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1st March 2001, Page 42
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Page 42
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Which of the following most accurately describes the problem?

Closures at Ford and Vauxhall mean that car transporters face a steep decline in work. Some are exploring imaginative alternatives to existing traffic. Guy Sheppard reports.

IVII ore than two million new

cars have been registered annually in the UK over the

last four years. Every time somebody buys or leases one of them, a chain of movements is triggered which often involves second-hand cars as well.

AutoLogic Holdings, the market leader among UK car transporters, estimates that more than 10.5 million cars have to be moved every year. This might suggest that anyone with spare capacity will have little difficulty filling it but, as in most areas of haulage, margins are tight and competition is intense.

Difficulties

Early next year, the difficulties facing this sector are likely to intensify when car and van production stops at Ford's Dagenham plant and Vauxhall ends all car production at Luton. AutoLogic's marketing manager Mark Morgan says: "Any time there is some sort of shut-down, closure or change in the dynamics of the market, competition does intensify."

AutoLogic will be one of the worst affected by the cutbacks. Its part-owned subsidiary Ansa Logistics has a fleet of 280 trans

porters and handles 8o% of Ford's vehicle movements. But Morgan says a similar number of vehicles will still need to be transported in the UK because Ford will simply import vehicles needed by the domestic market.

Nearly all of Dagenham's exports go by ship from a jetty alongside the plant so there will be no loss of work on that side either.

Transporters

The Luton closure is likely to have far more impact on AutoLogic's other main subsidiary, Walon, which has a fleet of 300 transporters and is the main carrier from the plant with Richard Lawson Autologistics. Last year Luton produced I12,000 cars of which half went for export.

Morgan says the closure is not a serious blow to Walon but adds: "We will be going into Vauxhall and saying 'you have contracted to do a certain number of movements with us'?

The knock-on effects from these cutbacks are likely to reverberate far beyond AutoLogic and Lawson. Morgan says his company has contracts with about half the car importers and manufacturers in the UK so it can spread its resources among other customers. The cutbacks will be partly offset by increases in production elsewhere in the country. 17)

D Toyota, for example, is boosting production at its Derby plant by 50,000 units next year and Nissan is set to increase car production in Sunderland from 330,000 to as many as 500,000.

But a general trend of more cars being imported at the expense of domestic production now seems established with the result that there is less work overall for car transporters. Since 1997, the proportion of new car registrations that are imported has steadily risen from 66% to 72%.

Concerns

There are other concerns for the sector as well. Graham Taffs, managing director of Axial, which delivers for Nissan and has 140 transporters, argues that as vehicle production is consolidated into fewer hands, manufacturers will increasingly look for Pan-European or even global logistics providers to meet all their distribution needs.

"Couple that fact with the investment that is needed in equipment, systems and even rail rolling stock and smaller players will increasingly find a barrier to hang on in there," he warns.

Although the typical cost of a transporter is Z.T20,000, they can cost in excess of f300,00o minus the tractive unit. Drivers do not come cheaply either, taking around three months to train and commanding salaries of f25,000f30,000. Another trend to watch out for is big players muscling in on work traditionally

done by the smaller operators.

Auto Logic's Morgan says that although its share of the new car market has grown phenomenally over the last five years, the company needs to expand into other areas. "Because the new car market is finite, you can't continue to grow in it for ever and ever," he says. Our primary purpose is to utilise our vehicles as best we can."

In 1992, the company started a transport brokerage operation whose primary purpose was to find backloads for Walon vehicles. It has since branched out into other work, including deliveries for auction companies. Morgan says that the 170,000 movements currently being handled annually by this service is "only scratching the surface of what it could do".

AutoLogic's ambitions also extend to Internet sales. Last year it set up a delivery service called &liable to handle

deliveries which go straight to the customer, by-passing the dealer network. Based at Walon's Upper Heyford site in Oxfordshire, it has a 15-strong fleet of smaller transporters that are suitable for delivery direct to homes.

Are there sufficient rewards for the bigger players to move outside their core areas? Ian Carter, managing director of IC Vehicle Deliveries in

Livingston, Scotland, says there is no lack of business opportunities, but making money out of them is tough,

The company has /6 transporters and makes deliveries for rental and auction companies as well as subcontract work for manufacturers.

Last year, it turned over L2M but only made a profit of L97,0 oo—nearly half the figure recorded in 1999. Carter blames high fuel prices and the reluctance of manufacturers to agree to rate increases.

Buyers

With combined pressure from government and buyers to bring UK car prices into line with those on the Continent, he says manufacturers are in no mood to compromise: "The last thing they want to do is to put delivery costs up." Axial's Taffs agrees: "There's a lot of 'cost down' pressure on outbound logistics. We are looking at alternative ways of doing what we do more efficiently at the moment."

Carl Richardson, managing director of Harwich-based Carlson Vehicle Transfer, says the big players are unable to match the flexibility offered by smaller businesses such as his. "We don't have the contractual obligations that they do to the major manufacturers. When coming into the secondary market, they can't give it the commitment we can."

Richardson started off in 1993 with one transporter, having been made redundant as a driver. He currently has a fleet of 25. Although he expects growth to continue, it will not be at the same rate as before: "The loss of the car plants will mean a lot of transporters looking for work. We're all after one thing at the end of the day, and that's vehicles to move."


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