Karl Brown took over as chief executive of APC Overnight in November 2013, a year that Brown described on his appointment as “arguably the biggest in our company's history”.
2013 saw the next-day parcels specialist move into its new £16.5m, 138,000sq ft national sorting centre in Cannock and collect the Motor Transport Network of the Year Award. APC Overnight reports turnover of £77.8m this year and growth is still running at 18% a year.
Brown, from Doncaster, South Yorkshire, has been on the APC Overnight board of directors since 2011. He has been in transport all his life, having joined the RAF's transport department upon leaving school. In 1998 he founded his same day parcel delivery business, Direct Logistics, in Goole, East Yorkshire and became an APC member.
He has since grown his business through the acquisitions of two branches of Express Logistics - in Nottingham and Stockport – and his business has a turnover of over £9.1 million. Like most APC members, most of Direct and Express’s volumes are B2B, and fresh foods are big business for the Goole site, especially in summer. Already one of the largest inputters to the APC network, Brown employs a sales team of five to keep the business growing and his general managers run his business on a day to day basis.
Priorities
His priorities as chief executive are to “service the growth” in the network and cope with the spikes at Christmas and Easter, which could be 30% above regular volumes this year as the B2C business grows. “We have improved services levels and reduced sortation costs to the lowest ever with the new centre,” Brown says. “I was a regional representative for five years before joining the board so I have the confidence of the shareholders and know what we need to do with the network, which is to deliver our IT investment and ensure service levels remain high.”
APC Overnight is unique among parcels carriers in that it is owned by 36 shareholders of which 32 are depot owners, with the remainder of the 116 depots operating under a licence agreement. But Ivor Skinner, company secretary and an APC director since 1999, says every depot is treated equally. “There is a level playing field and the rules are the same for every depot,” he asserts.
Another priority for Brown is to grow sales for those depots who are taking more of the network than they are inputting to help balance the trunking volumes. “Where we have imbalances we put in sales support to ensure everyone has a strong business,” he says. “We have not lost a single depot since APC was founded in 1994.”
That is not to say depots and shares do not change hands – members do retire and are able to sell their business and share separately if they wish. Like Brown, there are a number of shareholders now who own more than one depot in the network, but ownership of shares is carefully controlled to ensure no one is able to gain a controlling interest.
One area Brown will not be looking to grow however is central hub accounts. APC Overnight currently has two centrally managed customers: Geodis, with which it has an agreement to handle the French logistics firm’s UK delivery of parcels under 50kg; and Nacex, its partner in Spain. “We have no plans to take on more hub accounts,” confirms Brown. “We have a good relationship with Geodis and the arrangement with Nacex is very successful.”
Skinner adds: “If we took on any hub account it would not be for a price less than a depot would charge and we would never reduce the delivery fee. We have been approached but it would be disingenuous to talk to them if we can’t meet their expectations in terms of input charges.
“We do have an international offer and are looking to expand it worldwide. But it has to be easy for our customers to use and tracked end to end.”
Online shopping
While APC has built its next-day delivery business as a premium B2B carrier offering a superior quality of service, it is seeing a greater proportion of B2C parcels. This is causing bigger spikes in volume at the key peak periods, and
Monday is now its busiest day as online shoppers fill their virtual baskets over the weekend. Brown is keenly aware that APC cannot afford to let its new customers down in the peaks however. “We don’t take one-off accounts in the peak from new customers,” he says. “We look after our current accounts in the busy periods.”
The move into the new hub at Kingswood Lakeside near Cannock from its Essington hub took place in May last year. That gave the operation plenty of time to bed in before the Christmas peak and the move went well says Brown. “We have made great progress here [at Cannock],” he says. “The business is settled in and doing very well. The benchmark measures of service are the highest ever.”
Cannock has two identical Interroll cross belt sorters and a third is about to be added to boost capacity. The Cannock site will be able to handle the growth in volumes APC is seeing, but there are plans in place to ensure the network can cope for the foreseeable future.
Regional hubs
APC Overnight already operates one regional hub, in Bellshill near Glasgow, and has been looking for a suitable site for a southern regional hub for some time.
APC still owns its old hub in Essington, and Skinner says the company does not to intend to sell or lease it out this year at least. In the longer term Skinner says it would be ideal “for a pick and pack fulfilment type of operation”. “It has yard space and loading doors all around – there is plenty of warehouse space available” he says.
But Brown is adamant about one thing – APC will not be moving into palletised freight. “We have not looked at pallets,” he insists. “We will focus on our core business.”
One of APC’s core businesses is moving high value goods in a highly secure environment.
“Our advantage in high value goods is that we are all caged with no loose loading,” says Brown. “Our owner-managed depots also mean we have an ethos of high service levels.”
The new sorters can handle a maximum consignment weight of 30kg, but APC will take parcels up to 50kg for manual sorting along with fragile and high value products.
Timed delivery
APC is also strong in the timed delivery sector, especially in before 9am, 10am and 12 noon deliveries. “Some segments like food and emergency parts want before noon,” says Skinner. “We have a good share of that market.”
Being at the quality rather than the economy end of the scale has meant APC Overnight has not had to reduce rates to keep growing.
“We have never been the cheapest,” says Skinner. “We are all about quality of service and have been in the economy market so we never saw rates fall.”
Brown points out that rates are set by the depots not by APC in any case.
“Each depot is its own profit centre and they set the rates,” he says. “We are here to support the network. It is crucial we end up with balanced trunks so growth has to come from the whole network. There are no plans to add more depots but many are relocating to bigger premises to cope with the growth.”
