THE CAR'S THE STAR
Page 50
Page 51
If you've noticed an error in this article please click here to report it so we can fix it.
There are more than 25 million cars in the UK and, like any load, cars have to be moved from the factory floor to the customer. Mike Sherrington reports on the state of the UK car transporter sector, and looks at the pros and cons of working in this sector...
The car transporter sector has been boosted by Ford's plan to increase production at its Dagenham plant by 50,000 to 3oo,00o vehicles a year, and to make Dagenham the sole West European source for a second model line with a capacity of r5o,000 units a year. Even without this increase, the motor trade is pretty buoyant.
The situation at Ford is complicated because the company is about to change its major distribution firm, moving from Axial to a new organisation, Brentwood-based Triple A Logistics (CM 6-12 May).
Surprisingly, this has been welcomed by at least one of Axial's subcontractors. Carl Richardson, managing director of r8-vehicle Harwich-based Carlson Vehicle Transfer, says: "I hope the new move will free up the use of subcontractors. Axial's agreement was rigidly controlled by the unions which made it very difficult for subcontractors to get work."
The overall buoyancy of the sector is reflected in the registrations of cars and vans, which have increased every year since 1993. Figures produced by the Society of Motor Manufacturers and Traders show that in 1993 1,778,426 cars were registered, rising to 2,247,402 by 1998. This is close to the 1989 all-time record of 2,300,944.
Clobalisation
However, during that time the motor industry has changed considerably. Car production is subject to globalisation (vehicles sold in the UK, for example, are made all over Europe), and this has led to a change of emphasis for vehicle transporters. Ford alone exports 45,000 vehicles a year, and also imports complete vehicles and parts.
For Ford, getting parts made in this country and overseas to the factory gate under a justin-time delivery system is more crucial than delivering completed vehicles to the showrooms. "Ifa new car is a day or two late reaching the showroom it would be bad but not fatal," says a company spokesman. 'But if parts are delayed that could hold up the production line, with far worse consequences," Vauxhall, a subsidiary of General Motors, aims to manufacture its vehicles close to their strongest markets, but also runs a panEuropean logistics operation. We move all of our goods by road and tend to use firms that we have built up good relationships with over a period of time," says a spokesman. "But on the other hand we have to keep contingency plans up our sleeve to overcome problems such as strikes on the Continent."
The globalisation process has led a number of major transporter specialists to set up outlets on the Continent. Typical of these is
Dundee-based Richard Lawson, which operates 350 vehicles from this country and another 150 from Germany; and Sheertruck, which has a French subsidiary, SVTV.
However, this trend works in both directions. Carl Richardson says: "One of the major threats to the industry is the number of foreign transporters which are now coming into this country and which use cheap diesel and VED to undercut our prices."
There is a marked divide between the large fleet operators, which are usually locked into two or three-year contracts with major producers, and smaller firms which operate on a day-to-day basis.
Smaller operators tended to provide the extra capacity needed under the old registration system when the registration letter changed every August. Buyers want vehicles with the latest registration letter and up to 25% of annual sales were traditionally made in August. The run-up to the August registration was traditionally a period of all hands to the pump, with major operators subcontracting a lot of work or taking on drivers for vehicles which remained unused for most of the year, This August registration system has now been scrapped in favour of two new registration dates a year, in March and September. This was intended to smooth out the demand peaks, but all it seems to have done is to replace one peak a year with two.
Registration
John Fowler, finance director of Sheertruck, says: "The run-up to the March registration was much busier than we anticipated, and once we are over that we will have to start building up for September." Sheertruck runs a core of about too vehicles and tends to subcontract any extra work to a number of trusted regular subcontractors.
Most of the large companies report that business remains buoyant, but there has been a series of takeovers, such as Axial buying Tolman and Sheertruck buying so-vehicle operator HSL, which means the large firms are getting even larger.
Inevitably the workload tends to be dictated by the amount of vehi des that major clients produce, and the luxury of long contracts can quickly turn sour if car manufacturers suddenly cut back on production or change the firm they use, as has happened to Axial.
Two other major factors are changing the car distribution sector. One is the growing use of rail. This has been inspired by the advent of the Channel Tunnel which makes distribution to the Continent much easier by rail— Land Rover is the latest car manufacturer to explore sending a number of its export vehicles direct by rail.
The other development is total supply chain management. This is explained by Patrick Rohde, commercial executive of Richard Lawson, who defines it as "the use of just one logistics firm to do every thing, including the supply of parts and the delivery of vehicles".
This development could transform the configuration of fleets in this sector because as well as car transporters, operators will have to run more traditional vehicles such as flatbed and curtain-sided trailers.
But the car transportation sector is not just about moving vehicles from manufacturers to retail outlets.
Ray Taylor, operations director of PVDS, says: "We tend to be busy when others are quiet because a lot of the work we do is for carhire firms or involves shifting unsold stock around from one dealer to another. Ford, for one, has demanded that its dealers keep three months' worth of stock, and if this is not sold it has to be moved to another dealer.'
On the whole the sector is very strong; the seasonal element of the work has been reduced and there is an upward trend of new registrations. However, the growing threat from rail and the Government's fuel duty escalator could mean that this buoyancy is short-lived,
Entry barrier
Car vehicle transportation is pretty much a closed shop which is much tougher to enter than most sectors of the industry. One reason for this is the cost of setting up an operation. A complete new rig costs between £130,000 and 1140,000, and once bought it cannot really be used for anything other than transporting cars.
Also, car transporters are not easy to come by—there is a waiting list for new vehicles. Even major fleet operators, which make regular purchases and therefore have some clout in the market, say that if a new transporter was ordered now you would be lucky to get it by the end of the year.
To make the situation worse, there are very few second-hand vehicles on the market. This is partly due to the fluctuating nature of an industry which until recently had a very definite peak in August. with the start of the new registration letter. Many firms tended to keep their old equipment in mothballs and bring it out to meet such peak demands.