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Issue 7 2013 Freight Business Journal Parcel revenues turn a corner


Most Irish companies were forced to lay off staff and cut the wages of those who remained as the recession bit. But parcel firm DPD Ireland was able to stay in profit - just - and hang on to most of its workforce, says CEO Brendan O’Neill. “The underlying customer base


shrank from 2007 to 2012 and customers were downtrading, which meant turnover was static even though volumes were increasing 12% each year,” O’Neill comments. “We froze pay rather than


reducing it, but everyone had to handle more parcels, whether at our main hub here in Athlone or out in the depots. We found other ways of attacking our cost base, and kept improving our IT.” He believes that “anecdotally”


DPD gained market share through the slump, but admits that objective figures are hard to come by because his competitors don’t report precise data. What’s crystal clear, however,


is that Ireland’s parcel market has turned a corner. In this full year, O’Neill reckons revenue will be up almost 30%. He expects the company to double in size over the next four to five years. DPD connects its 38 depots


with 40-plus trunkers, including 10-15 double-deck trailers that run nightly between Athlone and Dublin. Other parcel companies prefer to be nearer Dublin, by far Ireland’s biggest city and main


business location, but


O’Neill prefers to be close to the geographical heart of the country. “It’s about small and medium- sized customers


sending tens of parcels per night,” he says. “If


you’re picking up from 6,000 or 7,000 of those, that’s a lot of running for [parcel] firms in Dublin to deal with.” Surprisingly, DPD’s


Roscommon/Longford depot in the deeply rural, and sparsely populated, centre of Ireland “clicks more than it delivers,” O’Neill says - that is, customers generate more parcels than they receive. Overall, more goods arrive into Athlone from Dublin than than go back east to the capital, but the traffic is “close to balanced”. Two years ago, DPD took on half


of a 2,000 sq metre warehouse close to its main hub as a fulfilment facility, and expanded into the rest of the unit earlier this year. Inventory of products such as computers, home entertainment systems and mobile phones is held here. The company carries out added-value work before putting shipments together for overnight despatch. Describing this growing


business segment, O’Neill says: “A lot of technology is involved in


managing the customer’s


customer. We interface with them very early, take charge of communications and agree when and how to deliver. We’re aiming for maximum first-time delivery success. It’s not like standard home shopping, where the supplier can just


leave the


package at the door. “ DPD Ireland employs six full-


time soſtware programmers, though three of them are based in Poland. The customer despatch system is being rewritten. Depot soſtware and support systems for the new facility are being upgraded, and the company is also


///IRELAND Cool running in Dublin


Norbert Dentressangle distributes 2.5 million cases per year of ambient and 800,000 cases of chilled products to ADM Londis’s 250 franchisees across Ireland - currently via separate networks as the company picked up the chilled contract only in 2012. In the last three months,


however the company has been trialling multi-temperature vehicles, initially in the Dublin area, to reduce the number of store deliveries. If the experiment is successful, the trials


will be


replacing driver handhelds. Although it has common


standards as regards labels, codes and data transfer, the DPD group has eight stand-alone operating


systems across Europe - a strength rather than a weakness, O’Neill insists. “Controlling our own IT gives us an absolute edge in the market.”


Tough times open opportunities for liner agents


Joe Dowling, director, liner services at Hamilton Shipping in Dublin, says he is surprised there have not been more casualties among freight forwarders during Ireland’s long-running recession. He


estimates the country


is still two years away from returning to genuine growth, which could mean shipping lines and multinational forwarders retrenching or consolidating in the short term. However, this could benefit the local labour force. Ireland has skilled employees and Dowling credits the Irish International Freight Association with


ensuring a continuing pipeline of qualified personnel. At one time, Hamilton was


agent for 15 lines and despite subsequent contraction in the industry, there are signs that agency representation could come back into fashion rather than the lines “planting the flag” wherever they serve. Dowling quotes two examples of lines that have returned to an agency arrangement in the UK. Hamilton’s main agency role


now is for Delmas, which provides a route for Irish exporters to west Africa via parent group CMA CGM’s services from Belfast over Greenock and Liverpool to Le Havre and from Cork and Dublin to Le Havre. Traffic is growing year on year and Delmas also connects to east Africa and Asia via Jebel Ali and Khor Fakkan. “Those regions require food


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that we produce, and the removal of export quotas will see great demand for Irish milk powder,” Dowling says. “Our dairy farms can increase their production by 60% overnight without the cost implications of extra feed, because the cattle mainly eat grass.” However, the current Africa


trade is largely one-way, running 5:1 in favour of exports. Timber was the major northbound cargo, but a resurgence in Ireland’s construction industry, viewed as unlikely any time soon, is necessary for this to become a serious market again.


extended to Cork and the west coast.


Demand for chilled products has exceeded expectations, according to Mark Boulton,


business development director for Norbert Dentressangle Logistics Ireland. “We were able to keep retailers better stocked through the Christmas and New Year period than under the previous ‘man with a van’ arrangement,” he says. “They have limited storage capacity, and sometimes the chiller cabinet is their only stock.” Boulton predicts consolidation


in the convenience store market but says Londis is in good shape following back-office investment that enables managers to order from an iPad as they walk round their store. “You can view your own top sellers, those of your chain, and in your category across all retailers,” he says.


Rail freight on positive track


Log wagons could combine with containerised traffic


Rail freight services in Ireland could be set to expand following the removal of derogations and the opening of the market


in


March. Howard Knott, transport and logistics projects director for the Irish Exporters Association, says a UK/European rail operator and a wagon leasing group have already held exploratory discussions, which were “not possible when Irish Rail was a fully integrated infrastructure and operating company”. In the latter case, longer-term


contracts will be essential since the Irish rail gauge is wider than the European standard, Knott points out, as rolling stock for Ireland is bespoke and cannot be leased out elsewhere in Europe without expensive regauging. The Ballina region in particular


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needs more competitive services since its cargoes are better suited than most to rail. A major Coca- Cola concentrates plant is located in the town, and Baxter Heathcare produces medical


devices in


nearby Castlebar. Ireland’s north-west has poor


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road links, and even in cases where road would be more cost- effective, some shippers prefer rail to support their green agenda,


Knott comments. Users may now press for longer train lengths and increased axle weights to increase the benefit. IWT’s unitised Ballina-Dublin


rail service is now up to six round trips per week. DFDS briefly withdrew its Waterford-Ballina service owing to disappointing volumes, Knott says, but was out of the market for only four or five months before reinstating a twice- weekly service last January. Bulk trains are also active in


the region, with pulpwood from Ballina and Westport going to Coillte’s board mills at Clonmel in Tipperary and Waterford two or three times per week. Knott believes


that combining log


wagons and regular container flats on the same services could offer Irish rail users greater flexibility in future, but points to many other opportunities for the sector. “The rail network here is still


under-utilised, for example at night and at weekends. We can get more out of existing resources. The same applies to Northern Ireland, where no freight trains have run for years. The south side of Belfast port could be developed as a new box terminal in a few years and could easily be rail connected.”


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