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er isn't beautiful when it comes to profitable haulage
Page 8
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Larger haulage firms aren't necessarily setting the world alight with their business success, says a new report. Guy Sheppard investigates.
BIG IS NOT necessarily better when it comes to road haulage, according to Plimsoll Publishing. It compared the performance of the industry's top 200 operators with 2,000 of their smaller competitors and found that economies of scale do not always apply Although the biggest 200 companies control 94% of the market, less than half of them make a higher profit than the industry average. In fact 95 of them are said to be less efficient than average in their use of employees and 78 are in financial danger because of their profitability and levels of debt.
Among the 2,000 smaller operators (with turnover less than £.6m a year) more than 30% are said by Plimsoll to be financially strong. Many also show strong growth with 71 increasing sales by more than 25% last year and 132 delivering pre-tax profits of more than 8%.
David Pattison, manager of Plimsoll, says: -There's a perception that big operators are better run businesses and small guys are being squeezed out of the market. Analysis shows that this is absolutely not the case." Peter Acton, secretary of the Transport Association, which represents a network of 60 hauliers, says many suffer from "diseconomies of scale" once they have more than one depot:"There is a danger that costs get out of kilter with revenues because you are having to manage remote places.
"Once you get into the Exels and Bibbys of this world you can start to look at things like automated warehousing and networked transport solutions. That's when you start to make financial gains."
• The Plimsoll Road Haulage Top 200 Analysis costs £500; CM readers who order it will receive a free copy of the Top 2,000 Plimsoll Porffolio Analysis.