Freezing out high prices for short-term equipment rental.
• Subsidiary of a company based in India that manufactures canned seafood
• First company in India to establish completely integrated and automated state-of-the-art factory for processing ready-to-eat shrimp in retail packaging
• Producer of frozen meals across a variety of cuisines; most feature shrimp
In the frozen-foods sector, refrigerated transportation and storage facilities are absolutely necessary. Choice Canning produces frozen meals, so it requires refrigerated trailers and trucks to store and transport them. By working with Wheeler Financial from Pitney Bowes™, Choice Canning moved from short-term rental of this equipment to a long-term capital lease; as a result, it is saving hundreds of thousands of dollars annually. The equipment financing experts at Wheeler Financial streamlined the transaction, including facilitating an introduction to the title company and minimizing the amount of Choice Canning staff time required to close the loan. In doing so, they also laid the groundwork for Choice Canning to build a strong relationship with a new financing partner.
Choice Canning was launched 75 years ago by the Indian conglomerate Choice Trading Corporation as a shrimp canner. Since then, the company has steadily expanded in both product line and geographic reach. The U.S. arm of the company, established in 1987, originally functioned only as a broker, providing a domestic sales channel for goods produced abroad. However, several years ago, the U.S. division entered the food processing and packaging business as well.
Today, Choice Canning produces a number of frozen foods — from Cajun meals to pastas to Asian stir-fries — at a facility in Pittston, Pennsylvania. The facility consists of a building housing a production line along with four large cold-storage buildings. The cold-storage warehouses, which hold raw materials and frozen-food inventory awaiting delivery to grocery retailers, are located across the parking lot from the production line.
Equipment Financing Through Wheeler Financial from Pitney Bowes™
The company uses a fleet of four refrigerated trailers to move goods from the production line to cold storage and vice versa. It previously relied on shortterm rental agreements for those trailers. Meanwhile, Choice Canning was also paying a third party to provide refrigerated transport to and from Port Newark to ship goods abroad.
“The equipment rental costs were high,” explains Alok Modani, CFO, Choice Canning. “From a strategic perspective, it became evident that for the same payments, we could buy the assets. We evaluated our options and decided to enter a capital lease in which we would own the assets, free of any lien, at the end of the lease term.”
Wheeler Financial made the financing process simple. “Wheeler Financial was very diligent in asking us questions up front to gather all the information they needed,” Modani says. “They also provided us with resources to streamline the process. For example, they facilitated an introduction to the title company, which helped us get this deal done even in the time of COVID.”
Choice Canning immediately began saving money. The trailers cost about $3,000 less each month under the long-term lease than the short-term rental. Moreover, the structure of the capital lease means the truck can handle transportation to and from the port. “There were freight costs involved every time we moved product,” Modani says. “Now, instead of using a third party, we can pick up some of those shipments ourselves, which is saving us close to $25,000 a month.”
Modani plans to extend these savings by entering similar transactions to finance additional equipment in the future. “We are currently spending around $3 million a year on freight,” he says. “I expect to slowly add more trucks to continue reducing our freight costs.”
Modani concludes: “We need this equipment to run our business. It only took us a couple of minutes to do the math and see the cost savings that Wheeler Financial could provide. We are already benefiting from this transaction.”
Choice Canning recognized the benefits of diversification in its sources of financing. “It’s always good to have multiple financing relationships,” Modani says. “For every transaction, I like to work with financial services companies that focus on the specific niche of funding we need. The bank that finances our receivables and inventory, for example, might not have the expertise to understand the details of an equipment purchase.”
Modani and his team selected Wheeler Financial from Pitney Bowes to provide a five-year capital lease to finance the equipment they needed, specifically four refrigerated trailers and the specialty truck to move them.
“The most important factor in selecting a financing partner is relationship,” he says. “We had previously worked with our Wheeler Financial representative, so he was familiar with Choice Canning.
In addition, the Pitney Bowes® name gave us confidence to move forward with the transaction. There’s a lot of comfort in dealing with a company that has been around for 100 years.”
Wheeler Financial from Pitney Bowes Inc., Pitney Bowes and the Corporate logo are trademarks of Pitney Bowes Inc. or a subsidiary. All other trademarks are the property of their respective owners. Wheeler Financial from Pitney Bowes Inc. is a subsidiary of The Pitney Bowes Bank, Inc., Member FDIC.