Intertwined with the pioneering spirit of Alaska from the beginning, the company continues to invest in all the last frontier has to offer.
By Hilary Reeves – This article first appeared in the December 2013 issue of Totem Ocean News.
The promise of Alaska has loomed large in the minds of westward explorers for hundreds of years. A land of riches both vast and subtle, tangible and experiential, Alaska continues to enchant and excite, due in part to improved accessibility. Though the transportation landscape has changed significantly since Totem Ocean Trailer Express’ SS Great Land departed for the icy waters of the North Pacific on her maiden voyage in September of 1975, Seattle-based Saltchuk Resources, Inc. continues to invest in the ship’s namesake – and tiptoe along the cutting edge in the process.
Betting on Alaska
“Our largest geographic concentration of assets is (located in) Alaska,” said Mark Tabbutt, who co-manages Saltchuk with his brother-in-law, Tim Engle. “We are ‘all in’ on Alaska. Going forward, we expect to invest heavily in the state (by) replacing existing assets, organically growing our presence and services, and looking for more acquisitions of distribution and transportation businesses.”
The July opening of a Foss Maritime Co. office in Anchorage is among the most recent examples of Saltchuk growing its presence in Alaska.
Tim Beyer is the Vice President of Alaska Services for Seattle-based Foss, responsible for business development and project work.
“I truly believe that the opportunities for growth in Alaska are very prevalent,” said Beyer, who also participates in the networking of Saltchuk’s family of companies in the Alaska region. “Foss felt that we needed a physical presence in Anchorage to become an active participant in local industry groups and the local community, and to cultivate business relationships, as well as explore and develop business opportunities for present and future growth.”
The office, located on the 10th floor at the intersection of 188 W. Northern Lights and C Street, was established for a full-time base team. According to Beyer, Foss also has space to seasonally “ramp up” and give the company’s project teams a place to work. Cook Inlet Tug & Barge share a portion of the space, as do Saltchuk representatives Harry McDonald and Annette Sheppard, who joined Saltchuk in the spring when the company purchased Carlile Transportation Services.
Beyer expects Foss’ new physical presence in Alaska will better position the company for long-term success.
“Foss is a quality company with high standards,” he said. “Operating in various geographic areas in Alaska is unique in itself, not to mention the variable weather, tides, ice, shallow draft, and remote-area planning and resources that have to be considered. These areas require both experienced vessel-manning, as well as shoreside personnel. We have quality people, but as new opportunities develop, we do recognize the need for developing personnel to safely and successfully work in this environment.
Beyer said collaboration has become the norm for Saltchuk’s suite of Alaska-based companies.
“Our family of companies can provide customers with cost-effective solutions to meet their transportation needs throughout Alaska,” he said. “For Foss in Alaska, many of the project opportunities may be developed independently or alongside Carlile or TOTE Logistics, but certainly there are and will be opportunities that we share with our other sisters in the region to meet the specific needs of our customers.”
The company that started it all
When it comes to exceeding customer expectations, Totem Ocean Trailer Express has more than 30 years of experience. Totem Ocean first began liner service to Anchorage, Alaska in 1975 and, seven years later, was Saltchuk’s first acquisition. According to President John Parrott, the state and its economy was far different during Totem Ocean’s infancy.
“As an organization, we have evolved alongside (Alaska),” Parrott said. “Today, it’s hard to find a community or company within the areas we serve that is not touched by Totem Ocean Trailer Express. What started out as this grand adventure by a group of businessmen operating two ships between Tacoma and Anchorage has grown into a broad-based and dynamic transportation and distribution company: Saltchuk.”
Parrott said that Saltchuk’s business philosophy and the organizational culture that has led to the company’s growth was established during those early days.
“In many ways, serving Alaska, with its challenging environment and wild economic swings, continues to have a huge impact on who we are. It’s no wonder Saltchuk continues to look toward Alaska for new opportunities.”
Northern Aviation Services, a Saltchuk holding company based in Anchorage, is a prime example of Saltchuk’s emphasis on organic growth. President and CEO David Karp, who took the helm in March, had previously been with Saltchuk’s first aviation acquisition: Northern Air Cargo. Northern Aviation Services, formerly known as Saltchuk Air Cargo, now houses Northern Air Cargo, Aloha Air Cargo, Northern Air Maintenance Services, Aloha Tech Ops, and NAS Contract Services.
