The Players:
Ernest Korankye, president and chief executive officer of Asante Logistics Group Inc., founded the Truro company, formerly known as Asante Freight Lines and Exports, a decade ago. He now co-owns the company with Asante Logistics vice-president of business development Jason Steele and Anita Quaye, the company’s finance and corporate secretary.
The Problem:
When Asante Logistics’ sales of used cars to Africa, Asia and Europe plateaued at about 280 per month years ago, it branched out into transportation logistics and began offering warehouse space to its customers. That’s where things stood last year as the global pandemic hit North America and Asante’s customers suddenly needed a lot more storage space.
The Pivot:
Asante Logistics first rented out and then bought the 367,000-square-foot former Crossley Carpets property, a 6.7 hectare property in Truro. The company converted the factory into a warehouse and offices.
Used car exporter and transportation logistics firm Asante Logistics Group quadrupled its profits last year after expanding its warehousing capacity by buying the former Crossley Carpets site in Truro for an undisclosed price.
The property and building was listed with Colliers International for $7.95 million.
Ernest Korankye, Asante president and CEO, says the original asking price had been about $12 million. He negotiated it down and got the property somewhere under the final asking price.
The company made its final bid for the property in May last year after renting it for months.
“Asante leveraged its ability to lease the Crossley building for nine months, which allowed it to generate significant free cash flow for a down payment on the purchase of the building,” says Jason Steele, Asante’s vice-president of business development.
“This satisfied a commercial lender, the CIBC Truro branch, to obtain a mortgage for the remaining portion of the acquisition cost.”
Asante Logistics, formerly known as Asante Freight Lines and Exports, is best known outside the transportation logistics sector as an exporter of used cars, primarily to Africa but also to Asia and Europe.
But the company does a lot more than that. Its exports of used cars have been flat for years, plateauing at about 280 cars per month.
New avenues
So, when other local companies approached Asante in 2017 looking for storage space, it seized that opportunity to branch out into transportation logistics. It began offering warehousing, material handling and trucking services, in addition to freight forwarding services for exporting.
That’s where the company was early last year. Then COVID-19 hit.
Government-imposed restrictions fueled an even greater need for warehouse and transportation logistics, and Asante boomed.
“COVID-19 shutdowns in the spring of 2020 brought opportunity to some businesses and challenges for others,” says Steele.
“Asante took advantage of both of these situations by targeting warehousing and trucking services for the companies taking advantage of COVID’s new environment and by offering temporary storage space and material handling services for those affected by country closures that prevented or delayed product shipments through the Port of Halifax.”
Before its purchase of the Crossley building, Asante had about 30,000 square feet of rented space in a building in Truro. It employed nine.
In the past year, the company has grown its warehousing capacity by roughly 1,200 per cent and doubled its workforce. It still uses the rented space on Willow Lane but has bought the former factory building about a kilometre away on Willow Street.
And Asante is still hiring, looking for a driver to operate one of its seven trucks.
Fiscal forecast
The company’s expansion comes just as the Conference Board of Canada is forecasting that Canada will see GDP growth of 5.3 per cent in 2021 and 3.5 per cent in 2022.
“The news that safe and effective vaccines against COVID-19 have begun to be distributed has provided optimism that the pandemic could soon be beaten,” says Pedro Antunes, the Conference Board’s chief economist.
In Atlantic Canada, it is forecasting Nova Scotia’s GDP will grow by 3.2 per cent this year, New Brunswick’s by 4.2 per cent, Prince Edward Island’s by 2.1 per cent, and Newfoundland and Labrador by five per cent.
Asante is poised to boom as the economy recovers due to its newly-acquired building.
“We are leasing 110,000 to 120,000 square feet so we still have 200,000 square feet left to lease,” says Korankye.
During its last fiscal year, which ended Aug. 31, the company grew revenues by 37 per cent and quadrupled profits over the previous year.
Although the privately held company does not divulge revenues, Korankye did confirm in an interview that Asante is on track to bring in between $6.5 million to $7 million in revenues during this fiscal year.
Warehousing operations now account for 53 per cent of revenues, with used car exports making up the other 47 per cent even though sales have held steady. Before the latest expansion, used car sales made up as much as 80 per cent of the company’s revenues.
“The biggest upside is that warehousing and support services have a much, much higher profit margin,” says Steele.
“With warehousing, you have fixed costs but there comes a point where you start hitting higher profit margins.”
Emergency measures
During the lockdowns, Asante did have to temporarily lay off some employees. All but one has since been rehired. The company turned to the Canada Emergency Wage Subsidy program to help cover costs while it was struggling.
Asante also availed itself of the $60,000 in interest-free loans provided to small businesses and non-profits to cover operating costs during the pandemic.
As a majority Black-owned business, Asante was also helped out by the Black Business Initiative. It provided Asante with a $5,000 grant for business consulting services to revamp its website and social media.
With the need to do business online, Asante also undertook a $12,000 project to boost its digital capacity with the help of Nova Scotia Business Inc.’s business development program. The economic development agency covered about half the cost of that project.
The Pivot is a regular feature about an Atlantic Canadian company adapting to new market realities with innovative products, services or strategies. To suggest a business, email: [email protected].
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