Motor Transport 30th October 2017 by Motor Transport

Sharp ■ Informed ■ Challenging

30.10.17

NEWS INSIDE Sweet service

THE NEW SCANIA

Hermes to shift focus to customer experience p3

Fresh blood

New DX board prepares for business turnaround p4

New bones

Welch MD appointed Palletline chairman

Operator faces union ballot over Carlsberg depot conditions

Trouble brewing at DHL Tradeteam Concept

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Abbey Logistics Group ...........................p3 Bishopsgate ..........................................p8 CitySprint Group ............................ p4, p10 DX Group ..............................................p4 Gnewt Cargo .......................................p10 Hermes.................................................p3 Howard Tenens......................................p4 McCulla (Ireland).................................p22 Turners (Soham)....................................p3 Welch Group .........................................p8

Transport journalist Steve Gray dies Transport journalist Steve Gray has died aged 71. Steve joined MT sister title Commercial Motor in the early 1970s after a number of jobs in the transport sector, and was celebrated as a talented technical editor. He was also a great friend to the industry. We send our deepest condolences to his wife Linda, son and two daughters. Focus:

Urban

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logistics

Studio Manager

By Carol Millett

DHL Tradeteam is facing the threat of industrial action less than a month after it began integrating Carlsberg UK’s secondary logistics operation into one of its depots. Unite members at DHL Tradeteam’s Enfield depot claim working conditions for the 70 drivers, dray and warehouse staff have seriously deteriorated since the firm took over the Carlsberg contract. It said one truck has already been involved in an accident since work began at the beginning of October, and staff were struggling with excessive workloads. The union warned that if the situation was not resolved, it would ballot members for industrial action. Carlsberg outsourced the secondary logistics contract to DHL Tradeteam from its own-account operation last year, and the operation went live in July. The deal, which boosted DHL Tradeteam’s market share in the secondary drinks logistics sector from 30% to 40%, was subject to an investigation from the Competition and Markets Authority in January. The operator was found to have sufficient competition in the sector. When it announced the deal, Carlsberg said its intention was to outsource its entire p10

Viewpoint

CJ Express heads to the graveyard

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OPERATORS IN THIS ISSUE

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secondary logistics operation to DHL Tradeteam by the end of 2018. But Unite regional officer Paul Travers said the new contract raised serious health and safety issues for DHL Tradeteam employees at Enfield, with drivers “physically drained by the bosses’ unreasonable demands”. The site also services businesses including Greene King, Coors and Mitchells and Butlers. “Our members are being treated appallingly following the advent of the Carlsberg contact,” said Travers. “This additional work, which has not been taken into account by the management, is the straw that has broken the camel’s back.” He added: “We have already seen one lorry involved in an accident, something we warned would happen many

Interview:

Mark

Duggan

p14

times over recent weeks; thankfully, no one was hurt.” A DHL Tradeteam spokesman said: “We are aware of Unite’s concerns, which were aired at a meeting earlier this month. Further talks are planned and we look forward to working together to resolve the union’s concerns and reach a satisfactory outcome for all parties.” But Travers said: “The company has met with us on two occasions, however the situation is getting worse. Management are talking, but doing nothing to address members’ issues. “Drivers are suffering with the stresses of trying to make timed deliveries around London, but their lorries are either loaded late and/or loaded poorly. We have concerns that there will soon be a serious accident.”

Profile:

BigChange

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Hull-based haulier CJ Express has ceased trading and will go into liquidation just over two years after it was acquired by Premier Logistics. A spokeswoman at business recovery firm Leonard Curtis confirmed last week it had been instructed by Premier Logistics to place the firm into liquidation. She added Leonard Curtis would be contacting creditors in the next few days. CJ Express, which also traded as CJE Logistics, was bought by Premier Logistics in July 2015 for an undisclosed sum. At the time, Premier Logistics MD Lee Christopher said the deal would expand Premier Logistics’ reach in the north of England, and increase group turnover to £21m. The acquisition created a combined fleet of 125 vehicles and 300,000ft² of warehousing space across three locations. Premier Logistics had not responded to request for comment as MT went to press.

Awards

winners

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26/10/2017 15:33:02

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26/10/2017 09:11:59

News

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New customer app and next-day delivery at heart of business’s growth as carrier redefines priorities

Hermes eyes next-day market By Emma Shone

Hermes is poised to expand its next-day delivery service and launch a new customer app, as it shifts its priorities. MD Martijn de Lange told MT the parcel carrier had previously focused more on its logistical operations than customer experience, but is now redesigning itself as a customercentric, technology-driven business. He said: “It’s about how to communicate with the end customer. How do you find out things about the end

customer so you can deliver the parcel every time in a way and in the place that suits them?” Part of this, said de Lange, will be the growth of its next-day delivery service, which has doubled in size in the past three years. Currently at 18% of its total volumes, the business expects this to expand to 21% by 2019. But de Lange said its focus on one-day turnaround does not mean Hermes is positioning itself as a rival to premium next-day specialist DPD.

“We want to be value for money in the standard nextday market but give it more of a premium feel,” said de Lange, “but I’m not trying to position myself as a competitor to DPD. We are very much our own business, we have a different operating model. “True, there might be customers that say ‘If that’s what the services are, why would I pay a premium or express rate?’ But it’s still a different business, focusing on different market segments.”

Hermes will also launch an improved app for end customers in 2018, which will include the technologies it has been developing this year. These include taking photos of safe places and a new returns system. The app will incorporate MyHermes services so users can also track parcels they have sent. Growth at the business also prompted the creation of de Lange’s MD role in March this year. De Lange, formerly chief operations officer, told MT

Carole Walker (formerly Woodhead) remains CEO, but he is responsible for the dayto-day running of the business. He said: “Hermes UK has expanded above average industry growth for a number of years, so the business has got to a size where we need to split responsibilities between myself and Carole. Carole sits in the European part of the board and works with customer experience, and I run the business on a day-today basis as MD.”

