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Taming the

23rd August 2012, Page 29
23rd August 2012
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Which of the following most accurately describes the problem?

ild West

Hargreaves Transport Services, which was named Tip-ex Haulier of the Year 2012, is trying to change the way it works with its tipper subcontractors

Words: Steve Hobson / Images: Tom Cunningham CM’s visit to Hargreaves Transport Services in the village of Esh Winning near Durham was on a fairly typical English summer day – it was raining. The week before it had also rained – a lot. With a month’s rain falling in a single day, Hargreaves’ head office was soon under 6in of water. But typical of the company’s team spirit, the whole staff stayed behind until midnight, clearing up the mess and making sure it was business as usual the next day.

This team ethos was one of the main reasons the bulk transport specialist was named Tip-ex Haulier of the Year 2012 and, unusually in this dog-eat-dog sector, general manager Andrew Spence-Wolrich is keen to treat his 50 staff, 250 employed drivers and 450 regular subcontractors with the respect he believes they deserve.

Spence-Wolrich joined Hargreaves in 2010 and is unusual in that he is a former consultant who has gone back into a hands-on operational role. He was running his consultancy The SWP when he got a call from Hargreaves asking him to help out for three months in a role that eventually turned into a permanent one.

“The MD had retired early and Hargreaves chief ▲ Two-thirds of the executive Gordon Banham asked if I liked the job and HTS artic fleet pulls wanted to stay,” says Spence-Wolrich. “I like the people moving-floor trailers and the company, which is the main reason I am still here. It is hard work but it’s fun and we have a good team spirit, so I look forward to coming to work.” Spence-Wolrich is also unusual in the tipper world – which he laughingly calls the ‘Wild West’ – in that he holds an MBA and has worked in a variety of logistics sectors. His CV includes 10 years at British Rail’s freight division, 10 years with tanker operator Hoyer and a spell with the ill-fated Bulmers Logistics.

“I was always fascinated by logistics, and there are so many niches that are different [to each other],” he says. “Coming into the tipper world was like coming into the Wild West! It’s a fragmented market – we are a medium sized transport business but we’re still one of the biggest in the bulk and waste transport world.” HTS is part of the transport division of Hargreaves Services, which has an annual turnover of about £550m. The other divisions are all bigger and more profitable – production brings in £110m a year producing coal and coke; energy and commodities earns £331m trading in coal, coke and biomass fuel; and industrial services turns over £70m providing contract management to utilities and other industrial clients.

The least profitable division

Transport made an operating profit of £3.8m on revenue of £78.7m last year and includes the bulk transport operation HTS, Imperial Tankers and Hargreaves Waste Services.

“I jokingly refer to transport as the carbuncle on the arse of the ship. We are the least profitable division, as in the highly competitive market in which a haulage business operates, there are not many companies in transport making a fortune,” says Spence-Wolrich. “Turnover is split equally between the Imperial bulk chemical and my bulk tipper and moving-floor operations. We run independently, though there is some overlap on procurement – we buy our tyres, parts, fuel and trucks together, although Imperial is mainly Mercedes and we have a mixed fleet.” HTS operates 14 depots across the UK and owns a fleet of 50 eight-wheel rigids and 150 artics. Of the artics, about 100 will be pulling moving floors and 50 tipping trailers.

“We switch units to work on either operation depending on volumes,” says Spence-Wolrich. “We don’t have a huge number of spare trailers – about 250 in total.” HTS’s customers are mainly in the energy, waste, recycling and construction industries, and can vary from large blue-chip corporations on high-volume regular contracts to occasional one-offs.

“Our customers use us because we offer flexibility, we manage our own fleet and subcontractor base in terms of compliance and legal operation, so instead of them ringing 10 hauliers to find which one is available, we have that headache, not them,” says Spence-Wolrich. “They could save the small margin we make if they went direct to the subbie, but then they would have to employ a traffic manager. We also make the combinations, so we can get a subbie into position for a load, and then a subsequent reload to get him to where he needs to be for his next load – that is impossible for our customers to replicate.” A third of HTS work is for other Hargreaves divisions, which Spence-Wolrich says allows a greater degree of flexibility to smooth out the peaks.

“They are, however, under no obligation to use me – they can go out into the market and use whoever they want, and we look after them as we would an external customer,” he says. “The other side of the coin is that I am not obliged to supply them. So, again, I treat them exactly the same as any other customer, and I will not let down an external customer just because an internal customer says ‘jump’. But when someone is in trouble, we will help them. It will be at the right rate, but it won’t be a rip-off. You can’t exploit people in this world, so I never do. Equally, I don’t exploit my subbies either. If I know it’s quiet, I don’t take the opportunity to pay them less. We try to be ethical and take a long-term view.” Subcontractors are vital to HTS, carrying more than half of the loads shifted. It has a base of 450 ‘live’ subcontractors – those who have worked for the company at some point in past three months – of which 105 are dedicated to HTS.

