Have you seen the Beth Ann recently, or perhaps the Pam Jean? If you know that these are the names of Eddie Stobart trucks, then you might well be a member of the Stobart Members’ Club. The fact that there is a members’ club tells you straight away that Stobart is no ordinary logistics operators – just check out the online store selling model lorries, teddy bears and novelty lorry slippers named “Tootsie”.
It’s not simply that Stobart is different. Over the past few years it has transformed itself from a traditional haulier with a cult following into a £450m logistics business through a series audacious business moves. And earlier this year it was announced that Stobart had beaten DHL and UPS to come 32nd in the 2010 list of Superbrands.
Chief executive Andrew Tinker is matter-of-fact about the growth. He and his business partner William Stobart bought the business from William’s brother Edward in 2004.
At that point the business was struggling, says Tinkler. It took a strong focus on the operational side, looking particularly at risk in the business, to turn it around and get it back into profit.
But the deal that really turned Stobart into a major player in the logistics market came in the summer of 2007 with a £138m merger with the Westbury Property Fund. Westbury divested itself of its property assets leaving a port development site in Runcorn, a rail freight operating business and a rail terminal in Widnes. In a separate deal it bought a rail-connected freight handling business called O’Connor for some £23m.
The company was renamed Stobart Group with Tinkler and William Stobart as substantial shareholders leading the management team. Since then Stobart has grown both organically and by acquisition – it took over the well respected haulier James Irlam in early 2008 before taking over the chilled and ambient business of Innovate, which had gone into administration.
In the transport operation the business model is pay-as-you-go, rather than a dedicated fleet model. “We work to reduce empty miles – we get 85 per cent utilisation as a result. Empty vehicles are no good to us,” says Tinkler.
With a background in rail infrastructure, it is no surprise that Tinkler is keen to see an expansion of rail operations. However, he says: “You need to be innovative and push the boundaries to work at shorter distances. We think we can work at 150 miles like a bus service. You need to get the utilisation out of the train.”
A recent deal with Tesco exemplifies the Stobart approach. A 528,000 sq ft sustainable distribution centre developed by Stobart at its Widnes inland port site was recently introduced as the new northern hub for Tesco’s fresh operations. At the same time Stobart was confirmed as Tesco’s transport provider for the North, operating from the hub.
Following that, Stobart sold the asset to Legal & General Assurance (Pensions Management), for £61 million. Tinkler says: “This asset disposal illustrates a fundamental strategy of our group which is to invest in assets to develop existing and new customer relationships and then realise the value of the asset, at a profit, to reinvest elsewhere in the business. At Widnes this has enabled us to gain a long-term distribution contract for Tesco and to increase the utilisation and support development of the next phases of the inland port facility.”
Tinkler expects to increase the throughput of the inland port terminal which is currently only 50 per cent used when the site is fully operational and when an existing Valencia fresh produce rail service is extended to Widnes. This will enable Tesco to transport its fresh produce from southern Spain to northern England by rail.
Stobart’s rail expertise also played a part in winning an £18m contract with AG Barr, the maker of Irn-Bru. This three-year warehousing and distribution contract involves consolidation of deliveries at a newly created central stockholding warehouse in Crick and distribution to retailers throughout the UK. Stobart will move stock by rail from AG Barr’s factory in Cumbernauld to the distribution centre in Crick.
“We give the customer hassle-free one-stop shopping,” says Tinkler. It’s another reflection of the innovative thinking at Stobart. Tinkler says: “Logistics is different today – we need IT skills and so on, and we have to deliver the right skill set around industry.”
Stobart is currently developing Southend airport in co-operation with partners. “There are both passenger and freight opportunities there,” says Tinkler. Southend Airport is part of the Thames Gateway blueprint plan, which also includes the huge DP World Gateway Port planned for the old Shellhaven site.
In March, the government approved the runway extension that forms a key part of the group’s expansion plans for Southend. Work has already started on a new railway station and control tower for the airport, which are due to open in summer 2010 and spring 2011 respectively – in plenty of time for the London 2012 Olympic Games.
In 1988 Andrew Tinkler formed WA Tinkler Building Contractors, later to become WA Developments, a business focused on civil engineering and railway infrastructure. It is now part of the Stobart Group and is known as Stobart Rail.
In 2004, Tinkler acquired Eddie Stobart Ltd with business partner William Stobart. Tinkler was appointed chairman of the group.
Tinkler was made the Institute of Directors’ North West Director of the Year in 2006.
In 2007, he was involved in taking the Eddie Stobart Group into its merger with Westbury Property Fund to form the Stobart Group, a London Stock Exchange listed public limited company, becoming group chief executive.