Knights of Old (KOO) was founded in 1865 by William Knight with a single horse and cart, and has grown steadily and today runs 169 trucks and 185 trailers.
The modern history of the company really starts in 2000, when it moved to its present base on a ten acre site in Kettering, which now includes 120,000sq ft of warehousing.
In 2011 the company took another big step forward with the merger with Northampton-based Mainland Group, adding around £10m revenue to take the enlarged KOO Group to an annual turnover of almost £50m – which would have boosted them 16 places to number 50 in this year’s MT Top 100 if their combined results had been published when this year’s league table was being compiled.
Merging with Mainland has brought KOO more than a site in Northampton, 100 staff, 67 vehicles and some fresh talent to the KOO board – it has given the group the scale MD Ian Beattie feels it needs to compete in today’s market.
“It was a big transition but it made sense,” he says. “If you look at the Top 100 they are all getting bigger. You need to be £20ma year turnover just to get in now and the family businesses in the middle are getting much bigger. That is what happens in recessions.
“One of the reasons we liked Mainland is that it made a good return and you can always learn from companies that are leaner and meaner. This year will be one of consolidation for us but we couldn’t do deals like the one we have just done with Palletforce without scale. If you want to play with the big guys you have to be a certain size and have all the right standards in place.”
Aggresive growth
According to Beattie, £50m to £100m turnover is where the market is these days and KOO’s 2011 annual report talks about maintaining its “aggressive growth strategy”, of which the Mainland merger is just a part.
“You have got to keep on trying to grow the business if you want to keep up the momentum,” Beattie says. “We are looking at 8% to 10% growth this year – there are other family businesses growing faster so we have to keep up with the Joneses.
“KOO has a large commercial team that consists of field sales, business development and marketing. The team works hard to find new business that not only fits into our existing operation but strategically will push us up to the next level.
“The market is maturing and becoming more sophisticated. It is about adding value – we will bring your container in from China, put it in our warehouse, pick it, pack it and despatch it. We will run your warehouse operation, pick for your factory – we are not just a trucking company.”
KOO and Mainland are a good fit geographically and in the markets they cover.
“KOO has always been strong in the east around Kettering and Peterborough, while Mainland covered Northampton, Oxford and Milton Keynes,” says Beattie. “We also offered complementary products. They had a lot of rigid trucks, all on distribution, while we had more big trucks plus distribution.”
KOO’s groupage service moves up to 4,000 pallets a day, with an average drop size of around two pallets, and it runs up to 30 trunks a night out of Kettering. “So we have a reasonably big groupage business now,” says Beattie . “We have a new depot at Hitchin, so that site, Kettering and Northampton give us a triangle covering London, the Midlands as far as Birmingham, Nottingham, Derby and Peterborough.”
Collaboration
As well as growing KOO, Beattie sees increasing collaboration with other operators as the way ahead.
“We work with many 3 and 4PLs and a lot of partners,” he says. “Palletforce is one but we have a lot of direct partners and are in Partnerlink which has 18 member companies. We have always been big on collaborative logistics – it was what the company was founded on. We have a lot of relationships in the UK and in Europe and they have been very good for us.
“We have national coverage through our 18 partners around the UK. To have 18 sites of our own would be hard work. Family businesses tend to be good at running their own sites within their own localities, so regional haulage operations are stronger if they can work with other people who know their own marketplace.”
At the time of the merger, KOO was a member of Palletforce while Mainland was in the Pall-Ex network. Does Beattie think there is enough business to keep nine UK pallet works going? He pauses for thought. “That’s a complex question,” he says eventually. “They all seem to make a living but it looks like a crowded market to me. The stronger networks like Palletforce with the bigger membership and stronger brands are definitely for us the way to go.
The other good news is that there was very little overlap between Mainland and KOO customers, and the new company has only lost one customer as a result of the merger.
“We shared our biggest client – we did the Irish traffic and Mainland did the UK,” says Beattie. “That customer is pleased – they get just one invoice now.”
KOO does a lot of groupage between the UK and both the north and south of Ireland, and Beattie says there are economic problems on both sides of the border. “It is a very competitive market but we seeing fewer Irish trucks in the UK so having a reliable service means our volumes have stayed OK,” he says.
KOO also operates a service between mainland Europe and Ireland with a partners in Germany, France and Holland, which is just one example of its collaborative arrangements.
“We have long term relationships with continental partners throughout Europe for distribution inbound and outbound,” says Beattie. “We have 50 departures a week to Ireland and 30 or 40 departures a week to mainland Europe. If Palletforce go into Europe that will be complementary to what we do already.”
Rates stabilised
With customers still struggling with the double dip recession and worrying about the possible fallout from the eurozone crisis, KOO has done well to stabilise its haulage rates. But with costs continuing to rise there is a limit to how much more efficiency savings the company can make to protect its already slim profit margins.
“Rates have got to go up at some point but the pressure is still on companies like ours to be efficient and look at every last little bit [of cost saving],” Beattie says. “Client demands have risen dramatically over the last three years because people are worried about their own businesses. Performance levels have to be 97% – 98% on time in full just to play in the game.
“Costs in transport in the next two to three years are only going to upwards. Trucks are getting more expensive , IT is becoming more complex, environmental impacts are becoming bigger and health and safety is right at the top of the agenda, so ultimately the cost of providing that kilometre or pallet movement is rising. The rates have got to go up or you have to get very, very efficient. That will push more people out of the market because not everyone can drive the rates up and not everyone can become efficient - I have never seen so many transport companies for sale.
“You have to want to be in this industry – if you don’t, it is not the place to be. You have to be enthusiastic and get some pleasure out of performing at a high level. You have to be playing at the top of your game all the time so it’s not for the faint-hearted.”
Beattie joined KOO in 2001 when the company turned over £5m a year. “It’s been an exciting 11 years of my life,” he says. “It’s a nice company with a good feel to it and really good people. Adding Mainland’s Northampton site has brought value because it is a well-run, well-oiled machine too.”
Beattie freely admits that despite being four times its size, KOO has learnt from Mainland.
“Sometimes when you come from being a small company to a big one you can lose the streetwise edge,” he says. “We couldn’t avoid having more overheads like HR, IT and so on – Northampton was at the point where it needed them. So it is great to add turnover without adding depot cost – the central cost was already here.”
Rebrand
The Mainland name will soon disappear, and Beattie has taken the opportunity to rebrand a number of other operations such as TAF Shipping under the Knights of Old Group banner; it is now called Air & Ocean.
“We now have 450 employees and it is better they all work for one organisation,” he says. “From the branding point of view we learned from other people who leave names, which can cause confusion internally and to the outside world – we are looking at the future rather than the past so better get it sorted and move on.
“We have a very big and successful brand around the UK, Ireland and parts of Europe and for the people who work here it is also nice to feel they belong to something that is all joined up. Integration to me is getting the best out of both worlds and making two and two equal six not four. That’s the clever bit.”