Container expansion comes up trumps for Turners (Soham) Turners (Soham)’s decision to expand its container haulage interests with the purchases of Macintyre Transport and Goldstar Transport last year has seen significant increases in turnover and profit at the acquisitive operator. Now reporting to Companies House as Turners (Soham) Group of Companies, pre-tax profit rose to £28.26m (from £24.8m in the previous year) for the period ending 31 December 2016, with turnover up 27% to £313.8m (£247m). It also revealed annualised turnover in its container division stood at approximately £150m. Turners acquired

Macintyre Transport in January 2016, while it completed its acquisition of Goldstar Transport (right) in September 2016. It reported turnover growth of 214% from £27m to £85m for the division during the financial year. At the time of the acquisition, Turners MD Paul Day said: “Container haulage was a high-volume space and it was about who can operate vehicles in the most efficient way. That’s something Turners is good at.” Breaking down the business by division, turnover increased by £2m in its temperature controlled arm to £111m; by

£6m in its tanker sector, to £82m; and by £1m in its general haulage division, to £36m. Turners is not shy of acquisitions, having purchased

chilled specialist Browns Distribution in 2012 and Lewis Tankers in 2013. It has bounced back from the loss of its Greenergy contract in 2013, which saw the energy

TOO MANY COOKS: Abbey Logistics Group is to roll out Microlise software across its 350-truck fleet, replacing three separate systems it currently uses. Abbey Logistics CEO Steve Granite said the shift to Microlise will free up management hours with the removal of manual processes. He said: “The deployment of Microlise Fleet Performance will make effective improvements quickly. We are hoping to free up management time by focusing our resources where they are needed. This is aimed at delivering the best service for customers.” The telematics package will give Abbey full visibility of its fleet in real-time, as well as tools to monitor and manage drivers’ performance. Microlise CEO Nadeem Raza said: “There is great energy and enthusiasm at Abbey Logistics, along with an excellent company culture. The success it is seeing as a business is no accident. We’re pleased to be supporting the operations team with a telematics product to help identify and enact efficiency.” 30.10.17

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company take the delivery of fuel to supermarket group Sainsbury’s in-house. Day described the loss as being of “some worth”. It employs 3,365 staff and runs 1,777 trucks compared with 2,459 staff and 1,203 trucks in the year ending 2 January 2016. However, Turners’ filings warned that the economic climate remained challenging and there were limited opportunities for organic growth. “The ongoing need to control costs and increase efficiency continues,” it added. Day was unavailable for comment as MT went to press.

FORS ups gold audits FORS is to up the frequency of site audits for gold members from January 2018. Gold operators will be required to commission a site audit every two rather than three years, at an estimated additional cost of £75 a year for large operators. The move brings gold into line with the bronze and silver-level audits, which last two years. Community partnership director John Hix said there are no changes to the standard and members will still be required to provide online evidence of meeting the gold and silver requirements on an annual basis. MotorTransport 3

26/10/2017 15:32:54

News

motortransport.co.uk

Haulier confident in future after recording £160m losses over past two years

New team at DX Group By Emma Shone

DX Group made a pre-tax loss of more than £80m in the year ended 30 June 2017, with financial difficulties leaking into its current financial year. The group issued a profit warning about the year’s results in February, and its CEO Petar Cvetkovic stepped down in June after an “exceptionally difficult year”. Although DX Group saw a 1% increase in turnover to £292m, the embattled company has lost more than £160m in the past two years. The majority of the pretax loss consists of an exceptional impairment charge of £74.4m. Earlier this month, DX announced it had secured loans worth £24m from shareholders to get the company back on its feet; a turnaround placed on the shoulders of new chairman Ron Series, CEO Lloyd Dunn, and new board members Russell Black and Paul Goodson (MT 16 October).

The appointments took effect with the release of the group’s results earlier this month. Series said trading in the year starting July 2017 had been affected by the previous year’s performance, and an update on this would be given in 2018. He said: “The team has significant experience, both

of the industry and of business turnaround situations and we are taking a positive and determined approach to DX’s turnaround. “We will be undertaking a review of the company’s operations to enable us to make clear and sensible decisions about recovery initiatives and to formulate a comprehensive improvement plan.”

Outgoing chairman Bob Holt said: “The year to 30 June 2017 and the first few months of the new financial year have been an especially challenging period. “However, the company’s prospects have been significantly transformed with the appointment of a new leadership team and a major new financing agreement. “I am confident the team will drive the turnaround of the business and a recovery in its financial performance.” Almost half of the £24m loaned to DX Group to rescue the business came from its largest shareholder, Gatemore Capital Management. Managing partner Liad Meidar said: “We are happy to see the new board installed and the company financed following our eight-month campaign to affect change at DX Group. Appropriately, they have decided to take substantial non-cash write-offs, positioning the company for a fresh start.”

SPEED CITY: CitySprint Group’s On the Dot delivery service has been selected to fulfil same-day deliveries for ASOS in London. The online retailer has launched ASOS Instant, which gives customers placing an order before 10am the option of having it delivered between 6pm and 10pm the same day. On the Dot will deliver to all 122 London postcodes and ASOS said it plans to roll the service out to other UK cities in the coming months. CitySprint Group CEO Patrick Gallagher said: “This move from ASOS is a recognition of the huge role that convenient delivery plays in acquiring and retaining customers, who expect to be able to shop on their own terms. We are proud that On the Dot’s market-leading technology will allow one of the UK’s most innovative retailers to introduce a new element to their customer experience.”

Minister pledges to tackle HGV parking shortage Transport minister John Hayes MP has pledged to meet his opposite number at the Department for Communities and Local Government to try to free the blockage placed on the development of HGV parking at motorway service areas (MSAs) by local authorities. Speaking at the launch of the first annual survey of MSA users, Hayes heard from the operators of the UK’s leading services that their planning applications to expand existing lorry parking were often blocked by district councils, even if the larger facilities are in the local transport plan. “We have the opportunity and the willingness to expand our truck parking,” said Welcome Break CEO Rod McKie, “but local councils are often reluctant to grant permission.” In response, Hayes said he would arrange a meeting with local government ministers to discuss “local authority guidance on incremental expansion”. He said he was considering measures to make it more difficult for trucks – especially foreign vehicles – to park in unsuitable places such as residential areas and MSA slip roads. “The chances of getting a fine paid when they have gone home is small, so we are looking at a clamp-first policy,” the minister said. “But we also need to drive up the standard of HGV parking to make parking sensibly more appealing.”

