Shortly before French food logistics giant Seafrigo acquired Perishable Movements Limited (PML), MT spoke to the Kent company's MD Mike Parr (pictured). In an extended interview, he explains why the sector is becoming increasingly challenging and how he's reacted...
Q&A
Q: What are PML's biggest current headaches?
A: Increased rates. Not for this Kent facility because we own it, but for our Heathrow facility the landlord has increased our rent by 72%. He wanted a 100% rise but we managed to get it down. I think they’re trying to recoup money lost during Covid. But I don’t know how any companies will be able to afford those kind of increases.
And on top of that, where the government are supposed to be helping businesses to recover, what they don’t tell you is that the local authorities have increased rates by 27%, which has an impact on moving produce. The main ground handling agent at Heathrow has also just increased its rates by 24%. Dnata is taking 28p out of every kilo of product that we fly in, it’s just not viable.
Q: How much impact are rising air freight prices having?
A: They’re proving crippling for some businesses. Charges at Heathrow have increased at a rate which is out of kilter with any other UK airport, while the standard of service declines. For example, it costs £880 to offload a four-tonne pallet from the aircraft onto an ambient lorry which then transports the cargo to an ambient transit shed when precisely the same movement for goods being moved from Stansted to its shed is £37.50. Yet the same movement for exported costs at Heathrow is £55!
As a business committed to maintaining the cold chain, PML is concerned that perishable goods can be held in an ambient warehouse for four to six hours after the plane has landed. They are then potentially held a further one to six hours before they are processed and ready for collection in a temperature controlled - not ambient - vehicle for their onward journey to the retailer.
Q: Where does that leave businesses like yours?
A: It’s likely to trigger an enhanced interest in shifting to sea freight, especially as exporters continue to identify new and inventive ways to maintain temperature control whilst the goods are in transit. At PML, we are experiencing an increase of 10-15% in our sea freight offering, compared to the same period last year.
Q: How’s PML's bottom line looking amid these challenges?
A: Last year we’ll make a small loss and this year hopefully we’ll make a small profit. But for the effort that’s put in the profit is tiny and insignificant.
Food prices are rising. Not just fruit and veg but also eggs. It can all be resolved if the powers that be listen, not just to me but the trade itself. But I don’t think the government consultants have ever been involved with lorries. They make us a laughing stock here and around the world. For example, there are two inland border inspection sites which used to be owned by Wincanton. And they gave it to a French company who were selling horse meat. We left the EU and now more and more EU companies are coming to control our borders.
Q: Do you expect delays at UK ports for the foreseeable future?
A: Brexit and the shortage of HGV drivers have played a key part in this issue and unless dramatic changes are forthcoming, it looks likely that these will continue and indeed get worse. Many European drivers are now unwilling to drive in the UK due to the ULEZ charges, poor welfare facilities and anticipated holdups.
In October the new inspection parameters for imported goods coming into the UK will be activated and unless the government takes heed of the feedback from logistics firms working within the fresh produce sector, this will take the delays to a whole new level.
Q: You wanted the Kent facility to be a border inspection post, why has that not happened?
A: Yes, when the actual full EU Brexit comes into effect there will be a percentage of product that will need to be inspected. We challenged customs because their border control post is at Junction 10 of the M20, which is further inland from Dover. Explain that one to me. But it would cost us a fortune to take it to court.
Q: How do you tackle the challenges you’re facing?
A: Reinvent yourself. Something we’re trying to encourage is exports out of the UK. We can make a reasonable profit on those – cherries, strawberries, a lot of lamb, fish from Scotland and the Faroe Islands. The meat is predominantly halal because it’s going to the Middle East via air and sea. We’ve diversified into a lot of sea freight as well.
Q: Why the diversification?
A: To help our customers. At one stage during Covid a lot of hauliers came up with a driver retention fee which varied from £60-100 per container. It wasn’t sustainable; we got our own fleet of vehicles and did deliveries ourselves.
We’re still the strongest on air, we’re making huge inroads into sea freight and we’ve set this facility up for road freight. It seems to be doing well. Things are looking up but it’s still very difficult.
When Brexit was announced, it didn’t really happen. Inspections didn’t happen, the volume of declaration didn’t happen, so we adjusted our staff accordingly. We went through the pain of training staff and then had to release about eight. This was about eight months ago. We hear the full Brexit status won’t come in until 2025. They’re kicking the can down the road until they’re not in power and then someone will have to deal with it.
Q: You’ve also just announced a new deal with Tulpin Group for last mile deliveries…
A: Yes, PML takes responsibility for the last mile delivery of fruit and vegetable consignments that have been shipped by air from Egypt. The agreement comprises Tulpin Group’s own customs agency / haulage company All-Trade/Ostendfresh collecting the freight from Ostend airport and loading into trailers. The trailers are driven to the ports of Dunkirk and Calais and the consignment dropped onto a RoRo ferry destined for the Port of Dover.
