Friday 21st Oct 2016 - Logistics Manager

The tide is turning

FOR the first time in four years the Institute of Logistics and Transport’s (ILT) annual accounts show an improvement on the previous year, but even so net assets (i.e. members funds) are still virtually £2 million down on what they were on the 30 September 2000.

The latest accounts for the year ending 30 September 2003 demonstrate a marked improvement in the Institute’s financial position since October 2002. After substantial falls in previous years, free reserves only reduced by £10,000. Trading losses have been reduced from £346,000 at 1 October 2002 to £86,000 by October 2003. The decline in the value of the investment portfolio, reported in the last two years, has been halted, resulting in a surplus of £104,000 for the year ending 30 September 2003, in comparison to a deficit of £423,000 for the previous year. The ILT has also changed its investment manager in an attempt to take full advantage of the more optimistic mood of the stock markets.

These improved figures were apparently the product of actions taken following a prudent in-depth review by the ILT Board in February 2003 of the Institute’s financial activities. Cost cutting measures implemented included executive staff reductions, increased subscriptions and activity reductions including delaying the launch of the new website and the ILT bookshop on the web.

Pitfalls and opportunities

Stephen Rinsler, who took over as ILT chairman from Alan Waller, says that the transition to a new operating structure based upon four professional faculties linked to 13 new regions and both underpinned by specialist forums and local operating groups has been a remarkable success. Rinsler said: “The new organisation has much importance for the future. It will give us the ability to accommodate new regions and faculties without massive disruption and make us a more agile body in a world that itself is constantly on the move. The challenge now is to ensure close cooperation between the faculties and the regions to maintain and promote relevant and interesting programmes at every level as we move forward.”

Rinsler says that the Institute’s activity in the field of public policies has continued at a high level. “We are engaged in formal consultation with Government over matters as varied as congestion charging and aviation. Our views are welcomed, although at times we might welcome a higher profile for our contribution.”

The ILT continues to make a significant contribution to the International Chartered Institute of Logistics and Transport playing a key role in its Strategy Working Group. The ILT is also active in the European Logistics Association and the European Certification Board for Logistics. A new region for ILT members in Europe is also in the pipeline.

It would appear that a great deal of work has been carried out to reduce past substantial losses and thereby strengthen the balance sheet. Even though the benefits of the cut back programmes mentioned earlier in this article will not be evident until the financial results for 2003/04 are available, it is obvious that activities still have to be closely monitored in order to produce another set of improved figures for the year ending 30 September 2004.

Difficult balancing act

The ILT relies very heavily on member subscriptions for its income. Although subscription receipts increased some £59,000 to £1,845,000 for the year ending 30 September 2003 they only did so by upgrading individual’s membership grades and through the imposition of higher rates as actual membership numbers fell 1.6% during the year to 21,864. In March this year, membership was reported to have fallen further to 21,500.

The ILT Board has put in hand a series of measures to improve recruitment and retention. One such move is an initiative with the British International Freight Association (BIFA) whose individual professional members have voted four to one in favour of migration of their membership to the ILT – see page 5 of the March issue of this journal.

However, subscription rates could become a problem as there is a significant gap in membership fees for the two organisations as BIFA fees have not been increased for some time whereas the ILT’s have increased 40% from 2001 and now stand at £105 for a member. Transition subscription rates of £80 from 1 April 2004 until 1 April 2005 have been arranged to attract as many as possible of the 4,000 BIFA members to join the ILT.

This move prompts the question: why should some new ILT members benefit by paying £25 less subscriptions than other potential new joining members, or indeed existing members who have supported the Institute over many years.

Losing its appeal

It also highlights the problem – not unique to the ILT – that institutes and trade associations face in relying too heavily on subscription revenues for survival. Further more in these tough economic times companies are beginning to question the value of paying multiple subscriptions for themselves and their employees often for similar or related services.

Hence, the drive to attract non-subscription revenues which must be won in an extremely competitive business environment and in many instances from organisations operating in the same logistics and transport sectors. For instance, income received from public relations and publications – the second biggest revenue earner – also fell substantially during the year ending 30 September 2003 – down to £840,000 from £986,000 in 2002 and £997,000 in 2001.

The good news is that some 75% of this £146,000 deficit was offset by increased revenue from professional development, events and other membership activities which have made good progress. The Qualifications and Curriculum Authority has approved the ILT Level 4 Professional Diploma in Logistics and Transport. While the take up of ILT courses generally has improved, the demand for distance learning offerings has increased substantially including new training ventures in China and elsewhere

A careful watch will have to be kept on management and administration overheads if the Institute is to eliminate its trading losses. Although the average number of employees during the year ending 30 September 2003 was cut to 45 from 52 for the previous year, staff costs increased to £1,305,000 from £1,293,000 but some of these additional costs could have been for one-off non-reoccurring payments. Therefore, as previously stated, the full benefits of the cut backs implemented in the Spring last year will not be evident until this year’s accounts are finalised.

Since its formation in June 1999, the ILT has been forced to concentrate its efforts very much upon its internal affairs integrating with the Chartered Institute of Transport in the UK (CIT-UK). Its strategic review and reorganisation was finally approved and put in place on 1 October 2003. Now this, and the development of new qualifications, has been completed after four years of cost and energy sapping effort, the ILT has set a course to make itself more relevant to the needs of the logistics and transport professional and to increase membership.

As Rinsler said: “We now have our house in order, with a strong premise from which to go forward. It is vital that we turn our attention to our external profile. We have a strong message for the profession, and the world at large, which needs to be heard.”

The challenge is to ensure that the new operating structure produces services, programmes and events that will be of sufficient appeal not only to retain but to increase membership. Of utmost importance the ultimate challenge will be to cut trading losses and further strengthen the balance sheet so as to secure the long term future of the Institute. n