The sale of TM Logistics to Bibby Distribution has put the spotlight on the specialist logistics players. But what is the attraction? Malory Davies looks at how they compete against their bigger rivals.
The news that Bibby Distribution has taken over TM Logistics could easily be seen simply as the disappearance of another famous old name of the British road haulage industry.
TM Logistics, better known to many as Taylors of Martley, was founded in the 1930s transporting sand and gravel in the Teme Valley in Worcestershire. It has grown to become a major family-owned logistics specialist with sales of more than £30m.
But perhaps it would be more accurate to see the deal as a reflection of the success of SMEs in the logistics field. TM Logistics has built up a customer base that includes 16 substantial contracts covering the automotive, construction and FMCG markets, including a major contract with Rexam Beverage Can Europe.
Clearly, smaller operators have some distinctive characteristics that enable them to compete with their larger rivals. Peter Larner, managing director of fuel tanker specialist Suckling Transport, says: “Why would someone want to eat at Rick Stein’s restaurant or Hibiscus in London, when they can go to McDonald’s or Little Chef? Because they want a unique experience. Just like McDonald’s and Little Chef, the main logistic services providers offer a fixed menu. Smaller operators can offer a customised personal service that is tailor-made to the customer’s requirements.”
iForce chief Mark Hewitt agrees: “A common perception among customers is that a large third party operator may treat an account as one of a number within their business, while an account placed with a smaller operator will be more precious so it will go the extra yard to provide good service. The onus then is on the specialist operator to live up to that reputation.”
And Ben Morris, managing director operations at Howard Tenens, says: “We have a portfolio of many blue chip customers who have clearly decided to purchase their logistics services from Howard Tenens rather than the industry giants. We believe the reason for this is our reputation for excellent service levels, the lack of bureaucracy, swift decision making and our environmental initiatives.”
iForce has carved out a niche in the e-fulfilment market and now counts some of the UK’s leading retailers among its customers. The ability to innovate has played a significant role in that, says Hewitt.
“Specialist companies in particular operate on their innovation – either in their skills and experience in new or emerging fields or with information technology systems designed in house, which offer a unique edge.”
Larner also highlights the importance of innovation as well as the ability to customise services. “We are able to customise our service provision to meet the specific requirements of each customer. But, more important than this, smaller companies bring innovation to the market.”
But is this enough to enable a specialist to outperform one of the industry giants? After all, they have geographical spread and the economies of scale on their side. Ben Morris is undaunted: “There is scope in every sector of the market for smaller players to outperform their larger competitors. Customers invariably prefer the personal touch and by opting for a smaller operator, they can be sure that their business is of premium importance as opposed to just another contract.”
And Peter Larner says: “Maybe Suckling Transport is unusual but, if we can succeed in the fuel distribution sector then it can be done anywhere. As Michael Corleone said in The Godfather: ‘If life has taught me anything, it is that nothing is impossible’.
It’s not just about cost savings, says Mark Hewitt. “The expertise, flexibility and added value that a specialist contractor can provide will deliver more than cost savings; a good 3PL will enable a business to enjoy shorter order cycles, better customer service and improved all-round efficiency, allowing the retailer to concentrate on what it does best: selling goods.”
So perhaps it is possible to get the best of both worlds through collaboration between large international logistics organisations and smaller regional operators?
Opinions are split. Peter Larner gives a straight: “No. Smaller organisations succeed because their decision making process is quicker. But what separates the two is more fundamental than that. The main difference is ‘culture’. Smaller operators keep their promises because their reputation relies on that central ethos. Larger companies want to keep their promises but are unable to do so because their senior management changes more regularly and they are subject to edicts from above.”
However, Ben Morris points out that Tenens is already collaborating with some larger organisations. And he believes that big players might compete more effectively at a regional level “if they are prepared to consider strategic partnerships and use the regional strengths of some of the smaller operators”.
The other option, of course, is acquisition and the past few years have seen a steady stream of takeovers. For Bibby alone, TM Logistics was the third major acquisition of the year.