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Expanding European trade is making it essential for many UK

28th July 1994, Page 28
28th July 1994
Page 28
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Page 28, 28th July 1994 — Expanding European trade is making it essential for many UK
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operators to establish a presence on the Continent. Joining a consortium can provide an efficient, low-cost solution.

0 ver the past five years, the value of UK exports to members of the European Union has increased by more than 50%. The increased business this has generated for international operators has heightened their need for strategic bases on the Continent which can provide on-thespot equipment, delivery and storage.

Forming a consortium with Continental partners avoids the costly investment that is usually needed to set up satellite operations from scratch. Consortiums can also provide the expertise and language skills necessary to market UK-based services and deal with local operational problems.

As a result, the popularity of forming such partnerships appears to be growing. Sainsbury's has links with three Continental supermarket chains to develop "opportunities in the European market in distribution, marketing, trading and information technology".

Consortium

Palletways (UK), a consortium of independent hauliers, is on the look-out for partners in France, Spain, Italy, Germany and the Benelux countries. Director Andy Hibbert says the creation of the Single Market has given added momentum to the trend: "With the barriers coming down, we should all look for the opportunities that this represents."

The West Midland-based consortium has 38 UK members and specialises in express haulage for any goods handled by fork-lift. Although only founded in May, Palletways has contacted a potential Dutch partner and has started negotiations with a Dublin-based operator with a view to setting up a similar consortium in Ireland. "Once that is up and running it will link in with us to offer an overnight service to Ireland," says Hibbert.

This month Kent-based Kudos Logistics announced the formation of a partnership with Viditrans Group, comprising eight Dutch transport and distribution companies. Kudos is part of the Direct Express UK overnight delivery network and was founded by Geoffrey Cave-Wood, former chairman of Cave Wood Transport. "I provide the international links for Direct Express and they provide the UK distribution network for me," he says.

As well as the Dutch link he has formed partnerships on behalf of Direct Express with a Belgian company and a consortium of German companies. "The German organisation consists of 70 independent companies and each one will ultimately be selling the English service," says Cave-Wood.

He says one of the beauties of working together is that it makes it much easier for UK customers wanting to deliver goods between EU states on the Continent. Although there is nothing new about UK companies forming partnerships with Continental operators, Cave-Wood explains that the type of relationship is changing now there is no longer a need for customs' clearance within Europe.

"The paper relationships between forwarders and so forth is being replaced by physical relationships," he says, "be it in warehousing, trucking, handling or labelling. Transport companies see a need for a particular facility and are often way ahead in doing what their customers perceive to be possible."

Having been involved in partnerships for much of his 30 years in road transport, he is well aware of the pitfalls: "Everyone dreams that they are going to be the beneficiaries and are going to receive a lot of extra work as a result of these new alliances. This is followed by a dawning of the truth and disillusion. Partnerships will normally only work if both parties are making money out of the deal; it won't work if one partner feels he is being ripped off by the other." He believes that one of the golden rules for successful partnerships is compatibility, which not only means a mutual affinity between the people involved but linking companies with similar backgrounds. It is also important to have a protocol which anticipates potential problems before any deal is struck. Apart from costing less than setting up satellite operations, partnerships have the advantage of providing strong local links. Cave-Wood says fear of foreign business interlopers is far greater on the Continent than in the UK. But this argument is countered by Stokeon-Trent-based Brit-European Transport which has had a presence on the Continent since the early 1970s. It now has five inhouse sales offices in Belgium, France and Italy, including two with transport depots.

Managing director Rod Carmen says the preference for using locally run companies has as much to do with the greater flexibility they offer as with nationalism: "One of the stronger reasons for having your own companies there is that they can develop in a way that fits on the day.," he says. Traditionally, agents have been most hauliers' favoured route to finding business in Europe but this approach is often found to be too unreliable.

Britannia Movers International is a consortium of 40 independent UK removal companies which secures large corporate contracts for its members. Formed in 1981, it is seeking to formalise some of the unofficial tie-ups it has with Continental companies as its pan-European business expands.

Joint managing director John Court says the aim is to find partners in all the main European capitals, but only if the right people can be found. "This is a fairly specialised industry and we don't go out appointing the first people that come along," he says, "We have to strike a relationship with them first of all, get to know them and see if we can trust them." Britannia is poised to sign up a Brussels-based removal company as its first Continental member.

Apart from being on the spot to sort out any operational difficulties, partners can also provide equipment and trans-shipment facilities. Court says there is a need to formalise relationships so a common standard of service can be operated by all members.

"We are probably the only sector of the industry which goes in and out of people's houses, handling their personal belongings,'' he says "You can't get just

anyone to do the work for you because you don't know how they will do it. People have to be vetted."

Recruits have to buy a stake in the consortium, usually worth a minimum of £1,000, and the overall cost of setting up as a member is about £4,000. Court says this investment helps enhance the sense of commitment to the enterprise.

Another means of strengthening commitment is to buy a stake in a partner. Birmingham-based international operator Chambers & Cook Freight has 35 trucks and 60 trailers. A year ago, it bought a 5% stake in MJEZ International, a family-owned business based in Paris. "They deliver small bits and pieces for us and they liaise with our clients," says transport manager Paul Blackburn. "They also work for us in terms of reloading our trailers for trips back to the UK"

MIR, which has five trucks, orig. inally worked as Chambers & Cook's agent in Paris but Blackburn says the problem with agents is that they can easily end up working for someone else. "At the end of the day," says Blackburn, "the owner of MJR can sell the majority of the company to someone else but it's better to have a small interest than no interest at all. By taking an interest in a company we can develop our services and make it more of a long-term relationship." E by Guy Sheppard


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