Gary Whittle of Meachers Global Logistics sheds light on AFS Haulage acquisition
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After overcoming huge challenges presented by coronavirus and Brexit, Meachers Global Logistics is looking forward to the future having recently acquired fellow Southampton-based company AFS Haulage.
Gary Whittle, the company’s Commercial Director, has over 35 years in the logistics industry under his belt, both in operational and commercial roles. During this time Gary has managed the full logistics functions of a petrochemical plant, operated a fleet of petroleum vehicles nationwide, and overseen several general warehouse facilities across the UK.
We recently got in touch with Gary to learn more about the acquisition and get his thoughts on the post-Brexit logistics climate, as well as the UK driver shortage among other things.
Hi Gary, thanks for taking the time to talk to us at Trans.INFO. Meachers is of course a company with a wide range of logistics services. In what way will the acquisition of AFS Haulage fit into your operations?
The reality is, it’s two or three fold. So firstly, there’s the additional provision of services that AFS offered that Meachers did not. So that’s around access to a pallet network, and to a groupage operation. Although we have got a very small amount of activity in this area within the Meachers environment, we don’t do that wholesale.
Bringing those additional volumes in at that level with the access to the pallet network through pallet base just gives us an economies of scale to start with, which I think is beneficial in our industry. So it is complementary to the services that we already offer.
It also works the same the other way round, as we can offer the existing AFS client base access to our international freight forwarding team, and to the economies of scale around a bigger transport and arctic fleet. So there’s some crossovers between the arctic fleets and the synergies of that brings in the benefits.
Geographically, it also gives us slightly wider coverage to the east of where we currently are, and quite a high percentage of our customer base is located there.
So for AFS, it presents economies of scale and access to an international division, and for Meachers, it offers us economies of scale around the arctic fleet, but also access to bigger volumes around the group and pallet network provision.
Meachers has said in its statement that the market is ripe and ready to welcome broader service provisions, especially around pallet movement and groupage. Can you explain why you feel this is the case?
Well, without wishing to go back to a 1970s or 1980s cliche, I do think there’s an opportunity for a one stop solution almost. The reality is, having the ability to just deal with one logistics provider brings a robustness in the supply chain, which is absolutely key going forward.
I think one thing that the pandemic has demonstrated is that your supply chain can be cheap, that’s one thing, but being robust is actually just as important if not more important than than the price itself.
So I think demonstrating a robust supply chain that has the ability to manage any provision that’s required is an advantage to procurement teams and to customers. The broader that supply chain offering is, the more attractive it will become and the more robust it is, the more attractive it will become too.
I’m not naive enough to think that price is not a factor. Of course it is, it probably always will be the overriding factor. But I think going forward, the ability to have more than one provision and robustness in the supply chain actually steps up that sort of equation.
The range of services in your portfolio allow you to offer clients what you refer to as a ‘total solution’. In recent times we’ve seen a number of logistics companies either expand their service portfolio or team up with other companies to achieve similar. Are we potentially entering a period of time where it’s very difficult to specialise in one area? Are companies now looking for a complete package, and could this trend see smaller, more independent companies lose out?
I don’t think it’s difficult to specialize in one area. But I do think it’s more and more risky. Specialization will always have a place if you’ve got a specific niche that you require resolving, but I think more and more, we’re seeing people that require a range of services rather than just a niche.
To use a different analogy, people go shopping in the supermarkets because they want to pick up a school uniform for the kids, and they want to pick up a bottle of wine and they want to get a new telephone, and actually do all that in one place or through the internet.
It’s the same sort of thing with the supply chain. People want a tried-and-tested partner that can solve the issues they have, and they want that skillset to exist in one place.
So in answer to your question, no, I don’t think it is a necessity. But I think you de-risk the business by having more services as a provision than just a niche. They’ll always be some niches, but they’re becoming less and less.
As people upskill more, there’s more integration in terms of fleets and the capabilities of each individual fleet. I do think things like legislation and cost of employment, and the cost of raw materials in trucks will mean that the niche markets are going to get smaller rather than bigger. They tend to be more family related businesses that are grown up around a customer. Their days, unfortunately, although they’re not numbered, are limited.
Meachers has also referred to the challenges brought to the supply chain by both the pandemic and Brexit as the toughest we’ve ever seen. There is nonetheless a feeling that we may have been through the worst with respect to these two disruptive events. Is the logistics industry emerging from the situation stronger from an organisational point of view?
Historically, our industry is a little bit of an unsung hero. What the pandemic and Brexit have done is demonstrate just how important the industry is to UK PLC.
As an industry, we’ve been incredibly good at just bringing innovation and a sort of synergy to what we do. There’s probably less trucks on the road and more freight moving now than there ever has been.