“Two (of the companies) are flying, two are maintenance we do for other air carriers, and NAS is special-project group,” Karp explained. “Saltchuk first entered the aviation business in 2006 with Northern Air Cargo. There wasn’t much need then for a holding company. (But) Saltchuk doesn’t really get into things that they don’t know a lot about. It tends to grow into business lines based on concentric circles of commonality. There’s a lot of commonality in the customer base and community at large.”
Karp is an Alaska native, raised in Nome. He first worked for Northern Air Cargo in high school, and said there are many aviation opportunities on the horizon. One thing he said Saltchuk is striving for is diversity, so its companies are strong despite the economic and political variables that have plagued the state of late. No matter what happens to the post office, the federal government’s defense spending or the oil rules and regulations, Northern Aviation Services will still be flying.
“Probably the things we’re most excited about is the opportunity to work with other Saltchuk companies,” Karp said. “We’re evolving into a suite of companies, whereas before we were just sort of doing our own thing. We’re doing more effective business together now, we’re more philanthropic, and its exciting to watch.”
But the priority, Karp said, is to continue to grow.
“Alaska and Hawaii are fairly mature markets,” he said. “We spend a lot of our time looking afield. Our focus is on finding as many efficiencies as we can and collaborating as much as we can.”
Fueling the future
Brian Bogen joined Saltchuk in 1998 and was a Vice President and treasurer before joining Delta Western in 2004 and forming North Star in 2006. Seattle-based North Star is home to Delta Western and Inlet Petroleum in Alaska as well as Hawaii Petroleum.
Delta Western distributes and markets petroleum products throughout Southeast Alaska, the Aleutian Chain, Western Alaska, and the Pacific Northwest. The company has fuel terminal facilities in Juneau, Wrangell, Yakutat, Haines, Dutch Harbor, Naknek, Dillingham, and the Pribilof Islands, and offices in Anchorage and Seattle. The company operates retail gas stations, delivers home heating fuel, and provides direct deliveries to remote Alaskan bush and coastal communities. The company sells a variety of gasoline grades, heating fuel, diesel, and aviation fuel.
Inlet Petroleum markets and distributes petroleum lubricant products throughout Alaska and gasoline and diesel throughout the Alaskan Railbelt. The company is a distributor for lubricant products manufactured by Chevron, Pennzoil, ConocoPhillips, and British Petroleum; and supports its customers involved in oil exploration, trucking, food service, retail service stations, and marine transportation industries.
“If we’re going to grow in Alaska, we need to do it in small and organic ways,” Bogen said of the companies he oversees, citing ongoing projects including the opening of a new operation in Sitka using existing infrastructure and the building of a new tank farm.
“We’re entering the Sitka market as a second supplier,” Bogen said. “We’re also taking a look at doing a lot of things to expand our ability to serve western Alaska. Our operations in Anchorage and Dutch Harbor position us for growth if offshore drilling materializes. In a lot of these communities, we’re the sole source of supply. We fuel everything from the Blue Angels to the local gas stations to individuals with their snow machines.”
Bogen acknowledges that there have been spurts of demand in recent years, driven by specific projects.
“We’ll certainly see some growth as major projects come online,” Bogen said. “We sell fuel to Totem Ocean in their yards, and to the owners of everything that consumes diesel in the Port of Anchorage. We continue to look at ways to set up or open operations in the Puget Sound. It’s a matter of finding the right opportunity.”
“I certainly think there are a lot of opportunities moving forward in all parts of the organization in working together to provide better service to our customers.”
Kirk Payne, the president of Delta Western, said streamlining is the new name of the game for Delta Western and Inlet Petroleum.
“We’re in the process of merging all the back office functions and combining the offices of Delta Western and Inlet Petroleum so we’re better able to serve our customers’ needs.
Payne reports a new dock and warehouse in Dutch Harbor are part of a series of infrastructure improvements that have allowed the company to improve its customer base.
“We have some competitors,” he said. “We believe we are better positioned than our competitors. Longer-term, we are going to continue to improve our infrastructure so that it supports more efficient logistics. We’ll continue to evaluate our logistics so that we can make those improvements.
Payne has been at Delta Western for 10 years.
“Over the past six to eight months, there has been more of a push between our companies to focus our services. We had a little bit of that focus in 2007 (when Northern Air Cargo, Totem Ocean and Delta Western began collaborating), but then the economy went south. Now we’re seeing that come kind of full-circle. It has returned in a much better way. We have more companies to support the effort and more tools in the tool box to throw at more industries.”
