30


ScOTLANd


ISSUE 1 2011


Scots emerge from the economic blizzard


They do things differently north of the border. We’re not talking about kilts and tartan but their export- led economy. Now, with business picking up again, the challenge now is to find enough equipment for Scotland’s burgeoning whisky trade. And then there’s the weather...


Logistics giant on growth track


The Scottish logistics industry may be facing a tough time in the immediate future, but John G Russell Transport is looking ahead to the next stage of its growth, says chief executive Alan Poulton. The eponymous founder and owner of the company, John Russell, is anxious to develop the logistics and value-added parts of the business, while Poulton plans to market awareness of what has traditionally been quite a low-profile company, considering the size and spread of its activities, not to mention its history. The company can trace its origins back to 1920, although in its current incarnation it dates back to 1969 when John Russell re-established the company name, the original Russell companies having been sold to TDG. John G Russell already numbers a majority of the blue chip companies


active in Scotland among its clients, including, of course, the whisky producers, along with manufacturers and major retailers. It has 625 employees, over 220 vehicles plus 650 trailers and, unusually


for a logistics firm, runs its own fleet of containers, currently about 1,000-strong. Moreover, it owns or operates six rail terminals, five road depots and around a million square feet of warehousing. The spine of the John G Russell transport system is, arguably, the rail


link that runs between its Coatbridge terminal via north-west England and the Midlands (where it operates a terminal at Daventry and, since March 2009, another at Telford) to its own facility at Barking, East London. It also has a terminal operation at the port of Tilbury. North of Glasgow, it has a further rail terminal at Inverness, where


John G Russell handles all the lo lo and deliveries for Eddie Stobart’s ‘Tesco train’. There is a terminal even further north at Castleton near Thurso, but there is currently no rail traffic. There is yet another one at Leith, near Edinburgh, which is also mothballed but there are hopes that it could be revived if talks with potential customers come to fruition. The company can also move its boxes to and from all the UK’s major container ports on Freightliner and other rail services. But John G Russell has further rail ambitions, says Poulton. “What we


do see is a great opportunity to develop continental services through the Channel Tunnel, and it’s something that I anticipate we will start in the foreseeable future. Until now, the biggest barrier has been the pricing of the Tunnel, but there now appears to be a greater realism on the part of the operator that they need to be competitive.” Service would probably be for containers and swapbodies, and it would probably piggyback on an existing service. Nor would it necessarily cater only for the Scottish market – it could equally serve customers in England. Destinations on the continent would probably be places such as


France, Iberia, Italy and Germany. This however would not be John G Russell’s first venture into the


continental market, Poulton points out. It already operates into Europe via the Rosyth-Zeebrugge ferry into Benelux and France. Its partner then reloads the boxes back to southern England where they are discharged – usually in the south or the Midlands – where they are reloaded with


Anglo-Scottish traffic if possible, or otherwise repositioned empty back to Scotland. Such are the lengths that operators have to go to in a country where exports outnumber imports by a considerable margin. Having an ‘in-house’ container fleet is undoubtedly an advantage for such complex routings, which would be much more difficult to organise if they were dependent on other operators’ equipment. The Channel Tunnel services will probably appeal to customers who


put a premium on time, whereas the less urgent business will continue to use the ferry routing. As well as its container service, the company offers a range of


worldwide deepsea import and export freight forwarding services for FCL and LCL. Coatbridge is the hub of the company’s logistics operations – road as


well as rail. The terminal is sited alongside the Freightliner facility and John G Russell is one of the service’s major customers. To some extent, the two companies are competitors but: “Freightliner says that us moving in here is the best thing that happened to them in Coatbridge, as we help support their overheads such as craneage, as well as being big users of the Freightliner train service itself.” Some 25-30 road vehicles depart Coatbridge every day to distribute


around mainland Scotland and there is around 55,000 sq ft of shed space, as well as empty and loaded container parks and trailer parks. Poulton adds: “We can put 3,000 pallets a day though here. Also, we’re encouraging customers to open offices at the terminal.” John G Russell also has dedicated warehousing sites, the premier


one being at Hillington, about two miles from Glasgow airport. “We’re looking forward to the completion of the M74 extension next June,” says Poulton. “It will make warehousing in west Glasgow a more attractive proposition, as you will for instance be able to get to the Manchester area and back within a single shift. We think this will bring Hillington back into play as a road as well as a rail site.” A multi-customer site and one of the biggest in Glasgow, Hillington offers a mixture of traditional and tenanted warehousing, as well as office space. “We also have space to expand there and in fact we’re looking at the next stage of that” There are 25 permanent employees at Hillington, augmented by up to 90 part-timers at busy times. “It’s a bonded site – both dry and wet – and it’s airfreight and Channel Tunnel security-accredited – and the on- site security is among the best.” It offers packing, including specialised services for the drinks trade like addition or removal of tax stamps, as well as limited-run bottling operations. Other companies within the John G Russell Group include bulk


haulier Carntyne Transport, with its 80-plus trucks and over 400 trailers and trailers. It specialises in the whisky industry “and we think it’s one of the best fleets on the road”. Carntyne can also offer cask handling and storage, and it has locations in all the whisky producing areas. The John G Russell Group also handles its own trailer maintenance, with its own engineers, with a main base at Springburn and at other


locations within its network. “We’re a great believer in doing in-house maintenance,” explains Poulton. “It gives us better quality, flexibility and immediate response.” But perhaps even more surprisingly, the group also builds its own box


van trailers, though the company’s Van Line subsidiary. This business had its origins in the Freuhauf trailer plant at Dereham; when the latter closed in 2006, John G Russell acquired the plant and equipment and moved it to Glasgow. It can also modify Carntyne’s tanker trailers. While Poulton is bullish about the company’s long-term future,


he also acknowledges that the industry has gone through “a very challenging two years” and that the tough times will continue for the immediate future. “We anticipate that 2011 will be very much the same and it is very difficult to see any price increases. That will mean pressure on margins and we will have to work very hard to get our costs down.” With the New Year VAT increase and the government austerity programme – which could hit the public-sector dependent Scottish economy especially hard - it would be unrealistic to expect much growth in 2011, in his opinion. “It’s going to be difficult next year, and all the indicators suggest that it will be 2012 before we see any real uplift. So it will be a matter of running as efficiently as possible and doing everything we can to keep costs down – for example, by investing in telematics and efficient driver education programmes, as well as leveraging our buying power as a group.” More positively, Scottish


exports have been doing well recently, and in particular the all-important whisky sales, especially in emerging markets. However, general manufacturing continues to have a tough time – in fact, with the departure of much of the ‘silicon glen’ IT industry to lower-cost bases in eastern Europe and the Far East, there isn’t a huge amount of general manufacturing left in Scotland.


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