Canadians are buying more products from the United States with their stronger dollar and their ability to make Internet purchases, which means double-digit growth for the Canadian shipping company Purolator International in Jericho, according to John Costanzo, president.
Currently with 80 employees on the Island, Purolator is seeking to consolidate its three office locations here and lease a 150-person workspace in Nassau or Suffolk.
It's a full circle for Costanzo, 62, who once ran the eastern division of Emery Air Freight Corp., which briefly owned Purolator's Canadian division before selling it for $150 million in 1987. Since then, Purolator Inc. has grown to generate $1.7 billion in revenue, and partners with the Canada Post Group to deliver packages to remote locations in Canada.
When Costanzo was approached in 2001 by Purolator's CEO to expand the company in the United States, he began as the sole Long Island employee. Today Purolator, which has a network in Canada equivalent to UPS and FedEx, is seeking to win 30 percent of the U.S.-Canada small-package segment.
It partners with companies such as eBay, Motorola and Starbucks. Some of its growth is due to the rise in e-commerce. Purolator initially focused on industrial shipping, but now consumer goods represent about 40 percent of the company's volume.
What is your growth plan outside of Canada?
The first step is our market share in the States. We came from single digits of share of the small-package market 10 years ago, to today, about 12 percent of the small-package segment here, and we're doubling our business every five years. Our objective here is to get a similar market share on small packages as we have in Canada, at least 30 percent share. Up until 2010 we were in about 10 cities, and today we're in 30. And the 30 we're in represent 80 percent of the trade with Canada . . . For the next few years, our main focus is on driving growth through those 30 U.S. markets.
What are your bottom line pressures?
We're competing in the home markets of two of the world's leaders of logistic services -- FedEx and UPS. If we're going to be able to compete effectively, we've got to always be better than they are, so that's a constant pressure. The other is to be more efficient than our competition in the way we get shipments to Canada and deliver. That's always a challenge, because, especially in the consumer goods segment under $100, the percentage of cost it takes to fulfill the order from their warehouse or from their store and sell it and get it across the border is high as a percentage of the total. So we have to be really efficient at doing that.
What was the first thing you did as president?
Get a really good understanding of 1) what our customers thought of us and 2) what our people thought of who we are and what we're doing, to see if those two things aligned.
What do you find when you survey customers?
We recently asked, Would you recommend us to somebody else for serving the Canadian market or your Canadian customers? And the pleasant surprise was 96 percent of our customers said they would, which is pretty good. Only about 4 percent of our business turns [over] each year.
How do you retain customers?
A lot of companies can get to the big cities like Toronto or Montreal. But if you need to get to Calgary, to the mining areas, or Yellowknife, we're the company that can do that for you. We also have 300 people that dedicate every minute of their day to serving shipments to Canada or delivering shipments from Canada. That's all we do in the morning rather than think about a hundred other things.
How has the survey helped you improve your business?
When we first surveyed our customers over 10 years ago, we asked, Have you had a problem in the last six months? If so, who did you contact? Eighty-nine percent said they called their salesperson. Salespeople are always on the road traveling. They're not always accessible, so the customer experience we were providing wasn't as good as it should have been. We now have as many inside client-relations people to be available for help or service as we do outside salespeople.
Will drones be doing your deliveries one day?
Maybe not in my lifetime, but, I don't know, to very, very remote areas, like the mining areas, someday maybe. Who knows? But I don't see it in the near future. I wouldn't want one flying around my neighborhood.
NAME: John T. Costanzo, president, Purolator International Inc. in Jericho
WHAT IT DOES: A subsidiary of Purolator Inc., Canada's largest integrated parcel and freight delivery services provider, Purolator International is responsible for growing the company's business in markets outside Canada.
EMPLOYEES: 290; 80 on Long Island
REVENUE: $170M to $200M