Reinvestment road map
“The investments in the new vessels, which have set a very high standard of transportation innovation and quality service, was made possible because of Saltchuk’s growth. Had Totem Ocean been a stand-alone organization, it would have been very difficult, if not impossible, to draw the level of capital investment that the new vessels represented.”
President, Totem Ocean Trailer Express
“Totem Ocean’s success is closely tied to the success of the State of Alaska: as the state goes, so do we,” said Parrott. “In this regard, any economic activity or investment (in Alaska) is good for Totem Ocean, and anything that’s good for Totem Ocean is good for Alaska.”
Parrot said Saltchuk’s reinvestment in Alaska began with the decision to build two new Orca-class vessels for the Alaska service, a major investment into the private transportation infrastructure serving the state.
“At the time, it was one of Saltchuk’s largest single investments,” Parrott said. “The investments in the new vessels, which have set a very high standard of transportation innovation and quality service, was made possible because of Saltchuk’s growth. Had Totem Ocean been a stand-alone organization, it would have been very difficult, if not impossible, to draw the level of capital investment that the new vessels represented.”
Parrott said Saltchuk’s continued investment in Alaska lies not only in the purchase of core assets or companies, but in making capital available throughout the organization to provide the highest possible service to Saltchuk’s customers. And TOTE will soon need the support of its large TOTE, Inc. and Saltchuk families as it prepares to convert the Orca vessels to liquified natural gas (LNG).
“The construction of two new LNG container ships by our sister company, and the conversion of the Orcas is a huge investment, which is narrowly focused on giving us the assets we need to provide the highest service to our customers for another 30 years and beyond,” he said. “Since Totem Ocean was founded, we have seen a huge change in the economic base and the quality of living in Alaska. In a small way, we were a part of that change.”
Tabbutt said there are always new opportunities on the horizon.
“We are constantly looking for new opportunities,” he said. “We look at growth and changes in the cargo transportation industry as major opportunities for us. You should expect to see our scope of services continue to grow and for us to increase our presence geographically around the Great State of Alaska.
“Every resident and visitor of Alaska has benefited from our company,” Tabbutt concluded. “We are working now to improve upon our work but coordinating it amongst the various legs of our business and providing more focused and higher impactful gifts to the region in which we operate.”
Who is Saltchuk?
Saltchuk began with a single liner company, Totem Ocean Trailer Express (Totem Ocean) traveling to and from Alaska, in 1982. Saltchuk’s founder, Michael Garvey, said his decision to buy Totem Ocean was based more on emotion than business sense – at least at first.
When the company was put up for sale, I immediately was interested,” Garvey said. “It was an emotional reaction more than anything else.”
Emotional, perhaps, because Garvey had nurtured a deep-rooted fascination with the Great Land from an early age.
“Ever since I was a boy, I had a strong interest in Alaska. I didn’t go to my high school graduation or my prom (in 1956), I drove up to Fairbanks the first chance I got and caught an airplane to Nome and started work at a gold mining operation.”
Garvey continued to spend most every summer in Alaska, working and visiting relatives. His Aunt and Uncle lived in Barrow. Their son, Garvey’s cousin, was even named after the town.
Garvey attributes a lot of his early business acumen to growing up in Seattle, and his knowledge of Pacific Northwest customs and resources. While the company’s founding may have been rooted in emotion, it also made sense financially. Garvey said each and every company Saltchuk acquires is meant to be part of the family.
“When we buy a company, it is always our intention to keep it forever,” he said.
For two decades, Garvey planned the succession of the company to the next generation, ensuring Saltchuk will remain strong – fiscally and in the spirit in which it was founded – for decades to come.
“I wanted to give my children and grandchildren an opportunity, not an entitlement,” he said. “There’s an old saying in Alaska: when you take gold out of Alaska, you’ve got to give something back. I’ve tried hard to do just that, and Saltchuk will continue to do that well into the future.”
What does it mean to be a Saltchuk employee?
“Being a part of Saltchuk unites you with more than 6,000 other people who share the same values: safety, reliability and commitment. We have a culture that is pretty easy to describe: we want our work places to be a place you would be proud to have your children work. And we are pushing to grow and improve our company every day. We also get to celebrate being an industry leader: we were the first company to build and operate a hybrid tug; the first to cold-iron our ships in Puget Sound; and now the first that will be burning LNG to fuel our cargo ships. All of these are really exciting projects and are just a small sampling.”
Chairman, Saltchuk Resources, Inc.