Howard Tenens employs CNG-fuelled rigids in low-emission trial Logistics firm Howard Tenens has put two 26-tonne rigid dedicated gas vehicles on the road, believed to be among the first to operate in the UK. The operator ordered the vehicles in February this year. The two CNG-fuelled rigid trucks, delivered this month, will be used by Howard Tenens in the low-emission freight and logistics trial, funded by the Office for Low 4 MotorTransport MTR_301017_004.indd 4

Emission Vehicles in partnership with Innovate UK. The 18-month trial, which runs until the end of next year, will see more than 300 lowand zero-emission vehicles deployed on UK roads. During the trial, the trucks will deliver to customers across a range of urban areas, – including London – from Howard Tenens’ depot in Swindon.

The trucks’ performances will be monitored on operating cost, range, reliability and emissions during the trial, and will switch to using biogas instead of CNG for part of the trial to compare fuel performance. Howard Tenens had been working with Scania and bodybuilder Don-Bur since April to ensure the trucks were built in time for the trial. 30.10.17

26/10/2017 10:20:45

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26/10/2017 09:20:34

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Jim Welch replaces retiring Trevor Ellis, who held the position for 11 years and remains on the board

Welch MD named Palletline chairman By Grace Wood

Welch Group MD Jim Welch has been appointed chairman of Palletline following the retirement of Trevor Ellis. Ellis held the role for 11 years and will remain on the Palletline board. Welch, who became financial director at the pallet network after the firm joined

it in 2010, said: “I wasn’t desperate to be chairman but Palletline is special because it is member-owned, and that sort of organisation only works if we all step up to do our bit every now and again. I thought it was my turn.” He added: “My role in the business will be to encourage our network members to

continue to strive towards our common goals. “Palletline’s strategy is well established and the importance to most of our members is that it remains an efficient and cost-effective way of getting our customers’ small pallet consignments delivered, and that will remain core.” Palletline MD Graham

Leitch said: “Rarely do businesses have such a plethora of highly successful business heads in their midst to choose from.” In response to calls for consolidation in the pallet network sector, which Palletforce CEO Michael Conroy raised earlier in the year, Welch said: “We’re

unlikely to sell and we’re unlikely to buy. “You could argue there are enough networks about at the moment, and if one wants to buy another then good luck to them. It will be a bold move and it will take several years to integrate two networks, but Palletline is unlikely to be involved.”

Bishopsgate replaces Trafford Park depot with Warrington facility Logistics and installation specialist Bishopsgate is replacing its Manchester depot with a new, larger facility in Warrington to meet the company’s expansion plans. The facility, located at the Eagle Park industrial park, close to the M6/M62 intersection, is the latest addition to its existing chain of depots in London, Swindon and

Glasgow. Due to open next month, it replaces its former North West depot in Trafford Park. T he Swindon-based company, which specialises in transporting, installing and storing fragile, sensitive or oversized equipment, said the depot will provide a strategic link with its network of UK depots. It will also help support

its European operations via its partnership with the European specialist hi-tech transport and logistics network Teneso. Ward Thomas Removals, which trades as Bishopsgate, holds three O-licences for a fleet of 59 trucks and 29 trailers across three UK sites. Warrington depot manager Martin Gorman said the site,

which is twice the size of the Trafford Park depot, will drive greater operational efficiency and give the company capacity for future expansion. “While retaining our workforce is a priority, we have begun our recruitment campaign in the Warrington area. Bishopsgate is expanding and this has created job opportunities,” he said.

Great Service and reliable trucks “I started Derry Refrigerated Transport in October 1999 with a Scania 113. Scania has always been our preferred brand and Scania Truck Rental has helped my company grow year on year with great service and reliable trucks.” Patrick Derry Managing Director, DRT (NI) Limited

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26/10/2017 09:24:06

Focus: Urban logistics

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Image: Rex

LoCity joins Freight in the City’s London expo Operators delivering into London will find the LoCity conference at this year’s Freight in the City Expo essential. They will be able to hear first-hand from TfL director of city planning Alex Williams on what the capital’s Ultra Low Emission Zone will mean for their operation, as well as learn more about the mayor’s draft transport strategy. Operators will also be able to find out about the latest tools and guidance to inform fleets’ buying choices and recent research focused on alternative fuels for refuse vehicles. LoCity will be inviting representatives from other UK cities to discuss their plans to improve air quality and encouraging uptake of cleaner freight vehicles. On the LoCity stand in the exhibition hall, operators will have the opportunity to speak to the team directly about the latest ultra-lowemission vehicle technology and pending air quality legislation. ■ The free Freight in the City Expo takes place on 7 November at Alexandra Palace, London. To register, go to: freight17-visitor.reg.buzz.

WHO ELSE IS SPEAKING? As well as the LoCity conference, we have three sessions on innovation, safety, compliance and future deliveries. The future is now How is the freight and logistics sector adapting? What technology is developed for urban deliveries of the future? ■ Venn Chesterton, innovation lead, ULEV, Innovate UK ■ Neil Herron, CEO and founder, Grid Smarter Cities ■ Matt Key, chief of business development, Arrival ■ Paul Blacklock, head of strategy and corporate affairs, Calor Gas ■ Sam Clarke, co-director, Gnewt Cargo Freight expectations A debate on future requirements and challenges: direct vision standard; diesel bans; disruptive technology; consolidation; autonomous deliveries; congestion.