I’m old enough to remember that when we took on a load, we could say “we’ll get there somewhere next week, if that’s okay with you, Mr. customer.” And now we have to be at the other side of the country, at five minutes past nine.
I think we’ve taken cost out, I’m still moving a load now that was the same rates as 10 years ago, because of the efficiencies that we’ve brought into the industry. Pallet networks have revolutionized how we move small consignments around the UK. So I think as an industry, we probably don’t pat ourselves on the back enough.
When you look at some of the challenges that we’ve seen over the last 12 months, and I come back to robustness, it is paramount people understand how complex supply chain processes are.
When the average person in the street picked up an item in the supermarket, they didn’t really give any thought as to how and why it was there. Now there’s probably a better understanding of how the supply chain works.
Over the last 5 or 10 years there’s been developments with things like driver shortages, skill sets, the proliferation of global trade, and the enhancement of the size of container ships.
This brings its own challenges, as have road congestion legislation around clean air zones and the rising cost of raw material. All of these things, in general, we take in our stride as an industry – we always have done.
For the first time, the general public are aware of how good we are at supplying goods. The real challenge now is whether the consumers are willing to pay that extra few quid needed to make a living out of it. That will be a real true test when costs increase, which I think is going to happen.
One of the other pressing issues in recent years has been the shortage of drivers. What do you feel could be done to alleviate the problem?
I don’t think it’s a question of flicking a switch and that will solve the problem. In simple terms, if drivers were paid a million pounds a week, there would not be a driver shortage. That’s pretty straightforward. But the reality is, obviously, commerce won’t pay for that.
As an industry, we’ve been incredibly poor and incohesive in terms of attracting people to the industry. I think we’ve had sort of an artificial boost over the last few years with some of our European colleagues coming over to the UK. Unfortunately that seems to be less and less available to us.
So I think we’ve got to capture people at the right age and entice them into the industry. There’s a recognition that being a lorry driver is quite a difficult job. The romance of being a lorry driver 30 years ago is long gone, it’s no longer the case that you can leave on a Monday morning and not return until Saturday morning, just ringing up from a phone box once a day to ask about the next job. That romance is gone, everything is tracked. There’s timetables and deadlines, huge road congestion, and lots more legislation about what they do.
So we have to recognize that the job doesn’t attract the same type of individual. We have to manage that and we’re not doing it particularly well. As an industry, I don’t think we’re cohesive enough. Some of the industry bodies could do and should do more when it comes to education.
There has to be a recognition from the general public that we need to pay these guys more money. And the only way we can afford to do that is by increasing the cost of the supply chain, which is going to hurt me and you when we go shopping. There has to be a recognition of that.
Some of the major retailers and some of the big players need to understand partnership means partnership. I’m not always convinced they fully understand the meaning of that term.
There’s a number of things we have to do. Some of it is self help, some of it is recognition in the marketplace. I also think it will be interesting to see how the consumer continues to purchase, because having teenage kids myself, they place an order at 10 o’clock in the morning, and they expect it to arrive in the afternoon, if not the very latest the following morning at nine o’clock. All because they desperately need something, when they actually don’t.
With that comes a cost to the environment, there’s also a cost to the supply chain for that level of service. I think that needs to be understood and recognized. All too often, I hear procurement teams telling me that they get deliveries free of charge. Well you genuinely don’t, there is a cost associated with that somewhere to someone. The whole mindset about paying the right amount of money for a robust supply chain needs to be understood.
That’s not a play for us to ramp our rates up, because the marketplace won’t allow us to do that currently. But I do think there’s an education piece to be made to consumers that says if you want a robust supply chain, we’re all going to have to pay a little bit more going forward.
Poor driver facilities is said to be one factor influencing the shortage. Does the government need to do more in this area?
Well, I think something that the industry could do is to lobby a little bit louder and a bit harder. In my 35 years in the industry, we are the highest profile that we’ve ever been due to Brexit and the pandemic.
One of the only good things to come out of this is, as I said earlier, is a recognition that the supply chain is so fundamental to UK PLC, and that if we’ve ever had the opportunity to make enough noise to to get ourselves heard in the right places about the right things, now is the time.
There are things we can do, of course. There’s always a balance when it comes to things like lorry parks and so on. The reality is that these parks tend to go bust – there’s not that many of them around anymore. The reason being is that they’re too expensive.
Although it sounds awful, it always comes back to one thing, which is money. If it was free to park in fantastic facilities, everyone would do it. If it cost us 150 pounds a night, and we were able to pass it on to the customer, then we would do it.
We’re stuck between a sort of rock and a hard place. Yes, we should increase the facilities as much as we possibly and sensibly can. But there has to be a recognition that there’s a cost associated with doing that if it’s a private entity, and those costs need to be reflected somewhere.
