Zero-emission, last-mile delivery service Zedify was unprofitable ever since the business first launched 10 years ago, according to its administrator.
Outspoken Logistics, which traded under the Zedify brand, was touted as a solution to rising numbers of diesel vans delivering to doorsteps via cargo bikes, but mounting losses forced it to call in insolvency experts at the end of January.
In a report to creditors, Interpath said Zedify relied on financial support from its shareholders, who had invested in the region of £9m to keep it going, but it added: “Although certain hubs remained profitable, the overall business faced losses due to low volumes and high operational costs.”
Zedify operated in five cities – London, Edinburgh, Manchester, Birmingham and Cambridge – and its 100% owned subsidiary, Size Works, operated its Bristol hub; in total it employed 158 staff.
By 2021, it was delivering for more than 500 customers, employing over 100 living wage riders, operating 80-plus cargo bikes and making upwards of 600,000 zero-emission deliveries a year.
However, explaining what went wrong, Interpath said: “Considerable investments were made to expand the company’s hub network and workforce to support a pipeline of promising new logistics contracts that ultimately did not materialise.
“Additionally, increases in direct labour costs and head office wages contributed to the company experiencing a negative gross profit margin.”
The administrator said it explored sales and investment options, as well as cash and stakeholder management services, to save Zedify.
It contacted 642 trade and financial parties and two offers were received involving both equity and debt; however, these offers eventually came to nothing.
An existing investor, Mercia, then submitted an offer of £500,000 to allow Zedify to continue operating and meet its critical payments.
It also enabled the company to conduct a review with the intent of making an offer, but Interpath said that after “extensive due diligence” Mercia withdrew from the process.
The administrator said that it had received offers for 54 cargo bikes and accepted a total consideration for them of £46,445; Interpath added that it was “highly unlikely” unsecured creditors would receive a dividend.