■ James Hookham, deputy chief executive, FTA ■ Ross Paterson, head of product and marketing, Mercedes-Benz Trucks UK ■ Ryan White, assistant vice president, New York City Economic Development Corporation ■ Ali Kagalwalla, insight and innovation manager, CitySprint ■ Tim Ward, freight and fleet engagement manager, TfL Safe and secure Key security and safety issues affecting hauliers in an urban environment. ■ Matt Hague, executive director – product strategy, Microlise ■ Sergeant Wayne Watling, Metropolitan Police Commercial Vehicle Unit ■ James Backhouse, director, Backhouse Jones ■ Tony Bowen, LCV project manager, Brigade Electronics

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FTA deputy chief executive James Hookham lists the FTAâ&#x20AC;&#x2122;s priorities for Brexit negotiations

Logistics key to best Brexit As claim and counter-claim continue to emerge from Brussels about the progress of Brexit talks, the FTA has pressed for urgent consideration to be given to the needs of the logistics sector, whatever deal is struck between the two parties. UK trade and industry needs to be able to operate seamlessly post-Brexit, but in order to ensure the supply chain continues to work efficiently, consideration needs to be given to the sector now, and not at the last minute, to ensure plans can be fully thoughtthrough and implemented in a timely manner. As the most active membership association in the sector, the FTA has drawn up its CLEAN agenda, which we believe covers all the sectorâ&#x20AC;&#x2122;s asks, and, if put into action, would ensure that trade can continue between the UK and its biggest trading partner, the EU.

The FTA has asked for

â&#x2013; Customs systems big enough to cope with the 255 million additional declarations that will need to be made each year, including fast-track arrangements for approved traders, pre-clearance of goods before a journey begins and post-payment of duties to avoid detention in ports. â&#x2013; Learning support for the 185,000 UK businesses that trade solely with the EU, which will need to learn how to do customs declarations for the first time. â&#x2013; Equally frictionless arrangements by other EU countries â&#x20AC;&#x201C; our exports are their imports, so itâ&#x20AC;&#x2122;s not just a question of getting the goods out of the UK; they will need to clear EU customs as well. â&#x2013; Avoid vehicle checks at ro-ro ports at all costs â&#x20AC;&#x201C; an additional two minutes in clearance times at Dover will create a motorway queue 17 miles long, and delays in the days following the UKâ&#x20AC;&#x2122;s depar departure from the EU could be significantly longer than this at peak times. 30.10.17

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â&#x2013; No cliff-edge. Exporters and importers will need time to learn what they have to do under the new trading regime, as well as changing their procedures and instructing their staff. Businesses have no details of what is expected of them other than the broad statements made by the government in its customs white paper â&#x20AC;&#x201C; to expect them to sort all the details out at the last minute, once the government has finished its preparations, is unfair and unworkable.

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A key area that has yet to be discussed is the number of trucks permitted to travel between the UK and EU after Brexit. Currently, this is an unlimited figure, but the automatic right to send a truck overseas will end after the UK leaves the EU, and there is an urgent need to agree to continue to recognise the licences and qualifications of the drivers if fleets of vehicles are not to be stranded on both sides of the Channel. Customs tariffs and border checks on freight from the continent and Ireland still have to be addressed and this is a key concern for the FTA and its members. Disruption to imports, given the balance of trade in the UK, will be felt sooner by businesses and consumers than a disruption to exports. It is time the government started the conversation to ensure that problems do not occur. It is not an insurmountable problem, but will take time to co-ordinate.

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Motivated supply chain? Well done T Iain Speak MD Iain Speak Consultancy

echnology has affected supply chains over many years and the pace of change is ever increasing. Inventory is optimised, operational efficiency is improved and customer response times and service are always at the forefront. Much of the change has been driven by IT development and adoption, which is true of life generally. This isn’t going to stop, and nor should it. But we mustn’t lose sight of the absolute need for motivated people along the supply chain. This is an inclusive statement, everyone from those who develop the technology, analyse, design and plan the systems and processes and those who physically deliver the service, the greater the levels of motivation the greater the effectiveness and efficiency of the supply chain. Any one element that underperforms as a result of demotivation negatively affects the whole chain, probably with a greater degree than the positive elements. The integrity of the chain will be compromised. If roles are not defined in the context of the organisation as a whole in a manner understood

by those participating, the chances are these gaps in understanding will be filled by an alternative and negative view. The short message here is not to underestimate the intellect and psychology of those involved. We are essentially wired the same way. We appreciate inclusion, we respond positively to respect and most of all praise. The phrases “good morning”, “how are you doing?”, “what do you think?” and “well done” are very powerful, for everyone at all levels. The optimised supply chain will be the one that makes use of the latest technology, designed around the ultimate customer, eliminating waste, that’s efficient in every way and is built using emotional intelligence. This will lead to the optimised business. Do we do enough to develop our leaders’ and managers’ emotional intelligence? I suggest possibly not. Perhaps we should consider the motivated supply chain.

THE NEW SCANIA

Big change is coming, but beware the disrupters Concept

Filename

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Notes

Steve Hobson Editor Motor Transport

Adapt

Sign Off

Initial

Acct Management

Operator

Milly

pending the day with Martin Port, founder of BigChange, and his ‘interns’ Des Evans and Richard Burnet (see page 18) was a fascinating experience. After seeing the huge possibilities of vehicle tracking and telematics with Masternaut, Port developed an all-encompassing fleet and driver management system, calling it BigChange because it has the potential to make big changes to the efficiency and productivity of transport operations. One client has increased productivity 20% using BigChange, at a time when most operators have picked the low-hanging fruit in terms of cost savings after the recession of 2009. While world and UK economies have recovered since those bad old days, it doesn’t always feel like it for 3PLs and hauliers. Competition remains intense, margins are stubbornly low and the uncertainties posed by Brexit mean business isn’t going to get any easier. Trimming away at the margins of road transport operation may enable survival, but there is talk of ‘disrupter’ firms that are going to tear up the rule book and bring in a whole new way of doing

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Master

Studio Manager

Creative Director

business. It is already the case that just running trucks and drivers is a commodity business where competition has driven rates down to a point where only the most efficient can make a living. The rise of contract hire funded with cheap capital with repair and maintenance plus the widespread use of agency drivers means there is little financial risk for the O-licence holder – with consequently little reward. This is especially true if the bulk of their work is as subbies for the large 3PLs that farm out approximately half of their bread and butter operations. Operators that prefer to buy and maintain their own vehicles, employ drivers and form close ties with customers do better, but even they know it is a tough, price-led market where outstanding service provided for several years can be rewarded with a competitive tender and having the work taken away at any moment.

