30


Issue 1 2012


Russell Group on the right lines for growth


There are signs that worst may be over for the Scottish freight industry, says Alan Poulton. As the logistics chief executive of the Russell Group, he has witnessed a rise in activity and enquiries in the past few months. “Don’t get me wrong – we have had a tough time in the past two or three years. But we have come through it, and we are starting to see an increase in business.” What have yet to recover are


margins, which have remained “very challenging” over the past 12 months. “At the same time, we’ve had price increases in tyres, fuel, insurance and, to some extent, wages – but it is very difficult to get price increases from our customers.” The group has had to look to


internal efficiencies to mitigate the effect of those increases, using its procurement skills and leverage to get the best possible deal from suppliers but above all, using telematics to squeeze the last drop of efficiency from its road vehicle fleet. Putting factors such as engine idling time or driving style under a microscope has helped to trim vital


percentage costs off the fuel and maintenance bill. Telematics also brings useful


extra features such as a ‘geo- fencing’ facility that sends an alert to customers to tell them that their delivery will arrive in, say, ten minutes’ time. “We’ve also continued to invest in trailers and the container


fleet – both replacement and new capacity” Poulton adds. The standard container is now the 45’ long, 9’6” high unit, with 40’, 9’1” units now very much the minority. The Russell Group offers a one-


stop shop for all supply chain requirements. The Glasgow site, for example, offers cross-docking, even preparing pallets ready to go


straight onto the shop floor. The Group also carries out a very large proportion of its maintenance in-house, even building its own trailers and one of its sites, at Springburn, Glasgow has just received accreditation as a VOSA Test Station. Rail freight is showing the most exciting prospects at the moment,


Local knowledge is key to shipping success


CSAV is one of a handful of container shipping lines to maintain its own agency identity in Scotland. The Chilean owned carrier makes no secret of the fact that these are tough times in the industry, says David Milne, director of business development at CSAV Agencies (Scotland) – perhaps it has even suffered a little because it was more open and honest about the poor state of the market compared with other operators that sought to bury the bad news. But aſter a pretty dreadful 2009 and recovery in 2010 – only to be followed by something of a knock-back in 2011 – CSAV is finding plenty of takers for its niche services to places such as


Latin America, the Caribbean and the Indian subcontinent north of the border. In fact, CSAV Agencies Scotland is currently looking to expand its existing base at Pollockshields in the Glasgow suburbs. “CSAV is doing well in


Scotland,” explains Milne. “We took on the agency seven years ago when the brand was virtually unknown and built it up to the point where we’re now recognised as one of the key players.” CSAV serves the UK direct


through Felixstowe on many of its services but Scottish traffic is almost all feedered to and from Grangemouth


on the twice- weekly third party Rotterdam


feeder service. As with most Scottish freight


concerns, whisky is the bread and butter trade, and Scotland is unusual in UK terms in that seaborne exports massively outweigh imports. “Interestingly, even in 2009


trade continued to be quite buoyant,” continues Milne. I think people really were drowning their sorrows.” Since then, annual growth for CSAV has recovered to double-digit levels. Oil related business to or from Aberdeen also stayed buoyant through the recession. “I suppose we’re fortunate here in that, although we’re a small country we have two massive industries that didn’t get affected.”


CSAV Scotland deals exclusively


with the Scottish


postcodes. The line has a UK head office in Liverpool and has just opened its own office in Dublin. But in having its own representation north of the border, it is bucking a trend, Milne points out: “A lot of the lines are closing their Scottish offices and trying to run things from down south. But I think you need a presence here – Scottish people like to deal with Scottish-based companies, not from any nationalistic motives but because you need that local knowledge – it’s not something you can do from a distance. Scotland is still a very personal market.”


///SCOTLAND


and has continued to grow at a time when other modes have been stagnating. One factor in this has undoubtedly been customers’ corporate ‘green’ or carbon-cutting policies though the rise in the oil price has also been important. Russell Group does not set out to promote one particular mode of traffic over another – ultimately it is all down to the customer – but more and more are seriously considering rail, which has always been relatively important north of the border compared with most parts of England. But some of the rail action has been taking place 400 miles to the south, at Russell’s terminal in Barking, East London. This has been chosen as the end-point of the recently revived rail service from Valencia to the UK and, more recently, the new service from Wroklaw, Poland that recently became the first to operate over the High Speed 1 line from the Channel Tunnel. While these services terminate the south, connections are


in


available on the daily trains that operate from Barking to Russell’s terminals in Scotland, albeit for somewhat lower-height units than are allowed over the High Speed 1 route in the case of the Polish service. There is also some potential export business from Scotland to East Europe and Spain to help balance the flow. “Scotland has a very strong


drinks export trade, and especially to the emerging markets” Poulton explains. The problem is, as it has always has been, the lack of a containerised flow into Scotland. “We can export our containers back and bring them back into the UK but only into the south or, at best, the Midlands – so we have to repatriate them empty from there to Scotland.” The group has in fact been working with the Freight Transport Association, the Scottish Whisky Association and the big retailers to see if there is some way of better balancing Scotland’s freight flows – for example, by trying to use empty containers for domestic traffic from England to Scotland. Meanwhile, the rail service from Poland into Barking has got off to


a good start, aſter some teething problems, reports director Kenneth Russell. (One issue was avoiding the Valencia and the Polish service turning up at the same time.) There is potential for traffic from both Spain and Poland to Scotland, he says, though obviously not for the 10’ 6” ‘Mega Combi’ units that operate into Barking over HS1. “But there are viable flows, and in fact we’re currently working on one to Glasgow and Edinburgh which would be a quarter of the train – and we’re also looking at traffic back from Scotland to Eastern Europe.” One issue that would ideally need to be sorted out is providing temperature-controlled capacity for meat and fish – both big Scottish commodities. This is planned for the Polish service and indeed the Valencia operation is already exclusively fridge units. But the Russell Group’s plans


for rail do not stop here. Kenneth Russell says: “We’re currently working on a project for trailers on trains, from France, Belgium and Holland, and we hope to make an announcement in April next year.” This though would have to terminate at Barking, but a small group, Euro Freight Route – in which Kenneth Russell is involved in a personal though not corporate capacity – is working on a £5bn plan to extend the system to other parts of the UK, including Scotland – potentially part of the Government’s plans to boost the country’s infrastructure. For more general intermodal


traffic, the group is also looking at a number of other routes into Italy, Turkey, Greece, Eastern Europe and even the Far East via the Transiberian railway. These could reach as far as the Midlands, though probably not north of the border because Scotland is unlikely to be able to fill an entire train on its own. A connecting service via Barking would be possible, but then there is the question of terminal capacity to consider. If rail business builds as expected, Barking would either have to be expanded or more terminals built – in addition to those already operated at Telford, Edinburgh, Glasgow and Inverness.


Direct China link?


A senior Chinese aviation industry delegation will travel to Scotland in early 2012 to examine the possibility of setting up direct air routes, First Minister Alex Salmond said during a visit to China


on 6 December. He met senior executives of China’s


Civil


Aviation Authority and senior airline representatives in Beijing, where they discussed the potential for what would be the only such link outside Heathrow.


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