AT THE HEART OF THE ROAD TRANSPORT INDUSTRY.

Call our Sales Team on 0208 912 2120

No job too small...

26th March 2009, Page 20
26th March 2009
Page 20
Page 21
Page 20, 26th March 2009 — No job too small...
Close
Noticed an error?
If you've noticed an error in this article please click here to report it so we can fix it.

Which of the following most accurately describes the problem?

In today's testing times, operators are turning to contract hire and fleet management specialists such as the Euroway Group to free up capital.

Wnr-rfc,= VrWirl Swallow / Images: Michael Thomas BAD DEBT and remarketing issues are hanging heavy over contract hire and fleet management firms such as the Euroway Group, which handles some of the biggest names in road transport.

The Leighton Buzzard, Bedfordshirebased business has already handled a high-profile casualty in 2009 (and you suspect there will be more) when, at the start of the year,Teeside-based Bulmers Logistics decided to enter into a 'prepack' administration arrangement and Bulmers Transport emerged from the ashes to take over 'trade and assets: The new company reduced its fleet by 40 vehicles. Part of that original Bulmers Logistics fleet was 30 vehicles, on contract hire, from Euroway Group's Euroway Vehicle Contract [EVC]. Geoff Howard, group sales and marketing director, got wind of the situation the same time as everyone else. Most of the vehicles were pulled out, he says, and new homes found.

There is no defined way to handle such events, but unnecessary remarketing can be avoided through short-term rental. Mark Howell, group commercial director, says: "The way we have our business structured means other parts of the business can be utilised, and we can put those vehicles out through another part."

The Bulmers Logistic vehicles that returned went into Euroway Vehicle Rentals I EVR], but administration, and returning vehicles, is largely treated as an occupational hazard.

"You always have companies going into administration. Last year, we had Corby Chilled and Innovate Logistics. We've been able to use the equipment from those deals," Howard says.

The family-run Euroway Group, set to turn over £20m this year, began trading in 1994. It has built on its contract hire roots while gradually adding other arms to its business.

Fleet management. purchase and lease, CV workshops and logistics service were joined by Magnum Self Drive in 2007 and renamed EVR.

Howell ventures: "EVR is an area of short-term growth; there are 230 vehicles in there. Rental has squared the circle for us in what we supply.

Inter-company business

-As we provide contract hire we can call on our own rental fleet to provide vehicle hire rather than use competition. We have a lot [more] inter-company business, which we didn't have before. It means we are spending less money with our rivals."

Conservative estimates put the volume of contract hire vehicles across the entire road transport network at more than 20% of annual registrations. This approach is gradually replacing ownership because it removes the need for capital and investment from the company books.

At Euroway Group, contract hire vehicles account for more than half the firm's annual turnover. but Howell admits the work is drying up because existing customers are extending their contracts and tightening their belts.

Recently, vehicle manufacturers have been keen to keep tabs on their own vehicles and generate work via their own workshops with fixed aftemiarket deals including R&M. However, Howell says, despite the competition, deals are not necessarily dictated by price: "It's more logistics and operations, and they will generally make those decisions at the same time as they are buying trucks.

"Often we will have manufacturers in the room when we are negotiating a deal because they're part of it. We have a good relationship with the truck manufacturers because we buy a lot of trucks, so we are also their customer."

Competing for work Howard says: "All the manufacturer wants is a sale. With the way the UK truck residuals are going, manufacturers don't want to own their own vehicles, they treat us as a customer."

Euroway Group competes at all levels, says Howard, and with EVC it's Prohire, Ryder, Fraiken and Dawsonrentals:"We have to compete with major plc& local dealers or small contract hire businesses, we have to compete for the work." As a result, smaller deals for three and four vehicles are never overlooked.

"We wouldn't want to turn away any business because it could be a way into other parts of the company.

-We do get a lot of business through referral, and you get people who change jobs, and who have a good Euroway experience with a previous job."

The looming spectre of companies going into administration, bad debt and remarketing remains the major concern for Euroway Group, but the firm has the infrastructure in place to cope with such challenges. •


comments powered by Disqus