The newspaper for transport operators

To contact us: Tel: 020 8912 +4 digits or email: name.surname@roadtransport.com Editor Steve Hobson 2161 Editor-in-chief Christopher Walton 2163 Group news editor Chris Druce 2158 Group technical editor Colin Barnett 2141 Aftermarket editor Roger Brown 2168 Vans editor George Barrow 2156 Urban editor Hayley Pink 2165 Senior legal reporter Ashleigh Wight 2167 Reporter Emma Shone 2164 Group production editor Clare Goldie 2174 Chief sub-editor Rufus Thompson 2173 Layout sub-editor Grace Wood 2174 Key account managers Andrew Smith 07771 885874 Richard Bennett 07889 823060 Display telesales Barnaby Goodman-Smith 2128 Group sales manager Julie McInally 2122 rtmclassified@roadtransport.com Sales director Vic Bunby 2121 Head of marketing Jane Casling 2133 Head of events/MT Awards Stephen Pobjoy 2135 Managing director Andy Salter 2171 Editorial office Road Transport Media, Sixth Floor, Chancery House, St Nicholas Way, Sutton, Surrey SM1 1JB 020 8912 2170 Free copies MT is available free to specified licensed operators under the publisher’s terms of control. For details, email mtsccqueries@roadtransport.com, or call 01772 426705 Subscriptions Tel 0330 333 9544 Quadrant Subscription Services, Rockwood House, Perrymount Road, Haywards Heath, West Sussex RH16 3DH Rates UK £125/year. Europe £160 (€235)/year. RoW £160 ($329)/year. Cheques made payable to Motor Transport. Apply online at mtssubs.com Registered at the Post Office as a newspaper Published by DVV Media International Ltd © 2017 DVV Media International Ltd ISSN 0027-206 X

Got something to say?

If you would like to contribute to MT’s Viewpoint, email steve.hobson@roadtransport.com 30.10.17

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26/10/2017 09:32:28

Interview: Mark Duggan

motortransport.co.uk

Taking a different path Mark Duggan, MD of The Pallet Network, likes his business to do things a little differently, and his methods are paying off. Steve Hobson finds out more

ark Duggan, MD of The Pallet Network (TPN), led a management buyout of the network in February 2016 after joining as commercial director two years earlier. “I’m probably the first MD of a [pallet] network to come from the ranks,” he says. “I bring with me about 14 years operating as a depot principal within TPN. I can stand shoulder to shoulder with my peer principals and talk about the real issues. “For me, it’s the best job in the world because of the ability to work with my peers to shape the future of the network.”

Peer-to-peer network

Duggan claims TPN, which was set up in 2000, does not take the hub-down approach adopted by some rivals. “It’s a peer-to-peer network,” he explains. “It’s very collaborative and we talk about the things nobody really wants to. If the hauliers aren’t doing well, the network’s not doing well, and we fiercely protect the independence of the member haulier. We have no 14 MotorTransport MTR_301017_014-017duggan.indd 14

inner circle, no centre forwards and each member is equal. If you put in 300 pallets a night and I put in 50, you don’t have greater standing in the network. It’s a flat structure.” The other difference is that TPN covers the UK with more, smaller territories – it has 108 members and 125 depot locations, compared with 60 or 70 in other networks. “We’re 125 overlapping circles, and they all intersect in a small place called common interest, where TPN has its flag,” says Duggan. “With the growth of the pallet network sector, many companies have allowed the percentage of their business that is network distribution, to become too great. From our point of view, it should be one distribution channel among other services in a haulier’s business. “It’s almost like a conveyor belt you can’t turn off, and it’s easy to put all your resources into that,” says Duggan. “But any network is a service choice by the customer, because the platinum option is direct haulage and that is the first thing any sales manager worth their salt should be offering.

“We try and encourage our members to keep a business mix and not to allow the pallet network operation to become too big a percentage of what they do.”

Dual-running

A thorny issue as good quality regional hauliers become thin on the ground, is dual running, where hauliers are members of more than one network. If each network is offering different services, shouldn’t a haulier be able to have membership of more than one? “In a marketplace with eight different offers, market differentiation is difficult,” admits Duggan. “The sector is at a crossroads in terms of strategically moving forwards. In 2014 we looked with members at the fundamental issues and how we address them, rather than covering them up with a sticking plaster, and we agreed a collective strategy.” Duggan believes the biggest issue about dual-running is pressure on staff. “That is driven by differentiation because customer expectations are high. Most networks ➜ 16 30.10.17

25/10/2017 16:51:48

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26/10/2017 09:35:07

Interview: Mark Duggan

have increasingly complicated IT offerings, and as ever the poor driver ends up being the meat in the sandwich. Whatever the driver does, he’s wrong. As a driver myself, that’s a given. You’re always wrong,” he jokes.

Transport management system

With each network using a different IT system and requiring different procedures, dual-running is becoming harder, not easier, says Duggan. “Picture the scene where you’ve got a driver and he’s got, say, two phones and a bespoke device rattling around in his cab,” he says. “Broadly he’s within the service parameters but not quite matching what is required by any given service. That is then is fed back to a traffic office which, in the worstcase scenario, is working with three different member systems without any integrating transport management system behind it. “The stress and pressure can get quite high. That inevitably leads to staff churn and service issues. From our point of view, that’s where, commercially, the members can do what they

IS EIGHT A MAGIC NUMBER? The UK lost a pallet network in 2015 when UK Pallets closed its doors but since then there has been talk of another – Principle Pallets – joining the fray. “The sector is thriving at the moment,” says Duggan. “But there are challenges and, like any sector, consolidation at some point I would say is almost inevitable. For me, it’s not so much about how many players there are in the sector, but the quality of the players. So it would be challenging for any new entrant into the sector. But given the growth the Association of Pallet Networks reports, it does seem to indicate at the moment there is still scope within the sector.” 16 MotorTransport MTR_301017_014-017duggan.indd 16

want. Yes, they’re probably in breach of their contract but whether anything happens is a commercial matter.” One of the toughest areas to find members for most networks is the south east of England and, in common with some other networks, TPN owns one depot there – Eezehaul in West Sussex, Duggan’s old business. It runs autonomously with its own management team and is TPN’s largest delivery depot. “We’re lucky we’ve got a good pipeline [of potential members] in the South East, but it’s different to when I joined TPN,” says Duggan. “Because of high volumes, the barriers for entry are so high the small start-up doesn’t exist anymore. Our coverage is good and the pipeline is strong. But we do have to be careful about who comes into the network, and we talk about the relationship as a business marriage. “When a haulier joins a network, it’s important it’s the right network for its ethos and staff. If someone joins the wrong network they will either feel uncomfortable very quickly, or it’s clear there isn’t a synergy between the two.”

