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TNT may burst on the British haulage scene
Page 53
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by James Millen A £77m multi-national transport group is eyeing the European road freight market
THE fierce competition in the British haulage industry looks like being stepped up soon if the giant Australian-based, multi-national group, Thomas Nationwide Transport, goes through with its present plans to set up a company in England.
How large an operation TNT has in mind for this country is not yet clear, but one Australian stockbroking firm suggested to me this week that the initial investment was thought to be of $A 1m (about £550,000) for a 60 per cent interest in a UK-France operation. This operation is said to take the form of a fast overnight freight forwarding service between London and Paris.
TNT, a £77m transport undertaking, is probably the largest haulage group in Australia. It claims to provide a complete transportation service. Activities cover road, rail and sea forwarding, storage and distribution, local delivery, general and refrigerated interstate haulage, vehicle repairs and maintenance, and a customs and shipping division. The group also provides a service to manufacturers of nationally marketed products by providing warehousing and bulk distribution from factory to retail outlets throughout Australia.
Nottingham company Only six weeks ago the group took over a Nottingham security company called Armaguard Ltd — which gives some idea of the very wide range of its interests. TNT has, in fact, only recently extended its transport activities to include armoured car and computer pay services — a new division, TNT Armoured Express Company, was set up with an initial six vehicles.
But at present TNT has no company in England; at Companies House this week I confirmed that it is neither registered as an overseas company nor as an English subsidiary of the Australian parent.
There is no doubt that TNT, with its vast resources, could make a sizeable impact on the British transport scene. In 1972, for example, its turnover was SA122,390,000 — roughly £68m on conversion at £1 — not much less than Transport Development Group's 1972 figure of£73.9m; and it is expanding fast in several directions.
Last week it was announced that TNT is to acquire the North American transport group, Acme Freight, one of the largest freight forwarders in the US. Acme, which has operating rights in all the mainland states, Hawaii and Alaska, as well as in Canada and Mexico, has revenue estimated at SUS52m. This, on conversion, produces a combined TNT-cum-Acme turnover of approximately £88.2m.
TNT is trading favourably this year. It announced a 43 per cent increase in its 1973 interim net profit at $A3.42m, against $A2.38m. Interim sales were SA70.3m, against $A61.7m in 1972. A large net profit for the full year (1973) has been forecast by one Australian stockbroking firm — $A6. 5m (£3.61m), compared with $A4.78m (£2.6m) actual in 1972.
Expanding rapidly TNT, which with Mayne Nicholas Ltd and Brambles Ltd has about 85 per cent of the Australian haulage market, was formed in 1961 to acquire two established companies. It has expanded rapidly, mostly by acquisition. The philosophy has been to offer a complete transport service in Australia and in the Pacific Seaboard countries.
But because TNT now sees its growth in Australia slowing down, it is looking for opportunities abroad — to further develop its interests in Canada and North America and to set up operations in Latin America and Europe.
In April the group paid SUS2.7m for a 70 per cent holding in Transport Total Pampa, one of Brazil's top five transport groups, and it was announced that TNT had established a subsidiary in Singapore (95 per cent owned) initially to cater for wharf-factory-wharf transport, but later to expand into Malaysia.
Now, with the acquisition of Acme — a loss-maker for the past • few years — TNT will have a huge network of routes in N. America and Canada. Numbered among the group companies in this area are Alltrans (in the US), Kwikasair Canada and Alltpns Canada. Another company, Overland, is also being purchased. It is the intention of TNT to link Acme with the existing Alltrans Express operations in Canada and California.
Acme freight, part of the Alexander and Baldwin Transportation Group which owns the Matson Line, is reported to have lost $2m last year. Among its assets is a fleet of about 400 vehicles with a book value of $155,000.
But in view of the size of the Acme liabilities there is to be no consideration payment in this takeover. Sir Peter Abeles, managing director of TNT, explained this last week, pointing out that the book value of the tangible assets was roughly equal to Acme's liabilities.
TNT is, hoirever, to cover Acme's minimum anticipated losses during a period of re-organization; it is expected that these will not exceed $A3m. Provision for these losses will be made on acquisition and TNT will regard the losses as the true capital cost the purcha se.
Sir Peter predicts that Acme will be maid a profit by mid-1975. He also observes that would have cost TNT something like $10m establish a company of this nature.
Acme, with the application of TN1 know-how, should add significantly to grot profits for a modest expenditure. The like impact of group revenue is seen as being : major that TNT forecasts N. America revenue of $ 200m within two years, compart with around $ 130m for 1973.
The expansion of TNT has been so gre, in the past 10 years that few of them have ra seen the raising of new capital. Only last wee it was announced that TNT is to raise a furthi 5A5.1m by another one-for-10 rights issu This new issue will increase group issue capital by 13.1 per cent to SA 17.6m.
TNT is claimed to have pioneered th development of the freight-forwardin concept, with rapid inter-city containerize transport linking the group's well equippe centrally located terminals, serviced by a extensive road transport system.
Interstate forwarding by rail through th company's own facilities and sidings at ra heads in each mainland capital city is growing business. In this traffic the compan: uses rail louvre vans (hired from Governmen Railways departments), Flexivan and Flexi flat rail trailers (35ft units which are rolled of road wheels on to a special type of rail car and containers.
Together with various combinations o road/rail and sea/road services, the grout maintains a large fleet of artics providinE scheduled interstate road services, an reckons to provide a door-to-door service ir all states.
Significant acquisitions of TNT ir Australia in recent years were the mammotf Alltrans Group, in 1967, and the purchase o: four subsidiaries from Cargo Distributon Ltd (a subsidiary of TDG) in 1966, the Kwik, asair Group in 1968 and of Hawthorn Tax Trucks (Australia) Pty Ltd in 1970.
Purchases abroad Large purchases abroad have included the big American organization, Walkup's Merchants Express Inc, and the largest inter-provincial transport company in Canada, Gill Interprovincial Lines.
TNT has extensive shipping interests, too, and manages and has a one-third interest in Bulkships Ltd, which owns and operates a number of bulk ore carriers, general cargo and container ships in the Australian coastal trade.
Interestingly, TNT's dynamic expansion has not been matched by any explosive growth in profit margins. For the past four years these have been running at between 6-7 per cent — approximately half the profit margin managed by TOG.