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8th April 2004, Page 62
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Which of the following most accurately describes the problem?

YOUR BOAT

Dominic Perry meets a Scots haulier who risked everything rather than let his business

be crushed under rising ferry prices. Ascenario: you run a successful haulage operation concentrated in the Highlands and Islands of Scotland and thus depend heavily on ferry services. However, the new owners of the ferry services on your principal routes have upped prices dramatically, making life financially difficult for you.You are anxious not to cave in to the demands of the ferry

operator, nor to abandon the route, but there seems to be no middle way. The solution? Well, you could club together with two of your business rivals, charter a couple of ferries and start running ships out to Orkney and Shetland yourself couldn't you? But that would be expensive, time-consuming and, above all, commercially suicidal, wouldn't it? Or

perhaps not. Faced with the above problem, Aberdeen-based haulier Jim Brackenridge Transport (JBT — or Jai BT as the security guard pronounces it in a cheerful display of north Scottishness as I pull into its Cumbernauld depot) did exactly as described; setting up

running its own ferry service until the rival firm came up with prices that both sides were happy with. For an industry that's not usually noted for its risk-taking, most operators would regard this as Russian roulette.

But Murray Prentice,managing director at the firm, saw the venture —Norse Island Ferries — as nothing more than a calculated gamble.You suspect that's the accountant in him talking — precise, certain and confident in his moves. From the above it's obvious that Prentice hasn't always been

involved in transport; he started his career with a small Edinburgh accountancy firm,T Hunter Thompson and, quickly growing bored of this particular branch of the profession, moved into a position within logistics firm TDG, which is where his and JET's histories began to intertwine.At that stage, prior to its switch to contract logistics and its unified brand,TDG was made up of regional haulage firms.The firm in question here was Inter City Trucks (I(T)— although originally a firm in its own right it had been merged with several other TDG operations along the way and had absorbed some of the services it offered, particularly those to the Highlands and Islands. Management buy-out Eventually,TDG decided that this was no longer an area it wanted to specialise in and Jim Brackenridge completed a management buy-out of the Highlands and Islands division of ICI' in 1993. He continued at the helm until

1998, when Prentice, who'd remained with the firm following the acquisition from TDG, became managing director and Brackenridge became chairman.

Which is where we rejoin the story— with the firm now sitting comfortably with an film per year turnover, and a virtually unrivalled service to the Highlands and Northern Isles. It had all been plain sailing too (if you'll pardon the pun) until the row broke out in 2002 over the proposed price rises for ferry crossings to Orkney and Shetland. Prentice explains: "When Northlink took over the service it virtually doubled the ferry rates. We tried to get it to see sense but it told us to take it or leave it, so I was forced to try and persuade my customers to accept the rate rise. But the salmon producers in particular were aghast at the prospect."Although JBT looked at the costs involved of running a ferry service itself it was quickly apparent that it "lacked the critical mass" to make it work on its own. Serious advantage

Enter rival island hauliers Shetland Transport and Northwards to form the Norse Island Ferries joint venture. With over 80% of the freight to the islands handled by these three companies their ferry operation started in August 2002 with a serious advantage in the freight market over its rival, which wasn't due to take to the waters until October that year. Norse Island ran until the following Easter, by which time Prentice and his fellow hauliers had managed to secure price commitments and capacity guarantees from Northlink for the next four years, relieving them of the need to run their own service. A result, but a gamble, as Prentice reveals: "It was an interesting time. I was putting in long hours and it was a

high-risk strategy, but it was a higher risk to do nothing—we came out of the other side stronger." It also impacted on JBT's 2002 results — these took a knock on the back of extra costs from the ferry service, plus other capital investment in the firm such as new warehousing. However, turnover that year increased by around 20% and followed that trend in 2003 with another 10% rise. Final deliveries

At the moment, JBT's fleet stands at a modest 40 trucks with a 27/13 split between artics and rigids, but with a substantial trailer fleet of 70, both fridges and curtainsiders. This, explains Prentice, is one of the joys of working in the islands — you have to have an excess of trailers for those occasions when the weather makes it impossible to leave the islands — profits dipped accordingly in late 2002 and early 2003 thanks to horrendous storms.

Although island haulage forms a large chunk of the firm's business, deliveries to the geographically awkward Highland and Grampian regions — small roads, big mountains, massive distances — are the real growth area, according to Prentice. JBT already handles Highland distribution for Michelin.As Prentice puts it: "If someone's wanting a complete service to the North then we can do it." Goods are trunked up to the firm's Cumbernauld warehouse by other hauliers — in fact 30% of its business is doing final deliveries for other hauliers — and then carried onwards by Brackenridge trucks. As Prentice notes:"If there's someone coming up to Scotland with three-quarters of a load to Glasgow there's no way on earth that they will want to deliver three pallets to Elgin.They can rely on us taking it from here and know that it will be with

their customer first thing next morning."

The nature of the work means that, of a total of 4,600 customer accounts, only 800 or so are ever active in a month and there is no single company dominating JBT's portfolio — its largest customer accounts for just 8% of its business.

Aside from handling the Highland deliveries for a number of pallet networks, JBT has entered into the new Transport Association commercial venture, Ling Alliance. Prentice elaborates on his decision to join the firm:"I figured that whether we were in it or not we'd be handling any work that was coming to our area so I thought we may as well be in it.

"I'm not one to stand on the sidelines;I'll nail my colours to the mast." He adds: "I'm a bit worried that we'll end up tendering against some of our logistics customers,

that's why I thought long and hard about it."

Not, of course, that Linq was attractive for any other reason: "It reminds me a bit of how TDG used to be —lots of individual trading companies under one umbrella.

"Mind you, that's not to say it's old fashioned, you've got all the decision makers there and I think sometimes the bigger firms miss out on contracts because it takes so long to decide anything." Plenty of work Despite Aberdeen neighbour ARR Craib looming over it —200 trucks and counting —Prentice is not worried:"They are both good strong companies and I'd like to think there's room for both of them to exist: we'll stick to Highland distribution and leave the paper and oil work to it!" •


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