Never say never

While TPN has a waiting list of potential new members wanting to join in most areas, Duggan says “you can never say never” when it comes to TPN buying a member who’s owners want out of transport. “I don’t think it’s anybody’s plan to do so,” he says. “But if for strategic reasons it makes sense to do it then why wouldn’t we? But if a haulier’s succession plan is just an expectation that it’s going to be bought out by the centre, then they might need to replan.” TPN’s member-centric approach means: “we don’t compete with our members,” says Duggan. “We don’t have any central accounts.

All our growth comes from our members. “It’s easy as a hub to introduce false volume, but it disrupts the organic balance the members have between what they input and what they have to take out. Because contractually, they have to remove whatever at the hub is going back to their area. So if we sign a blistering account and introduce another 2,000 pallets a night, our members have to deliver them. “For us, the sustainability of the network is all about the members’ profitability. We must not do anything that forces them into irresponsible selling. The last thing any haulier wants is to run an empty lorry. If we create an unnatural imbalance, we’re forcing them to undersell the product.”

Strategic decisions

Although a previous backer, private equity firm LDC still owns a small stake in TPN, most of the shares are now held by the management team. “That is very important,” says Duggan. “It enables us to make strategic decisions in the best interest of the network as a whole rather than having to be too hub-centric. We have shareholder expectations, but it enables us to work in the best interests of the members. “Our members stay with TPN because of the strength of the relationship and the network gives them what they want. Having been a shareholder [in a parcels carrier network], I would argue our members have more of a say in what we do than if they were shareholders. We’re a collaborative network. There’s no PA here. Our mobiles are on 24 hours a day.” In practice, TPN works with its membership through a five-strong representative council, elected by members in each region. But Duggan says: “We can’t absolve ourselves of the responsibility of managing the network.” 30.10.17

25/10/2017 16:52:11

motortransport.co.uk

No pallet network boss has ever claimed to compete purely on price – and Duggan agrees when asked what differentiates TPN from the other seven networks. “High value and high quality – offering the best-value proposition is our thing,” he says. “Our consistency of service is very good and it’s really simple. We’re the most densely populated network in the UK bar none. That’s a fact. “Why is that important? The smaller a delivery area, the more resilient the service is and the higher standard it works to. Our other USP is that more than 65% of members have been with us for 10 years or longer. There’s great passion and determination that the customer’s pallet always comes first. “We’re all aware that we’re only as good as our last delivery. It’s all about consistency of service excellence.”

Day service

Next-day is TPN’s most popular service, accounting for 70% of volume. But Duggan is looking at ways to spread the two-hour nightly peak in the 367,500ft2 Sutton Coldfield hub, by introducing more services that can be processed across the day. “We’ve got a very good dedicated day service,” he says. “A lot of people ask, ‘where is the growth coming from?’ It’s coming from home deliveries or deliveries with specific requirements. A lot of senders are driven by next-day delivery when a B2C recipient wants convenience. It’s not necessarily all about nextday, it’s about knowing when a pallet is coming and getting it without needing to take a day off work. We have a great economy base service. It’s better value for residential customers and they can specify what day they want it. If they’re shift workers, they can work it around when it’s convenient for them.” Duggan says it is time pallet networks went on the same journey most parcels carriers have been down and accept B2C is where the growth will come from. “There’s a bit of a misalignment in services, because most networks are still what they were when they started off, which is a kerbside, B2B delivery service,” he argues. “The sector is evolving but it’s evolving in a fairly undefined manner. “For us, it starts at the beginning, with sales. Is the freight suitable for pallet network distribution? Have we given them a full heads-up as to the journey the pallet will go through? Is

it sufficiently well packed? Most pallets from point of collection to point of delivery are likely to be lifted by a forklift up to eight times. Is the packaging right for that? “Then, what service has been sold to the customer, particularly with home deliveries? Have they overstated the expectation at the delivery point? Because B2C deliveries are more time-consuming, but unfortunately it’s not recognised with even a small premium. So, in terms of service misalignment, it’s definitely something that we need to look at going forward.” Postcode analysis carried out by TPN revealed more than 12% of volumes it moved last year were B2C, but that type of freight reduced during the network’s overall growth of 11% in 2016. “We see that as really positive,” says Duggan. “Growth to us is about the profitability of our members. If it’s the right profile freight and it’s being sold at the right rates, so the members are making a suitable margin, then as a network we’ve got a responsibility to give it the best service. “The nightmare scenario, especially at a time when there is a lot of cheap freight out there, is that a member will start over-inputting. That is something we encourage members not to do. We encourage balance. We don’t want significant over-inputters selling at lower margins as you can end up clogging your arteries with low-paying freight, which is detrimental to the whole. I liken that to serving a steak and charging for a burger, which hauliers generally are quite good at!”

Growth rate

With no central accounts, TPN is reliant on members to sell the right freight mix at the right rate. TPN is unusual in that it also offers its XL service for specialist loads up to 6m x 2.4m x 2.2m. “Our members are independent,” concedes Duggan. “How they task their business development managers is a matter for them. We talk about the days when a member’s mentality was ‘I’ve sold it; tip it into the hub, it’s somebody else’s problem’. “Those days are gone. All networks over the course of their histories, have had elements of that. But if we behave for the next 17 years like we did for the last 17 years, it won’t work as well.”

