sustainability must be as important to the cleaning facility as it is to the fleet. We are an extension of our customers. If they succeed, we succeed.” ♦
