Richard Simpson, CEO of Leeds-based Walkers Transport, is typical of the new breed of logistics business owners who have not been brought up in transport and so have a fresh view of the industry and its future. He explains his vision to Steve Hobson
Walkers Transport was formed in 1977 and until October 2017 was owned by Nigel Jenkinson, the son of the company’s founder. Jenkinson had a clear plan that he did not want to pass on the business to his children and as such took steps to set the business up for continued success in the future.
Jenkinson engaged Simpson as a consultant in the first instance and it soon became clear to both of them that one of the best ways to build on the historic success and maintain momentum was to consider a management buy-out (MBO). The three year plan came to fruition in October 2017 when Simpson completed the MBO backed by private equity firm Total Capital Partners.
Simpson had no background in transport and so has few pre-conceived ideas about the industry and its future.
“My dad was a farmer in North Yorkshire,” Simpson says. “When I was a kid I didn't really know what I wanted to do, so I went into sales. I started as a rep and ended up as regional manager for a pharmaceutical company. Then I inherited some money and bought a print franchise in Leeds.”
University of life
As anyone in publishing will tell you, printing is just as tough a market as road transport.
“The printing business was interesting because I started it from nothing,” says Simpson. “I bought a start-up franchise and when you've got no money coming in you really understand the importance of sales. I did that for three years and then sold it.
“I put quite a lot of money into it but learned a lot. If I had left work, gone to university and got an MBA or a degree I would probably have spent about the same. So the way I reconcile this to myself is that it was my university of business life.”
Simpson’s next venture came about through a chance meeting with someone from a Canadian-owned mobile paper shredding company called Shred-it.
“I'd never heard of them and thought it was a con to be honest, but I did some investigation and it all checked out. I started as Manchester general manager in 2001,” he says. “At the time the business was facing some significant challenges but we got to work and built the business and turned things around pretty quickly. On the back of that they asked me to take over Shred-it’s business in the UK.
“When I started in Manchester there were 17 people and turnover was about £500,000 and when I left we had 500 people, 160 vehicles and turnover would have been about £40m.”
When private equity firm Birch Hill Capital bought the company, Simpson took a stake in Shred-it but by 2014 it became apparent that it was time to move on when the company was merged with a large American corporation.
Entrepreneurial
“We went from having a really entrepreneurial culture, very similar to what we have here [at Walkers], to being part of a massive corporation,” he says, “and with that the entrepreneurial spirit seemed to die overnight.
“I worked there for a about year and learned a great deal about how to operate in corporate environments. But I became increasingly frustrated, as I think they did too, so they offered to buy my shares and off I went.”
Simpson’s next move also came about through another chance encounter, this time with Nigel Jenkinson, then owner of Walkers.
“I had known Nigel for years, he went to school with my wife and we used to have a pint together at the cricket club,” Simpson says. “He met my wife in Costa and asked what I was doing. She said ‘he's doing nothing, he's a pain in the arse’. So Nigel asked me to come and have a look at his sales team on a consultancy basis.
“I set up a consultancy business, quickly got to four clients and it was great. I got to choose my work and I got a massive kick out of seeing people grow and develop.”
However, in January 2016 Simpson became full-time MD of Walkers, “I was enjoying my time as a consultant but Nigel made me an offer I couldn’t refuse. That and the prospect of being part of a team again was what did it for me, so I accepted his offer.”
In October 2017 he led a management buyout to give Jenkinson an exit from the business, though the latter remains a non-executive director with a minority stake.
“He's got a small shareholding and is a vital member of the team,” says Simpson. “He knows so much about the industry and he keeps me on the straight and narrow with an array of difficult questions!”
Not being a diesel-in-the-veins truck man it is hardly surprising that Simpson is vague about how many vehicles he has on the fleet. A colleague suggests a figure of 90.
“Have we really? It’s a bit of a moving feast, it changes every day because we have a number of short-term hires,” he says. “I reckon we also have around 130 trailers across the business including short-term hires. We have never been that interested in owning lots of vehicles - it’s a means to an end for us so the fewer the better!
“We have a very definite strategy when it comes to vehicles. We try to keep a good proportion of our vehicles as a variable cost. with a split between owned, contract hired and short-term rentals, The tractor units we tend to contract hire because they get utilised 24 hours a day and after three years of hard work, we don't really want to own them.
“We tend to buy our rigids and trailers because we keep them longer and it gives us flexibility on capacity. We use DAF in Manchester and Volvo in Leeds because the dealers are really strong and support us fantastically well.”
Simpson has an experienced team to look after operations, trucks and trailers and with refreshing honesty admits “they don't want me poking my nose in everywhere. They’re really good at what they do and they have been doing it a long time.”
Walkers started out delivering air freight out of Leeds-Bradford airport, and now has hubs in Manchester and Birstall in West Yorkshire with its headquarters in Morley near Leeds where our interview takes place.
“We have around 60,000 ft2 here, 40,000 ft2 in Manchester and 48,000 ft2 up the road in Birstall,” says Simpson. “Birstall is a storage location and Manchester is a transport operation that we moved from Middleton to Rochdale in 2015.”
