This year has seen a healthy number of mergers and acquisitions in the sector.
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Leading the way is Bibby Distribution, which bought TM Logistics for an undisclosed sum in October. marking its third large-scale acquisition in seven months it bought some of the contracts of collapsed MRS Distribution in August, and took over Taygroup in April.
Burnley-based EFS Group is also on the acquisition trail. For more than a decade the business has grown organically from a courier franchise to a haulier with a 60-plus truck fleet (plus warehousing), but its next phase of growth will come from acquisitions, says MD Mark Jones.
Sitting in the firm's transport office. surrounded by paperwork. family pictures and fish tanks, Jones discusses the acquisition of Winsfordbased courier 747 Express Freight for an undisclosed six-figure sum in April.
Strategic Locations
EFS Group has sites in Burnley, Manchester and now Winsford. Jones believes the purchase of 747 makes sense because EFS can access 747's Winsford site from Burnley.
"If we are busy, they can send vehicles up from Winsford because it is close enough and, if they are busy, we can send vehicles down there.
"Both sites are close enough to share resources and far enough away to have work that pays both ways," he says. The plan for EFS, a member of pallet network UK Pallets, is to collect pallets from the Winsford area to generate more business.
Steve Blackie. founder of 747 and now group business development director for EFS, says introducing pallet collections in Winsford opens the door to other work in the area.
"The pallet network attracts other business; once a company sees you can move a pallet for, let's say £40 to £50, they automatically think of you for doing other work rather than just being able to offer courier rates that can be matched or bettered by four or five other local couriers.
"We have customers all over the country,says Jones, "but, for pallets, we deliver to the BB-postcode area Colne, Nelson, Accrington and Burnley and, when [fellow UK Pallets member] McGregor Europe went bust, we took over the BL postcode as well.The firm added the CW postcode from 1 November.
"The biggest growth sector has been pallets. We realised we wanted to become a one-stop-shop, so a
salesman goes in to a potential customer and can say 'yes, we can do that . We are very flexible, we go looking for opportunities and adapt to the opportunities that we find," he says.
And the numbers agree: the business had turnover of £4.5m in the 2008/9 financial year, with 7.2% net profit. The projected target for 2009/10 is £5.6m turnover with 8.2% net profit, due to increased efficiencies and the acquisition.
"We are trying to grow through acquisition. With 747 it was a low-risk opportunity. It is a steep learning curve, but we have not had any surprises yet," he says.
The deal represents Jones' first foray into the market, but it won't be his last. He is already looking to his next, which has sites in Leeds and Birmingham.
"Basically, anything that is on the motorway and isn't too far away, means you are getting paid two-ways a lot more often., the key is sharing resources." he adds.
Pragmatism pays
The EFS Group fleet totals 63 vehicles, which includes 35 tractor units, 45 trailers, 10 18-tonners, 10 75-tormers and eight vans.
Jones takes a pragmatic approach to the vehicles he runs, especially tractor units.
Predominately DAF, they are all bought second-hand via Preston-based dealer Lancashire DAF, which is open 24 hours, His main reason for buying used is the lower initial outlay and subsequent depreciation levels. "We look at tractor units that are older," he says.
"We bought an '06-reg DAF CF85 with 275,000km on it for £12,000. and we will run that for six years and then export it.
"In six years' time, it will still be worth £41,000,
"We look for the opportunities to buy; we just bought nine tractors in one sweep. We like the standard supermarket trucks: there are a lot of them and you get good prices on them.
However, Jones buys vans and trailers new because it works out cheaper in the long run.
"We like to buy new and keep them forever. If you buy a second-hand trailer, say three years old, the owner often hasn't depreciated it enough and they've had it for the best years of its life.
"If we buy new, we get the best of it and run it when it's cheap. Around 40% of our trailers are new.
""lbe newer ones keep up your image, and the older ones make you money," he says.
Aerodynamics
EFS's latest trailer is from Yorkshire-based Wilson Trailers. It is a double-deck with a sloping front roof and the CurtainClear system at the back.
"The sloping front saves you about 7%-10% in fuel. while because the body is slightly curved at the rear [reducing drag] fuel saving is 2%-3%. It is all about being more efficient," explains Jones.