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Group transport Continental style
by George Malcolm
A LOT can be learned from looking at how foreign road hauliers are organised. This struck me particularly when I was glancing through the annual report of a big West Germany company, Rhemus-WTAG.
This firm bears some resemblance to Transport Development Group and the National Freight Consortium in that it has a variety of transport and allied interests. However, it is not so big and its interests follow the Continental pattern as opposed to the British.
In other words, Rhemus has a strong international forwarding activity extending not only to shipping, but air freight forwarding and forwarding for fairs and exhibitions. Yet it has a huge road haulage activity and runs 1,200 heavy goods vehicles.
Here in Britain shippers and forwarders seem to stick to these activities and only a few, comparatively, are involved with haulage.
Rhemus as a group last year had a turnover of DM890 (£241m approximately) and made net profits of DM6.3m (£1.7m). That measures its size. Road haulage, it says in its report, is one of its most important activities. This division carried about a third of the total volume of goods carried by the group, divided almost equally between longdistance and short-distance traffic. The others were involved with inland waterway movements and air freight.
The company operates regular full load and groupage road freight services between all the important industrial centres of economic activity in the Federal Republic of Germany and other European countries.
In 1983 Rhemus obtained, it says, a reasonable proportion of the rise in the total volume of road freight with an increase of about three per cent in the previous year's volume to lift it to 10,700,000 tonnes. The upturn in the demand for goods was reflected in an increase in the short-haul volume carried by its inland section, the company says; in domestic long-distance traffic the emphasis was on expansion of regular road services.
An interesting point is that there was also a large increase in combined traffics with swop bodies. In 1983 Rhemus operated 20 regular domestic lines with these vehicles. Reduction in vehicle running times boosted its groupage business.
It also reports an increase in the volume of international freight traffic between European countries. Most of this increase related to traffic to and from Germany, but there were also further increases in bilateral traffic between other European countries, particularly those in which one of its group companies is situated, such as the Netherlands, Belgium, France, Austria, Greece and Switzerland. That throws an interesting light on quotas and their use.
Rhemus is heavily involved in cargo handling at German seaports and in warehousing. As in Britain so in Germany there is a falling off of tonnage handled at seaports. Rhemus notes that it was 10,000,000 tonnes less than in the previous year.
This involvement in dock work is in marked contrast with most transport companies in Britain where dock handling is virtually non-existent.
Precious few British transport companies, too, have any involvement with barges and lighters, yet such is the "inland shipping" activity at Rhemus that in 1983 it operated a total of 138 vessels. Where there is a marked parallel is in the operation of road vehicle fleets and facilities for the recycling of waste, particularly glass from bottle banks and waste paper. Rhemus handled 225,000 tonnes of glass for recycling in 1983.
Another parallel with British companies lies in providing storage and distribution facilities involving purpose-built warehouses.
This German company is typical of a number in Germany where all activities logically surround transport. This contrasts with interests in Britain where, very often these days, a group counts a transport activity as one part of some eight, nine, 10 or more totally different activities. Some like TKM (Tozer, Kemsley and Millbourn), which has important road transport interests, admittedly group in a different way with the emphasis on the motor trade and vehicle component manufacturing rather than transport in its widest sense.
TKM has three British haulage companies, Cave Wood Tranport, Cawthorn Holdings and Langdon Industries in England and it also has Mitzavile and Transports Mutte in France. Allied to these in its automotive and transport division are wellknown names like Wadham Stringer, Daihatou ILJK) and Victory Bodies. Then it has other interests close to its haulage interests which cover port terminal handling facilities, predelivery inspections and rectification and storage of cars.
TKM turned over £933m in 1982 but with a loss of £6.2m in that year before "extraordinary items" which boosted the loss to £26.1m. But the 1983 report from TKM shows things to be improving with operating profits of £3.4m. However, again "extraordinary items" of £6.4m had to be deducted to generate a loss of £2.9m. These results, however, reflect a turnround in fortunes, for one of the big items in the accounts contributing to the losses is the level of interest payments which have been cut from £14.7m in 1982 to £9.4m in 1983. Little wonder then that Sir Montague Prichard, TKM's chairman, reports that 1983 saw the group recovering from "the dangerous position reached after the disasters of 1982."
He details the efforts made to dispose of parts of the group to reduce its debt position and cut out others to reduce losses. It looks as though the worst for the group is over, as Sir Monty says the company has traded profitably so far in 1984.
Coming back to the comparison with Continental transport groups, a British company which falls into the European mould in many ways is the Lep Group. Lep's specialities are all allied to transport, international freight forwarding, insurance and travel.
Like TKM, Lep has just issued details of its 1983 annual results and, as in so many companies at the moment, the preoccupation of its chairman is with the impact of reorganisation measures. He says: "1983 has been a year of transition involving a substantial reorganisation of the Group. This reorganisation is now largely complete and benefits were increasingly felt in the latter part of 1983. I believe that in all the circumstances the increase in the profit before tax in 1983 of about 81/2 per cent over 1982 was a reasonable achievement."
He added that results so far this year are well ahead of the comparable period in 1983.
Lep made a profit of £296,000 in 1983 on a turnover of £77,296,000. In 1982 it was £66,000 on a turnover of £78,148,000.