Tulpin Group advises PML in advance of any required information to enable a seamless customs clearance and potential inspection. PML collects the trailers from Dover, taking them to the the Kent hub for clearance via the company’s approved Border Control Post. After clearance, PML delivers to the end customer and then returns the trailers to the port for transfer back to Belgium, to enable the process to be repeated. It is anticipated that during the peak season, there are up to 20 trailer movements per day.
Q: What are the advantages to this arrangement?
A: A faster turnaround of trailers allowing for more freight to be moved; no requirement for down time for EU drivers saving time and money; elimination of the risk of EU drivers being caught up in queues resulting in problems with managing driver schedules / drivers becoming frustrated and addressing the growing reluctance for EU drivers to drive to the UK post Brexit.
PML has already handled 7.5 million kilos worth of Egyptian strawberries through the partnership – that’s around 800 trucks worth. This is alongside its clearance operations in Kent out of Morocco of mixed berries, which amounts to clearing 1,200 trucks, proving both trade routes have been a roaring success.
Q: How far are you on the journey to net zero emissions?
A: It’s something we’re seriously looking at. But I’ll put the question back to you. Who out there can give me an electric truck that can do four or five hundred miles? Nobody. And we recently asked a German manufacturer about the range of their refrigerated vans and they said, ‘don’t bother’.
We’re looking at putting solar panels on the top of trailers but unfortunately they’re twice the price. We’re also looking at hydrogen but where can you refill? And who’s going to pay the additional cost? Some of the government grants could be used better.”
Q: In June 2021 you shifted the PML operation to Kent to avoid what you said were “crippling” LEZ charges. Has the move paid off?
A: Yes, we picked up a lot of business on that and reduced a lot of road miles. The Spanish hauliers now come in and we empty and they make local deliveries. It means less usage of the trucks and less trucks and it’s worked very well.
Q: Do you need to win new business to drive growth?
A: No we’re quite stable with what we’ve got. We get enquiries every day from potential customers. They know it will be a reasonable price and a Rolls Royce service. That’s what happened with our lamb. Unlike our competitors, who went in for the kill, we looked at it on a long-terms basis. We wanted to grow the lamb business in the Middle East because it competes with New Zealand and South Africa. We did deals with the airlines and passed the discounts on and we can now very closely compete with New Zealand. If you put a UK lamb against a New Zealand lamb it’s very meaty, they love it in the Middle East. Some restaurants will only serve Welsh lamb. The difference is incredible.
Q: Do your customers buy into that?
A: Customers don’t know the whole story so they’ll look for a cheaper way or go to a competitor to get it quicker, which is why we spend time sharing information about the supply chain. Being a customer not just the end user is what makes the difference, they’re not just a number. A lot of them are personal friends.
I’d rather look after what we have and increase gradually. But you’ve got to give them the service. When they become a number I won’t be in the busines any longer.
Q: There looks to be a lot of consolidation happening in the industry lately with the likes of Culina etc looking to drive more growth…
A: Yes and they aren’t the only ones. Look at Maersk. I’d be embarrassed with the profits they made last year. It was about £37 billion. They’re claiming things are tight but still making those profits. It’s the same as the energy companies. Same with the fuel. When there was a fuel crisis they were making a fortune. So why shouldn’t they pay additional tax? Then you’ve got P&O sacking people.
Q: Do you fear for the SMEs making thin margins?
A: I do. I think there’s a few that will go by the wayside like some of the freight forwarders. You’ve got the new computer system, you have to train everyone on it
Q: What’s a typical week for you?
A: The last one was Dubai for Gulfoods, which is a good show. I’ve also just been to Food Logistica in Berlin. I’m only here for a week then the it’s the Gulf, then Barcelona, Madrid, Hong Kong... that’s just the shows, that’s not seeing customers. Not all our customers are based in the UK. It’s an exciting job if you’ve got the stamina. I turn 60 next year and I love it. I couldn’t slow down.
Q: What do you love most about the job?
A: When someone tells me we’ve got a million kilos of something and knowing that when I come in the following morning that it’s all gone. And I do love comparing product that is packed by us to other supermarkets. I want us to be the best. We’ve got the quality. We reduce the time the product has to go through by two days. We can land it today, pack it today and deliver it tomorrow. Whereas others might take it inland and it’s delivered the fourth day. Ours is fresher and has less road miles and extra shelf life.
Q: What’s the make-up of your fleet?
A: We have a lot of DAFs and some IVECO. Scania and Mercedes trucks are very expensive. We’ve also just taken delivery of three brand new Mercedes Sprinters.
We always get the drivers to trial the trucks. We trialled the Actros. They hated the electric wing mirrors. It’s like a camera that came up on the dashboard and they didn’t like that all. The one they like most is the DAF, it’s a good reliable vehicle.
We change them every three years and get a brand new fleet. We contract hire our vehicles. We use Farnborough Van and Truck Hire, they’re a good company who’ve been around a long time. They maintain everything. We change the tractors every three years and the trailers every five. A lot of them buy them brand new. It’s not our business, we’re not mechanics. We just want something reliable, that’s the key.
