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TNT Logistics by any other name...
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Page 27
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TNT Logistics rebranded as Ceva Logistics in December.
Chris Tindall asks managing director Neil Crossthwaite what the future holds and whether the firm can go it alone.
Funnily enough, 17th-century Italian Jesuit mathematicians are not normally a common feature in UK road haulage. But the launch of Ceva Logistics late last year has enabled what was TNT's logistics arm (prior to its sell-off to venture capitalists) to identify itself four-square with the scholarly advances of a mathematical genius.
Or that, at least, is what Ceva's PR department would like us all to believe. The press release announcing the new name valiantly attempted to link the Italian Giovanni Ceva's theorem regarding triangles with Ceva Logistics' three "cornerstones of strategy". To his credit. Ceva managing director Neil Crossthwaite is a little more circumspect.
"I don't know if it particularly comes from anywhere," he says, when asked about the name's origins. "There is a reference to the 17th-century mathematician [but] I don't think we are claiming it comes from Giovanni. It's short and punchy and doesn't offend anyone in any language we know."
Crossthwaite sportingly offers to recite the theorem, but this is declined politely. Of more interest to CM is Crossthwaite's background and how he has risen to head up the UK's third-largest logistics company (after Exel and Wincanton). "I am a TNT employee, man and boy," he explains. "Some 28 years ago I joined TNT and I've worked with it ever since."
When Crossthwaite first crossed the firm's threshold it had an annual turnover of ifim. Clearly, he has witnessed some changes since that time: "I was around when logistics was born in 1985/86.That really was the birth of the logistics business and ultimately that became TNT Logistics. We entered into a relationship with News International in Wapping [and then] won our first ever bid — and that was the birth of this organisation."
Confident of growth
In August 200 the private investment firm Apollo Management paid ilbn for the logistics business. allowing Netherlands-based TNT to concentrate on its core mail and courier activities. Analysts speculated whether the sale was a precursor to a piecemeal sell-off. and Crossthwaite doesn't entirely quash these rumours; "I'm not Apollo so I can't comment," he says. "I can't comment on longterm plans, [But] I am confident that this business will continue to develop and grow for a considerable number of years ahead:.
He is also confident about the security of the company's 7,500 staff, 3,500 of whom are drivers. And the reason, he says, is the relationship established with its customers: "There's no issue in terms of the security of our employees; we see only positive opportunities for our employees.
"Since the announcement of the sale right through until now not one customer has decided they don't want to be involved in our business going forward:That is profoundly important to us.
"The reason is that our customers have established relationships with us here in the UK: they rely on our employees. If the message to those customers was we are going to start tinkering with everything, they would feel very different about extending those contracts."
TNT has retained a 50/ interest in the business, although it has no role in board matters, and Crossthwaite says he is pleased about this, and is happy to be free of the constraints brought about by the competition for funds which occurred when the company was just one of several businesses TNT controlled.
As long-term plans are not up for discussion, I ask what Ceva's short-term strategy might be.
"Doing what we do," Crossthwaite replies. "Keep winning new customers, getting our brand out and renewing contracts. We have two major new contracts [to announce] in January, as big as anything we have seen in the past 12 months. We'll keep adding value and show customers we are at the forefront of technological capability.
When the sale of TNT Logistics was announced in December 2005 it might have heralded a stormy period, but Crossthwaite says 2006 was "one of the best years we have had for four years. We had a cracking year: we won new business with Tesco, liver and Disney. Our contract renewal rate was also the best we have had for the past four years."
Last September Ceva CEO Dave Kulik indicated that he might be in the market for buying a freight forwarding operation. However, John Manners-Bell, director at analyst Transport Intelligence, has queried whether the "heavy debt" TNT Logistics was saddled with following its purchase by Apollo might put a damper on these ambitions.
Funds for acquisition Again, Crossthwaite declined to comment beyond saying that if an appropriate acquisition were to come to Ceva's attention -there would be likely to be funds available for it. Apollo is very large with very large hacking. I am confident that if there were an actual acquisition in the market the funding would be available."
The fragmented state of the industry suggests that if companies are not involved in acquisitions they are looking at the alternative strategy of consolidating. But Crossthwaite denies Ceva is considering either of these routes at the moment. In fact, he remarks dryly that Exel has already "swallowed most of them up", before insisting Ceva is more than able to go it alone.
"We're a large player in the UK market," he points out. "Certainly. I agree with you that consolidation is a huge issue and I see it continuing in the UK market. But there aren't that many large players left. We're big enough to stand on our own two feet." m