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Branching out in business can pay dividends—but the reverse is

20th January 2000
Page 40
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Page 40, 20th January 2000 — Branching out in business can pay dividends—but the reverse is
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Which of the following most accurately describes the problem?

also true. Do you speculate to accumulate or play it safe? Mike Sherrington spoke to five operators and found compelling arguments on both sides of the fence...

The road haulage industry is in the doldrums with more and more firms finding it harder to make ends meet because of high fuel and excise duty, fierce competition and a shortage of drivers. One way to try and overcome these problems is to diversify into specialist sectors. This is not as easy as it might seem because the cost of equipment can be prohibitive and because moving into different areas requires drivers to develop a different set of skills, and the right training is not always available.

The advent of just-in-time deliveries, the growth of the parcels trade and refrigerated deliveries and the increased sophistication demanded by clients are making life tougher than ever for small general hauliers running flatbeds to carry heavy industrial goods.

One area which could be looked at is heavy haulage but Richard Dunkerley, managing director of IR Dunkerley, says: -There are too many vehicles chasing too little work already and the cost of setting up in the business will also deter a lot of potential entrants." Some 50% of Dunkerley's business is in heavy haulage; much of the remaining work involves transporting bricks.

Naturally costs vary, depending on what part of the heavy haulage sector you want to enter. Dunkerley explains the requirement for the right gear. Pulling caravans, for example, could be handled with a tractor

dovvnplated to 30 unties GCW and a specially adapted trailer, but the equipment at the heavier end of the market costs between fifi,000 and £25,000 per axle line and a single load might require up to three tractors.

"Another stumbling block is that there is no formal training for people entering the market," Dunkerley adds. "They have to learn on the road. And there is also the problem of getting permission to take heavy vehicles on the highway. In the old days you got permission from either the Department of Transport or a county council. Now, with the privatisation of the network, this is a minefield even for experienced operators. You just don't know who to ask any more."

Hazardous goods

Another area which is difficult for new entrants is the hazardous goods market. This sector has an excellent safety record, not least because of a host of regulations. The latest, which came into effect on i January, requires every site which works with hazardous goods to employ a qualified dangerous goods safety advisor. Every hazardous goods driver must have an ADR licence, which is available in seven categories reflecting the type of substance carried, so many drivers find it necessary to hold more than one category.

Hazchem drivers must receive specialist training before being allowed on the road. This, and the high cost of insurance, is enough to put most people off. And companies which regularly employ Hazchem hauliers generally like to use firms they've used in the past, which can be yet another barrier to newcomers.

The industry has strong views on both sides of the diversification debate. Roger Freeman,

a co-director of Sutton Coldfield-based haulier William Freeman & Sons, is against diversifying his fleet of 12 tankers which collects milk for the South Midlands Co-operative. This is despite the changes in the milk collection sector, with market leader Milk Marque halving the number of hauliers it uses.

"I want to keep the company a manageable size," he explains. "We are quite happy with what we've got, and although it's hard to forecast the future things would have to get a lot more serious before I decided to diversify."

Another firm keen to stick to the status quo is Edinburgh-based Freight Express, which already carries diverse loads including oil, pallets and white goods. "I wouldn't be prepared to diversify any further," says partner Keith Grant. "I'm quite happy with what I've got— you shouldn't break things which work."

Others take a different view. Small family firm DA Gamham runs two artics specialising in timber haulage in Norfolk. Wendy Corbyn, the wife of one of the partners, says: "We're doing some general haulage now because there is not enough timber work. We find this work very easy to pick up because we have a lot of good contacts in the area. We don't need specialist equipment even though we use skeletal trailers for our timber work— we just hitch up to the client's trailers."

And Richardson Transport, based in Middlesborough, makes no bones about its policy: "We will carry anything we can legally get away with," says co-director Reg Richardson. The firm started out as a coal merchant but moved into carrying steel from British Steel's Redcar plant. Steel now accounts for about 30% of its business although ideally Richardson would not want to place more than 25% of the business with any one customer. He sees diversification as a way of combating the onerous conditions that the Government is placing on the British

haulier—but he is not prepared to diversify if it means forcing local rivals to the wall. "Apart from having a certain loyalty to my rivals, the main fact is that if they can't make it pay then I can't make it pay," he says.

Warehousing facilities

One way to diversify is to look outside the fleet: Suffolk-based I luclson Haulage has moved into warehousing and distribution. Managing director Steve Hudson explains: "We moved into our new yard five years ago and decided to add warehousing. Apart from the cost of the buildings we also had to buy three fork-lifts, which was a big investment. However, it has paid off because we can offer a more flexible service to our clients, including storing goods in transit and providing a pallet service. We have the chance to grow again but I am not so sure we would want to because we are a family business and I want to keep hands-on control."

Many hauliers have already found that putting all their eggs in one single industrial basket can be fatal, because if that sector declines so do the haulier's fortunes. On the other hand, entering a new field can be expensive—and once in it you will be up against a lot of experienced hauliers who in many cases have the market sewn up.


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