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Analysis 09


Logistics in the news N


ews UK, publisher of The Times and The Sun, has launched a print and logistics service for newspaper and


magazine publishers – Newssolutions - in a moved designed to make use the spare capacity at its existing printing plants and distribution operations. At the same time, Connect Group, which


owns SmithsNews,hasboughtparcels carrier Tuffnells as it seeks to reduce its dependence on the publishing business. Not only that, Smiths’ rivalMenzies recently signed a deal to deliver betting slips to betting shops in a move designed to make more use of its delivery fleet. These changes all reflect the fact that print sales have been falling. Nevertheless, saidMikeDarcey, CEO ofNews UK:“We are inprint for the long term –we believe it is pretty durable. “With shrinking print circulation


challenging publishers, we have identified the opportunity to collaborate and achieve the economies of scale that will ensure we all have a thriving and profitable future for the printed product.” News UK delivers four million


newspapers a night to 55,000 retail outlets and directly to more than 16,000 in the London area. It already does a significant amount of


work for other publishers. As well as its own titles, it prints The Financial Times, The Daily Telegraph, TheMetro, and the London Evening Standard. It has some of themostmodern newspaper


presses in the industry, having invested £600m in 2007 in three sites: Broxbourne, Knowsley and Eurocentral near Glasgow. It opened its logistics support centre at Broxbourne in 2009. News UK has brought in Tracey Hart as


commercial director of operations. She was recruited from The Daily Mail, where shewas head of sales and marketing, and has extensive experience in providing revenue generating services topublishers – be that in print, distribution or other related services. In August last year News UK


signed a joint distribution deal with theTelegraphMediaGroup using Ceva network. Chris Taylor, chief operating officer at News UK, said at the time: “We are very pleased to be working in partnership with TMG on what we believe will be a platformto promote and expand our distribution services.” He said today that this arrangement has


saved some one million truck miles over the past year. The delivery to home service currently


operates inside the M25. It has just taken on deliveries for a number of other


Supply Chain Standard December 2014 TraceyHart


newspapers and is looking formore. One of the advantages of this service, said Tracey Hart, is that it not priced by weight like RoyalMail services. Hart saidNewsUKwas looking at taking on


franchisees to expand this service. In the future theremight also be potential to extend the home delivery service to other cities, although there are no plans at themoment. As well as print and distribution,


Newssolutions offers a range of operations and technology services designed for the media sector, for example help desks and service desks. Themajorwholesalers have been launching


initiatives to improve the utilisation of their networks in the face of falling print volumes. Smiths News recently launched


“PassmyParcel” – a sameday parcel collection service with Amazon. Menzies said in its results for the first half of 2014: “The extension of logistics services using our existing network and fleet has expanded. The venture is still in its early stages but there are real signs that further expansion is possible in collaboration with others and through additional print products.”


In the second major move, Connect


Group, which owns Smiths News, is acquiring Tuffnells, the Sheffield-based parcels carrier, for £128.7m, which specialises in mixed freight and parcels – particularly “uglies” – items of irregular weight and dimensions. The deal gives Connect distribution


network the potential to enhance existing operations, such as Pass my Parcel – the parcel collection service it launched in partnership with Amazon last month. It also expects synergies worth £2m a year by year three of the deal.


Hot off the presses.


business. It was demerged fromWHSmith in 2006 and has been expanding its range of services since then. In the year to 31st August it had sales of £1.8bn and underlying pre-tax profit of £50m. The group name was changed to Connect


Group plc in April this year, although the newspaper wholesale business has retained the Smiths News name. The group’s strategic ambition is to


generate 50 per cent of profits from activities outside newspaper and magazine wholesaling over themediumterm, and the proposed Acquisition ofTuffnells represents a significant step towards achieving this ambition. Tuffnells operates through a network of 34


depots, and operates a largely depot-to- depot operational model, providing more than ten million deliveries a year to more than 4,200 customers focusing on SMEs. Many of the items it handles are too large


or awkward for automated networks. Sales last year were £127.8m while EBITDA was £15.2m. Connect reckons that Tuffnells


core addressablemarket isworth £740m, and believes that this market will grow at three to four per cent a year. Following completion of the deal, Tuffnells willoperate as a separatedivision withinConnectGroup. Lloyd Dunn, managing


director of Tuffnells, said: “By combining our businesses we will immediately benefit from


Mark Cashmore, group chief executive of


Connect said: “The addition of Tuffnells will see us broaden our reach into an area of specialist distribution, which complements our core skills and competences of time sensitive distribution with high levels of service and efficiency.” Connect Group has its roots in the WH Smith newspaper andmagazinewholesaling


opportunities to share skills and create synergies. We are already planning for strong standalone growth and expect there will be significant further benefits as we combine with Connect Group to deliver for the next phase of our development.” The deal will be funded partly through a £55m rights issue, along with extended debt facilities of £50m.


Publishers are facing big changes in theirmarketswhich are impacting on the logistics of thewhole sector.Malory Davies investigates.


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