A new national consortium of regional transport players is planning to swipe key grocery contracts from the logistics giants. Simon Creasey reports
High prices and poor service the logistics behemoths have been getting away with murder for years. That’s the damning assessment of Paul Smith, who believes his newly-established national consortium of five major regional transport groups is the breath of fresh air the logistics industry needs.
Harlequin Logistics, which brings together R Swain & Sons, Prestons of Potto, John Raymond Transport, Jack Richards & Son and Currie European Transport, is targeting key grocery manufacturer contracts by undercutting rivals on price and offering a “personal touch” service. But can it really take on the might of Wincanton, DHL and Kuehne + Nagel and win?
Harlequin’s business structure is hardly revolutionary. Ten years ago Smith set up a similar operation called Jigsaw that brought together nine different hauliers. He sold his share three years ago but says that it still trades profitably. Now he wants to repeat the trick with a new line-up of regional partners.
The consortium’s financial model is simple. Contracts are doled out to the relevant regional operator from a central office. The consortium member receives payment for the job plus an “element of profit” on top. A “small charge” is also levied to the customer to cover overhead costs with any additional profit paid into a central pot. A dividend is then paid out to consortium members from any profits generated at the end of the year.
In addition to the promise of new revenue streams, member companies were also attracted by the opportunity to reach “a level of customer that they’re not reaching at the moment”, says Smith.
The consortium aims to generate turnover of £20m within three years by offering keen prices and high levels of service. Smith argues that unlike large national logistics operators, Harlequin’s overhead costs are minimal, so these savings can be passed on to the customer.
It will further differentiate itself from other logistics giants through its customer service, says Smith. “It’s my belief that customers who have placed contracts with big corporations over the last couple of decades have seen service levels dwindle as these companies have grown bigger and used more fourth-party providers,” he says. “The service levels we offer will put us ahead of where the big companies are.”
Despite Harlequin’s criticism of the big players, Wincanton claims to welcome the new player. “As the transport industry further moves towards a more collaborative model, we see the creation of this new consortium as a positive development,” says director of transport, Nick Graham. “At Wincanton, we work with operators of all sizes who are vital partners. What is most important, though, is to deliver the right customer experience and service.”
Others, however, are sceptical about its prospects. One large logistics operator claims not to have heard of Harlequin. “As I am sure you are well aware, logistics is a tough industry and it’s getting tougher with the demands of the retailer ever-rising,” adds its spokeswoman. “Long-term success is very much about sustainability, costs and service levels. All we can say is, ‘the very best of luck!’”
A spokesman for another large logistics group warns that the business could be at a disadvantage if it doesn’t offer an all-important multi-modal service. “One of the key challenges facing logistics providers is helping customers meet their carbon reduction commitments, so this consortium will struggle if it’s only providing a road transport service,” he says.
Smith concedes Harlequin doesn’t yet have multi-modal capabilities, but says he recognises the importance of providing such a service in the medium term and that it will be considered when the consortium is firmly established.
That may not take as long as critics think. Scala Consulting MD John Perry thinks the consortium is “interesting” and there are plenty of opportunities for Harlequin.
Smith is certainly hopeful. He also believes the days of large logistics groups contracting out deliveries to “any man and his dog” fourth-party providers are numbered. If Harlequin really can deliver the superior service levels it says it can, he may be right.