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RENTAL ARITHMETIC
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• According to Keith Morgan: "If you're in distribution — and we are — you're only as good as your last delivery." Make your entire transport system as reliable as possible, he says, starting with the bottom line — the trucks.
Morgan runs a privately owned wholesale and retail distribution, import and cash and carry group in Leeds called Douthwaite Florists and Sundries. It has a 106-year history and an M millon annual turnover. He is an archetypal blunt, nononsense Yorkshirernan who does not suffer fools, or breakdowns, gladly.
He owns as few trucks as possible. The rest he rents from Salford Van Hire. "Only a bloody idiot would have a truck fleet big enough to cope at Christmas, and then keep it sitting around for the rest of the year doing nothing," he says.
Morgan rents in a big way: "Because we pack and load the same day as the telephone orders come in, it is impossible
to say what kind of volumes we are going to carry. Our distribution margin is virtually impossible to predict and we will rent between 17 and 20 trucks a week at Christmas."
All of which is good business for Salford Van Hire. Even during the quiet periods Douthwaite uses an average of eight Salford rental vehicles every week. Morgan is convinced that rental offers him the price and the flexibility he needs, most of the time.
"I'm approached by a lot of truck rental companies," he says, "but no-one has ever offered me a better price than Salford or better availability than Salford. And don't forget [was born and bred in Yorkshire, so getting the price right always come first on my list."
The Douthwaite warehouse is in the same Victorian labyrinth of industrial back streets as Salford Van Hire's Leeds depot. Morgan frequently rings Salford at about 3pm for a truck or two fully expecting the clean, and fuelled vehicles to be on his doorstep by 3,30pm.
Douthwaite's operation demands fast, accurate responses. Carrying dried flowers, wicker baskets, plastic pots and an increasing range of ceramic pots means that the firm is more interested in volume than weight: "I like to get maximumcapacity loads all the time," says Morgan. He runs 56n-capacity 16-tonne GVW box vans from choice, though high street deliveries frequently force him to take four: tonners. Salford now has a range of 56m3 16-tonners in stocks to satisfy Douthwaite's needs.
Morgan actually owns seven vehicles: five 16-tormers, one four-tonner and a long-wheelbase Ford Transit: "I reckon that is the bare minimum we need, and this is an incredibly seasonal business." Christmas, Valentine's Day and Mother's Day are among the demand peaks.
The company has been looking into contract hire: "1 think that I could only really get excited in very short-term contract hire," says Morgan, "and even then I'm not sure." He shivers at the idea of idle trucks: "I toyed with the idea of buying more of my own trucks about two years ago," he says, but nothing really happened. "I'm glad we went rental, you can never buy the vehicle you want. You have to shout very loud at most truck manufacturers before they deign to give you what you wanted in the first place." He loathes the idea of waiting lists too.
Morgan firmly believes that the big commercial vehicle dealers are only interested in giving a detailed service to major fleet buyers. Small companies like his do not stand much chance of getting them to build or supply anything off the beaten track. Use a supplier like Salford Van Hire, says Morgan, and they have the buying clout to make sure that you get exactly what you need.
• Out on the road
Douthwaite's drivers typically stay out on the road for two to three days at a stretch. Most vehicles leave on a Monday and travel all over the country. Morgan keeps a careful eye on all movements, and an equally-careful eye on the bills that come in as a result: "We used to have two or three trucks on contract hire from BRS," he says, "but I couldn't believe it when I priced it out. 1 reckon that they must have built three roads with the money they made on those deals."
He objects to the idea of built-in cost margins benefiting the man on the other side of the fence.
Contract hire involves fixed monthly payments, with breakdown and repair costs built in to the formula. To a man like Morgan, that is money you can use elsewhere. "If I went out tomorrow and bought 15 trucks at £30,000 each, I reckon that I'd be wasting money — money that we could spend in a much more productive way in the business itself." Morgan says: "We're not selling baked beans or beer. Transport managers there have an easy time. Our market is just too unpredictable.
"Lots of people shot into contract hire last year, as well as leasing, and I reckon that they will catch a cold later this year. The economy is going to slow up and the accountants will be asking, why is this .track hanging around with nothing to do?" he predicts.
Morgan feels that his hands are tied by the high-cost nature of his operation in other ways: "It is very unfortunate that nearly all of the products we transport have to be loaded and unloaded by hand. We hardly use pallets." He cannot foresee Douthwaite needing to upgrade its vehicle specs or size, or finding any new time or money-saving automatic loading systems.
As boss ("this is a hands-on management company — just the way I like it"), Morgan trims costs on his rental vehicles by insisting that Salford Van Hire gives him the exact size of body he needs at the right price; that Douthwaite insures the vehicles itself, and that everything is supplied on unlimited mileage. "We don't run a bus company with set mileages."
Salford Van Hire's Leeds general manager, Nick Evers, says business is good. His major headache is that the company is struggling to get hold of new vehicles. Salford has always used Iveco Ford, but the 56m3 16-tonne boxvans Douthwaite needs are being increasingly fitted to Mercedes-Benz 1617 and Leyland Daf 1900 chassis. The Scandanavian manufacturers have been particularly slow to supply in the past 12 months, says Evers.
The company prides itself on supplying
young, reliable trucks. Douthwaite reckons that it has had less than five breakdowns in the eight years that it has been using Salford vehicles. Other big rental customers for Salford in Leeds are MacFarland Transport (a major local and international haulier), E and G Harris (an ownaccount distribution operation) and Symphony Kitchens.
• Unpredictable gap
Salford does not seem worried that contract hire is trendy with the accountants at the moment. It already offers contract hire packages, of course, but reckons that rental is still the best way to fill a shortterm, unpredictable gap.
For Keith Morgan, break-bulking and distributing the contents of 10 12.2m (40ft) trailers every week with three Mr Douthwaites keeping a beady eye on him, rental seems the ideal solution.
"I must admit," he says, "I've never liked putting all my eggs in one basket, but it has proved true that if 1 just use Salford and am loyal, they go on giving me an unbeatable price. They have never let me down."