A decline in grocery sales has eaten into profits at logistics giant Stobart Group.
Deputy CEO Richard Butcher told The Grocer volume declines at its customers - including Tesco, Danone, Mars and P&G - led to a £1.3m fall in pre-tax profits at its transport and distribution division to £13.7m in the six months to 31 August.
“The forecasts our customers gave us didn’t materialise in May to July, due to the economic climate and falling consumer demand,” said Butcher. “Normally we allow for a 5% variance on the forecasts, but volumes were down by 10% or 15% in some cases.”
A subsequent move by retailers to “shift volumes from one-off deals” - with as little as one day’s notice - heaped pressure on the supply chain, he added.
Tesco is the transport and distribution division’s largest customer, accounting for about 30% of its volumes. Stobart Group primarily delivers between Tesco’s distribution centres, and serves fmcg customers by delivering from the manufacturer to supermarket depots.
Turnover for its transport and distribution division - which accounts for 90% of the group’s revenue - rose £35m to £265m, though £8m was from a fuel surcharge.
Stobart Group is now looking to nudge retailers towards 24-hour deliveries to take the pressure off early mornings. “It’s about doing fewer and friendlier miles,” Butcher said.
New analysis tools, rolled out in the past couple of months, track the punctuality and profitability of its 22,000 weekly deliveries. “It lets us tell retailers what they could save if they changed the delivery time,” he added.