A MEMBER’S VIEW: TREVOR EDDEN, MD, TWE HAULAGE “Mark Duggan was a breath of fresh air when he took over as MD of TPN. He arrived with 14 years’ experience of running his own depot and logistics company, and he’s seen the problems the sector can have. TPN has always had a member-first attitude but Duggan set it on a new course to benefit the members and hub. “Duggan looks at what hauliers need to be profitable and what they need from their network and that’s what it tries to deliver. That’s why we’ve stayed with TPN so long. “TPN doesn’t have direct hub accounts. Members shouldn’t have to compete with their own network when it comes to customers. I have no problem delivering a fellow member’s freight, but I would have a problem delivering freight generated from a hub direct input account. “Being a member of a pallet network should be just one arm of a successful haulage business because that makes the firm safe. TPN puts the commercial sustainability of its members first because if we’re secure, then the network coverage and service level are secure. “It’s so important that networks look after their members. There’s too much cheap freight in the rest of the sector and the transport industry generally is in a race to the bottom. We chose our network with great care and we work hard to keep shaping it and contributing. Networks can be the salvation of regional haulage but only if they actually care about their business partnership – and that’s what we have with TPN – a true partnership. “Much as I feel valued and heard within TPN, the sector as a whole needs some representation for network members. The Association of Pallet Networks represents the hubs, not the thousand or so hauliers involved.”

Duggan says TPN is “second or third in terms of pallet sector volumes” and he is happy with the network’s growth rate. “In the first seven weeks of this year, it was 12%,” he says. “Pure volume isn’t our mantra. It’s quality, consistency and resilience. If there are changes in the economic outlook, if you are a high-quality, best-value proposition, then you will be OK. Financially our members are strong. That makes us strong.” One change that came out of TPN’s 2014 strategic review was a rebalancing of fees paid for pallet deliveries. “TPN, for many years, had been known for having a sellers’ tariff,” says Duggan. “When you sell, you’re making more profit. That clearly needed looking at and that has taken place over the last three years.”

Safety first

TPN has not imposed a 750kg weight limit on tail-lift deliveries, and Duggan would prefer an industry-wide agreement on what constitutes a safe pallet delivery. “We haven’t put a limit on them,” he says. “This is a big issue and I don’t think it’s something to try and gain competitive advantage on. Safety should be the way we all live our lives, the way we all operate our businesses. “We would encourage the Health and Safety Executive to kick on with this and to give the sector an informed opinion as to the way forward. People say, ‘it’s a pallet network problem’. I disagree – it’s a problem for anybody who’s delivering pallets on tail-lifts. I’m surprised it’s taken this long. Are we supportive? Absolutely. We encourage our members, when they’re selling, to be responsible. If it’s wrong, don’t sell it.” ■ 30.10.17

MTR_301017_014-017duggan.indd 17

MotorTransport 17

25/10/2017 16:52:31

Profile: BigChange

Ready for a change At the one-day internships of former MAN MD Des Evans and the RHA’s Richard Burnett at fleet management software firm BigChange, Steve Hobson takes a closer look at the business

t the Motor Transport Awards in July, Transaid held an auction of industry ‘superstar’ interns, sold off by awards co-host Gabby Logan for the highest bidder to have them working for a day in their company. Martin Port, CEO of telematics and fleet management software firm BigChange, generously bid £12,000 for former MAN MD Des Evans and RHA chief executive Richard Burnett. He had them hard at work at BigChange’s Leeds head office, reviewing the firm’s strategy in the road transport market. Port is a larger than life character who built up and sold tracking and telematics business Masternaut in the UK before founding 18 MotorTransport MTR_301017_018-019transaid.indd 18

BigChange in 2013. The company describes its cloud-based driver and vehicle management software as “the paperless way to plan, manage, schedule and track your mobile workforce”. The system is so comprehensive it is hard to sum up what it does; even a thorough demo of its dozens of features only scratches the surface, as it aims to automate practically every function of a transport or field service operation. It also shares data seamlessly between its driver and vehicle management; job bookings; scheduling; customer management; and payroll and finance software, which avoids or drastically reduces paper trails and multiple entry of the same data into separate isolated software programmes.

Efficiency and maintenance

Used properly, the software can massively improve productivity and efficiency while reducing errors and delays in managing drivers; accidents; vehicles; work scheduling; parts inventories; health and safety; invoicing; and customer handling. Although not designed as a stock or warehouse management system (WMS), BigChange includes a parts inventory management function to help with vehicle maintenance, and for smaller operators this can also function as a WMS. Vehicle tracking and telematics is included in all three levels of service, each simply priced per month per vehicle or driver. BigChange can also take a feed from most existing tele30.10.17

25/10/2017 16:47:54

motortransport.co.uk

BIG HITTERS IN TRANSPORT AND TELEMATICS

MAIN MEN: (main picture, from left) former MAN MD Des Evans and RHA chief executive Richard Burnett; top: BigChange CEO Martin Port; and above Des Evans and Motor Transport editor Steve Hobson

matics systems already installed in the vehicle. While it schedules jobs – matching available work to assets and drivers in the most efficient order – it is not designed to replace a dedicated routeing and scheduling package. The option of a ruggedised Samsung tablet for drivers is available, but it will also work on any Android smartphone. iPhone compatibility is coming soon in Q4 this year. Port said: “We have created something quite disruptive with BigChange. It provides everything a transport operator needs.” BigChange already has 550 customers and 12,000 subscribers, and one plant hire operator has improved the productivity of its workforce by 20%. Another large bulk operator puts 20,000 jobs a month through the system, managing both its own and subcontractor vehicles and loads. “BigChange enables operators to share jobs with subcontractors – everyone can see what has been done electronically without the £20 cost of processing a paper transaction,” said Port. “It works for any size of business; transport and logistics is just one of many industry sectors we sell to.” Evans, now honorary professor at Aston University Business School, saw massive potential for BigChange to transform the efficiency of traditional road freight operators, which often struggle to make more than marginal improve30.10.17

MTR_301017_018-019transaid.indd 19

ments in the efficiency of their operations. With competition fierce and margins low, Evans argues that only those operators able to make a step change in productivity will thrive in a future dominated by disruptor firms such as Uber Freight and Amazon.