“On a typical day we would be running 200-plus subbies,” says Spence-Wolrich. “From the busiest to the quietest day, volumes can be double. The fluctuations are immense, so we need to be flexible to cope with that. Hargreaves exists because we offer the customer the ability to place a single order for large volumes and we deal with the Wild West. It’s about flexibility, speed of response and the ability to manage the whole job, so the customer has one point of contact. Even after 18 months the team still impresses me with their ability to handle big jobs at short notice.” Spence-Wolrich uses his in-house fleet as “the cavalry”. “They can go anywhere, whenever I want them to go,” he says. “When a job comes in I will send my own fleet in first and then bring in my dedicated subbies, who are almost at the same level as my fleet, and then we start to bring in local subcontractors.

“The tipper world being what it is, there is not a lot of loyalty and subcontractors will move for 10p a tonne. “Critically, it comes down to productivity. We pay subbies per tonne and our obligation is to maximise their earnings – I want them to make a profit. If they don’t, they won’t work for me. If they have to queue to load or tip that is their cost, and a subbie will be ringing me before he arrives to tell me there is a queue. Some will turnaround and go to another job rather than join the queue. I get better feedback from my subbies than my drivers, because they are still getting paid while they sit in a queue for an hour.” Spence-Wolrich is trying to change the relationship between HTS and its subcontractors, putting it on a more equitable and professional footing. He wants to pay them fairly, but also expects them to play fair with HTS.

Maximising profit

“We work on maximising our subbies’ productivity and we will keep them going,” he says. “In February, when it was really quiet, we parked seven of our trucks up because our dedicated subbies were running out of work by Friday lunchtime. We also gave subbies priority at our Maltby site so they were allowed in to load first. Subbies are vitally important to us. We pay them bang on time every month and our finance director and chief executive have agreed that our subbies get priority.” In return, subbies have to play by the rules. “When I arrived, we had subbies who would say they would take five loads for tomorrow and only do two and not tell us,” says Spence-Wolrich. “Then there were subbies who said they would take two loads and then take five. A lot of sites have a generic password and subbies will talk to each other and get the password. So even though we hadn’t given them a load they will turn up and take one. Equally, we would give them a load and then if our fleet was quiet, we would take it off them. So there was a lack of trust. Now woe betide them if they take a load that they shouldn’t have had. I pay them half and give the other half to the subbie that had been planned for the job.” Spence-Wolrich wants to go further and requires his subbies to prove they are operating to the same standards as his own fleet.

“Delivering a compliant service to our blue-chip customers is a challenge,” he says. “While I believe we have a good group of subcontractors, auditing a subbie base of this size is difficult without employing an army of people. As a minimum, we keep track of their O-licence and their insurance, and we do a lot of spot audits on both my trucks as well as subbies. That is around site compliance, such as: does the driver know the site rules, is he wearing PPE, has he got his seatbelt on, is the defect book up to date, etc?

“We do about 200 of these audits a month and subbies are in as much trouble as my drivers if they fail. I can ban them – though I don’t use bans lightly – and sometimes my customer will ban a driver depending on the seriousness of the offence.” HTS’s in-house drivers are all on a cash bonus scheme, and passing an audit earns points towards their bonus. Giving subbies an incentive is more difficult, however, and Spence-Wolrich’s solution is persuading them to do their own audits. “I am about to ask my subbies to have an independent audit once a year – which is going to be contentious,” he says. “I don’t mind who does it, as long as they are qualified – it could be the Road Haulage Association, the Freight Transport Association, or whatever.

Practice what you preach

“As a test, we have just had a full-day compliance audit by our transport lawyers JMW, so I am not just preaching, I am also doing. I am only asking them to do a minimum audit of tacho compliance and maintenance systems, but it will cost them £500. For those who are struggling to afford £500, I will pay for it and charge them £10 a week.” Spence-Wolrich is acutely aware that this is a major departure for the tipper world and that he may meet some resistance.

“Our dedicated subbies will have to do it. If all the ad hoc subbies refuse on day one, I will have a problem, but in time those who have it will get preference over those who haven’t. Ultimately, those who haven’t got it won’t be on our list,” he says.

“I am hoping that everyone out there will be asking for the same thing, as in the short term, an ad hoc subbie might say ‘I’m not going to work for Hargreaves’, but if all his customers, ie our competitors, ask for an independent audit that he only has to have done once, he will have to have it.” ■


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