So I think it’s unfortunate. Again, there is not a straightforward answer to that. It would be really lazy of me to simply say yes, we should have better facilities. That’s true. But someone’s got to pay for that and how those costs are recovered needs to be thought through.
Again, it goes back to your point about attracting drivers to the industry. Cabs are fantastic compared to how they used to be, but you’re still stuck in a box 24 hours a day, several days a week. We have to recognize that I think.
Over in Scandinavia, they run a so-called ‘Fair Transport’ scheme whereby road transport operators must meet certain requirements, including fair pay for drivers. Retailers are then encouraged to use those hauliers as it is good for their image. Would you be supportive of something similar in the UK?
Yes, but I would add that already exists. In essence, it’s the law of the land. The starting position needs to be the law of the land; the law needs to be adhered to, monitored and policed properly.
All too often, there are people within our industry, unfortunately, who are not necessarily hitting the level of standard that they should be. And there’s a commercial advantage for that.
I would say, yes, I’m perfectly relaxed with that as a principle. And we would sign up to that quite comfortably. But I would say that it needs to at least work hand-in-hand with the enforcement of the already existing legislation.
We have the tools to make a level playing field already. It would be nice as a sort of marketing badge to wear and to have, and then there are people willing to pay more money for that, which would make sense to me.
We shouldn’t have to do that though, as the legislation should be applied properly in the first place. And that’d be my first port of call.
We’ve already got the tools to make sure that happens. Then everybody should apply by the rules rather than just a select few that have the ability to run on a marketing brand and put a little badge on their documents.
Another area you operate in is the UK warehousing sector. Given the ecommerce boom and the difficulty that could emerge in importing goods from the EU to the UK, to what extent do you anticipate strong demand for warehousing services?
There are two ways I think the type of warehousing will change. We’re looking at a lot more ecommerce fulfillment requirements, as opposed to a sort of bulk store.
I think the impact of free ports will be interesting. Certainly in terms of servicing the European market, as we’ve said before, with overseas imports, what we’re seeing is bigger and bigger ships coming in less frequently.
So, going forward, the inventory will change and the style of inventory will change. I think free ports may have an impact in terms of being almost like a transshipment zone for mainland Europe.
It is very early days to make a judgment call, but I’d say the NDC/RDC model may come under challenge over a period of time because of the speed of requirement.
I think that there are a number of influencing factors. There will be opportunities, but also risks. So for areas like us which are close to the port, I think there’s an opportunity around the freeport, and what that will bring. I also believe there’s an opportunity around moving into e-fulfillment and e-commerce.
However, what will come under threat is some of the low value, high volume to bulk shipments coming in. I don’t see people holding lots of inventory.
Having said that, right now things are so volatile, so I’d be an incredibly brave man to put my last five pounds on either one of those two predictions.
And do you anticipate more unaccompanied freight coming into the UK as a result of Brexit? There are reports of it already happening.
Yes, but to what scale I don’t know. I would anticipate that certainly in the Southern region where I’m from. In Portsmouth, we’ll have an increase in terms of ro-ro activity. But I think the dynamic of how goods are moved around will be changing.
We’re seeing an increase in terms of rail freight requirements and capacity. We’re certainly seeing that across the south coast in the southern region, where the capacity for rail freight movements up into the Midlands has increased significantly.
The dynamic of how inbound freight works is going to drive that. So as I said, we’re getting less and less visits, but bigger and bigger ships. So what you’re seeing is 20,000 TEUs coming in on one ship. Logistically, it is incredibly difficult to move all of that by road within a sensible timeframe.
Of course, the issue with the road is that you can get a feast and famine. Trying to get that balance right and get the resource levels right to support that is going to be difficult. And it will be a bigger combination.
I think when it comes to ro-ro rail freight and road freight, that balance will need to address itself going forward. You’ll have an element of increasing in say, some of our e commerce and a fulfillment closer to the port of entry. I believe that will happen a bit more. It may be that you see less and less of the super sheds.
We are nonetheless in the middle of all this change. We’re still in the middle of the pandemic, Brexit hasn’t settled down either. I think I would be an incredibly brave man to predict what this is going to look like in 18 months.
Finally, looking forward, what are Meachers aiming to achieve between now and the end of the year?
The first one is to integrate the acquisition into the business as fully as we can and to get the synergies out of that and improve the operation.
I think the other one key one for us would really be to absorb the changes that are coming our way, to predict those as best we can, and to position ourselves so that when we come out of both Brexit and pandemic scenarios that we’re currently in, we’re in the right place to take advantage.
I think it’s a case of utilizing what we’ve got, fully positioning ourselves correctly, and having the right service provision at the right price in the right place.
Photo credit: Meachers Global Logistics