Reaching for hire ground
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MD Oliver Touze is getting ready to celebrate two years at BRS and his tenure has seen a lot of change at the contract hire and rental firm. CM takes a closer look
WorcIS: Steve Hobson
IN A PREVIOUS LIFE. BRS was the road haulage arm of NFC and although it is not returning to those roots under its present owner, the Volvo Group. with a reporting line into RenaultTrucks Europe — itself part of the Volvo Group — it will be adding more services to its mainly truck rental offering.
Oliver Touze was appointed MD in January 2009, having joined the Volvo Group in 2006 to look after the European contract hire and rental division Clovis Rent, which operated a total fleet of 22,000 vehicles. The BRS fleet currently stands at about 2.300 vehicles
But Touze says pure short-term rental is now a "commoditymarket where most players are losing money.
"Prices in the UK arc lower than in mainland Europe. even though the legislative requirements are higher.he says.
In the UK, for example. we have sixweekly inspections, but on the Continent they are once or twice a year."
Although Touze describes tractor unit rental as "booming" with rates up on 2009. he says income is still not high enough. "We have 900 units and utilisation is above 90%,he says.
"We are reducing the rental fleet,
although we have to keep enough to support our contract hire customers.
Touze says that the decline in shortterm rental rates since 2008 is damaging the market.
Utilisation must be high -Flexibility is good for the customer. but rates are so low that if utilisation is not 95%. we are losing money," he says.
"Rates are slowly increasing, but if the customer wants flexibility arid low rates, we are damaging our environment. Customers will get a short-term benefit but, in the long term, it is not good for them either. Touze continues: "Any rental company that is not profitable cannot invest in its business and continue to offer flexible services."
He adds: "I am not sure there will be a shortage of used trucks in three years. We could take a view that residual values (RV) will be high, but instead we take a more balanced view to avoid the huge provisions we saw in 2009. We work with Renault Trucks, so BRS doesn't carry the RV risk.
"We are in a position to get funding for new vehicles from either Renault Trucks Financial Services or the big banks, although it is not easy to get them to invest.
"We are lucky to be part of a large group, which helps, and BRS and Renault Trucks are complementary businesses — they make trucks, and we talk finance and contract management," he says.
Average fleet age
Before it became linked with Renault Trucks, Volvo pulled BRS out of contract hire to focus on rental and contract hire with driver, so the contract hire fleet effectively started from scratch again in 2007 and now stands at 1,400 vehicles, 350 of which are with drivers. "The average age of the contract hire fleet is very young and it is increasing dramatically," says Touze.
He describes contract hire as still very difficult, although 2009 revenue was double 2008's. and BRS put 200 new Renault trucks into its contract hire fleet this year, some for fleet renewal and some for new customers. Touze remains keen to expand BRS's valueadded services, including contract hire with driver where competition is not purely on price.
Given its connection with Renault Trucks, BRS's policy now is to offer only Renault trucks. Touze says this policy is based on a sound business decision to maximise the opportunities of the group relationship. "Renault Trucks has the
technical expertise. the products and A BRS MD the network to provide high levels of Oliver Touze support to our UK customers."
Working together
Renault Trucks and BRS also work closely on key issues such as RVs of trucks coming out of the rental and contract hire fleets and linance.Touze is not working on the assumption that the slump in new truck sales in the past two years will lead to high used-truck prices in the future.
Contract management is also key to BRS in the service it provides to its customers, with a dedicated contract manager assigned to every deal.
Contract hire with driver can also go as far as taking delivery and routing instructions from the customer, with BRS being responsible for operating the vehicles and managing the drivers. This is what the company's contract with B&C) involves — BRS owns and operates a fleet of 88 trucks collecting building materials from BM.) sites and delivering them to domestic and small business customers.
"It tells us where to collect the materials and we are responsible for delivery," explains Touze. "But we are not a haulier."
He is technically correct — BRS is effectively running an in-house fleet operation for an own-account operator not hauling third-party goods. But it is a deal that would be familiar to many 3PLs running dedicated transport operations for single customers.
A bespoke operation Touze admits -the difference is not very clear", but says: -In this case we are not paid for the volumes carried.
"It's more like fleet management with drivers," he insists. "A haulier to me is someone with a long-term contract — this is a bespoke operation that can change every day. I don't want BRS to be a logistics company, but we can load and deliver goods where we are told. We are not in charge of planning or warehousing."
So what does the future hold for IIRS? "The future is bright," says Touze. BRS has gone through many changes in its lifetime, no more so than the past 18 months.
"The organisation is in a stronger shape. with a streamlined, more efficient operation. We have focused our activity on the contract hire side of the business, developing our offer, while continuing to maintain an excellent service for our short-term hire customers." •
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