Productivity gains

“Today the average availability of a commercial vehicle is just 300 days a year,” he said. “With a 3% margin, that means most operators only make money on the last nine of those days, so vehicle uptime is the most important factor. Most fleets only use their vehicles for less than a quarter of each 24-hour period – even the best are only getting up to 40%. Doing more of the same but just a little bit better won’t do. Big productivity gains are what it has to be about.” Evans said fundamentally operators need to know “the vehicle and driver are compliant and that the vehicle is working properly”. Some operators had already asked BigChange to add a few extra fields such as driver licence checks to make the system fully FORScompliant, and one FORS inspector praised the levels of compliance it enabled an operator to achieve – and demonstrate. The RHA’s Richard Burnett believes operators would benefit from integration of the outputs from all the in-cab devices now cluttering up modern trucks, including sat-nav,

When it came to a day’s consultancy on how to improve his product and target the road transport sector, Martin Port could not have chosen two better interns. Des Evans OBE retired from his job as CEO of MAN Truck and Bus UK in 2014 – the year he also won the Motor Transport Service to Industry award. He has more than 40 years’ experience in the industry, having worked at Ford and Mercedes-Benz before joining MAN. He is now honorary professor at the Aston University Business School, working with Professor Tim Baines on the ‘servitisation’ of products ranging from trucks to tyres. After a career spent in road transport with operators including Wincanton and Samworth Bros, Richard Burnett has been head of the RHA for three years, revitalising the trade association. He took the bold step of launching a class action against Europe’s major truck manufacturers, seeking compensation for overpricing trucks, which has more than 2,000 operators signed up. He has significantly raised the profile of the association, reaching more than 408 million people through national and social media in the past 12 months, and has grown the RHA membership among own-account as well as hire and reward operators. Port, on the other hand, started his working life at 15 in retail and then in bread and pretzels in New York. He returned to the UK in 1990 where he continued in the baking industry, until he got married and got into vehicle tracking with the ill-fated Minor Planet. He saw the potential of vehicle telematics, however, and founded Masternaut in the UK under licence from the French parent in 2002, building it into the UK’s largest B2B tracking business before selling it to Aéroports de Paris in 2009. After a short break honouring a no-compete clause in the sale, Port began developing next-generation software that formed the basis of BigChange, which he launched in 2013. He expects BigChange to turn over £7m this year and has ambitious plans to grow the business.

tachograph, telematics and phones. “Operators just want a one-stop-shop for all the in-cab technology,” he said. “They also need to be able to see in real-time how many hours a driver has left.” BigChange’s telematics module links to the digital tachograph status and the company is working on being able to remotely download driver files for analysis in accordance with O-licence conditions. Burnett also saw that BigChange’s ability to share jobs electronically was ideal for today’s logistics operators that are heavily reliant on subcontractors. “The big 3PLs sub out up to half their work,” he said.

And the future...

Both Evans and Burnett were of the opinion that the DVSA’s earned recognition “will be the future”, and advised that BigChange must be able to deliver the necessary fleet management data in the right format. “For earned recognition there will be five key criteria the DVSA will want to see in a standard format,” said Evans. After a day discussing BigChange’s strategy for the logistics sector, Port pronounced it a “very valuable experience”. “I have loved the day,” he said. “It is now all about what happens afterwards and there will be further meetings in future.” ■ MotorTransport 19

25/10/2017 16:48:23

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26/10/2017 09:38:44

MT Awards 2017 winner profile Temperature Controlled Operator of the Year

Family firm plays it cool M cCulla (Ireland) has developed from a standard refrigerated haulier to a full-service temperature-controlled transport and storage provider. It provides groupage and tailored services for customers of all sizes, including full-load deliveries by pallet or box, mainly of temperature-controlled goods. Its headquarters are in Lisburn, Northern Ireland, 30 minutes from Belfast port, and in January 2014 it opened a facility in Ballymount, close to Dublin port, which provides storage and cross-docking of goods.

Route to market

As well as offering a regional DC to store supermarket work, the firm also delivers to restaurants and a hotel and restaurant chain in Northern Ireland. McCulla operations director Brian Beattie told MT: “The company offers product collection, storage and picking to order, as well as transport from Ireland to the UK, for the frozen and chilled sector. We offer a route to the Irish market that many European/UK mainland operators aren’t willing to do. We provide services to a range of end-users, from major

Temperature-controlled storage and distribution firm McCulla (Ireland) serves the UK, Ireland and the continent and secured this year’s award for its flexible, innovative performance

international manufacturers to the small corner shop.” McCulla has diversified into niche distribution sectors over the last five years. For example, it supplies goods to the pharmaceuticals industry, a compliance-dominated sector that involves the transport of temperature-critical and highvalue or sensitive loads.

Expansion

It has also expanded into the transportation of technology products, and is doing five loads a week from the UK to Paris. The company also provides security escorts on its technology and pharmaceutical routes. “Our organisational structure embraces change and we strive to invest and advance the business, in terms of facilities,” said Beattie. It runs a mixed fleet of 100 trucks and 150 trailers, as well as Mercedes-Benz Sprinter vans and rigids up to 18 tonnes. They include urban rear-steer trailers; 13.6m multi-temperature trailers; roller-bed trailers for air cargo; twin-deck trailers with moving floors and high-roof twin-deck trailers. The firm will become one of the first in the UK and Ireland to order a gas-powered Volvo, from its range when it is available in November.

FAMILY STRUCTURE McCulla (Ireland) was established in 1969 by David McCulla, and is under the ownership of the second generation of the McCulla family, brother and sister Ashley and Carol. The pair, who took joint control in 1992 as shareholders, have overseen an increase in turnover from £700,000 in 1992 to £21.7m in 2016. MD Ashley McCulla is an RHA board member at national level, while Brian Beattie (right of picture) sits on the RHA regional council for Scotland and Northern Ireland. Although still overseeing the company, the McCullas have recently taken a step back, entrusting the day-to-day running of the operation to Beattie; Peter Summerton (left), commercial director; and David Bradford (centre), financial director. “The change in structure is about positioning the company to be the best it can in the future,” says Beattie. “We will continue to offer a pro-active, quality and flexible service, but in today’s fast-paced and impersonal culture, the business will be influenced by its family roots.” The judges were impressed with McCulla for being a “highly flexible, innovative, service-led” operator with high levels of compliance and a “great environmental performance”. 22 MotorTransport MTR_301017_022-023.indd 22

30.10.17

25/10/2017 16:40:40