Friday 30th Sep 2016 - Logistics Manager

Tata sale challenge for logistics operation

The decision by Tata Steel to put its UK steel business up for sale means a challenging period for its logistics partners – including one of the most innovative fourth party logistics operations in the UK.

The KeyPL operation, which is run by XPO from Scunthorpe, covers the full order-to-cash process using an integrated transport management system that links multiple Tata sites, customers and third party hauliers.

The operation originated with a contract won by TDG (now part of XPO) in 2006. At the time Tata (then known as Corus), was spending more than £76 million a year on moving steel around the country.

The new system set out to save over one million miles of transport a year – and half a million litres of fuel. One of the objectives was to reduce empty running by the third party hauliers. The system increases efficiency levels by linking outbound journeys with return legs – combining the requirements of more than one Corus business unit.

The first site went live in August 2006, and in 2013 there were 62 sites operating on the platform equating to 1,200 loads a day. Savings were calculated to be more than ten per cent on the previous system.

Tata Steel, which employs about 15,000 people in the UK, set out the reasons for selling the business following a board level review, saying: “Trading conditions in the UK and Europe have rapidly deteriorated more recently, due to structural factors including global oversupply of steel, significant increase in third country exports into Europe, high manufacturing costs, continued weakness in domestic market demand in steel and a volatile currency.”

It said that financial support to the business meant that it had suffered asset impairment of more than £2 billion over the past five years.

There is now pressure for the government to intervene. In a statement, the government said: “Both the Welsh and UK governments are working tirelessly to look at all viable options to keep a strong British steel industry at the heart of our manufacturing base.”