All three sites are leased, the Morley “super-hub” still being owned by Nigel Jenkinson.
Palletways
The company became an early member of Palletways in 2000 and is Palletways’ biggest independent inputter. Around 55% of Walkers’ turnover is through the network.
Growth is hugely important to Simpson, who says: “Growth creates opportunities for all, it’s healthy and much more invigorating than just existing. Yes, it can be tough but nothing worthwhile is ever easy is it?”
How Walkers are going to do this sounds simple – give customers want they want.
“Everything that we do is driven by the customer,” he says. “I'm passionate about giving the customer what they expect and what they deserve. Yes, customers want their pallets delivered but I think that we can do it with care and finesse. It’s about how we represent them to their customers as well.
“We want to build long term relationships with customers, no matter how big or small, and we’re investing a lot of money in account management and customer services There is a market for great customer service and companies that look after their customers tend to prosper. Our mission is to treat the customers how we would want to be treated.”
Own network
Giving customers want they want might involve Walkers building a network of their own to do more of deliveries on their own vehicles.
“Pallet networks are only as strong as their weakest link so if a network member is struggling somewhere, it causes a lot of problems for us because we put so much freight in,” says Simpson. “When it's all working smoothly and everybody's happy, it's great. But sometimes things fall over and you want to go to the customer and say, ‘look, don't worry about it, we'll do it ourselves’. That's the journey that we've started on now.”
The boss of another pallet network told MT last year that any self-respecting haulier should look to sell its own door-to-door service first and only use a network when the volumes do not justify direct delivery.
“If we're all being honest with each other the customer would probably prefer to not have their pallet handled eight or nine times,” says Simpson. “I've had this conversation with many customers but the big benefit of using a pallet network is cost. Generally speaking, it's the most cost-effective way, right now.
“We love Palletways. They love us. We have a great working relationship. The network concept is great but we are being asked to offer our customers more choice and better service, so that's what we intend to do. Over time the natural progression for us, as we get bigger and acquire sites, will be to do more on our own wheels. This is not to decry the importance of networks, their volume will grow as we grow.”
Dual running
While UK’s pallet networks continue to grow their volumes, competition for members, especially in the South East of England, is becoming intense and some networks are having to buy depots or accept dual running.
“Getting deliveries done in the South East must be really difficult,” agrees Simpson. “That is a concern to us, our customers and everybody else's customers. Just because you buy a depot does not necessarily mean it's going to be successful. You’ve then got to get somebody to run it properly and if you don’t do that then all you own is a failing depot, which is pointless and damaging.”
The pallet networks are all chasing the same quality members and the quality members know that all the pallet networks are chasing them.”
“I think dual network membership could be a way forward. It's just helping each other out so that everybody can make a bit of money. We're the biggest Palletways member but if an acquisition came along in another network we wouldn't automatically rule it out. It might actually be a benefit to us if they were in another network.”
Since 2013 Walkers’ nine-acre Morley site has been Palletways’ northern hub and the haulier trunks direct to Scotland and London as well as to the network’s central hub in Lichfield. As a major inputter Walkers’ vehicles often run empty back to Morley.
“That is a challenge for us but I don't get too hung up about balance if I'm honest,” Simpson says. “I see it as a profit opportunity rather than a necessity for us. The challenge for us is how do we collect as much freight as we can into here and Manchester - that's through sales and growth and looking after our customers. Once it gets here we manage the resources to get it to where the customer needs it.”
Walkers uses its own bespoke IT systems integrated with Palletways’ IT systems for its back-office management, and the company has developed its own software to manage all of its freight consignments. “We can see them all,” says Simpson. “Most of it just gets done, no problem, but we've got the red flag screens to highlight anything that needs chasing.”
Simpson admires what parcels carriers like DPD have achieved in improving the customer experience but knows success isn’t just about clever computer systems.
“I don't think IT is a blocker,” he argues. “You show me a well-run company and I'll show you a great set of people. Business is a game played by people. If you’re good at people, there's a good chance you'll be good at business.
“When I came in here as a consultant it was very clear that there was something very special about this company. It's the mentality, the culture and the mindset of ‘can do’. Everybody’s got wheels and sheds but they don't have the people who think differently about the customer and what they're doing. We challenge ourselves to be better tomorrow than we are today.”
Human face
Simpson understands that his 170 drivers are the human face of the company, and treating them properly should mean they deliver a better service. One of his first actions when taking over Walkers was to knock down the literal and metaphorical wall that separated drivers and traffic office staff.
“Generally speaking, I don’t think the drivers in our industry get the respect they deserve,” Simpson says. “When I first came in, we had something which looked like a bank vault where the drivers came in and talked to the traffic team through a sliding window. We can’t have that culture; the drivers are the most important part of the team and do a great job for our customers.
“So I said ‘you've got to take that wall down. Who is it protecting?’ We took the walls down and now we've got a free vending machine in there. If we treat out drivers properly, there's a really good chance that they're going to say ‘I'm going to do the right thing’. Drivers are the most important people in any transport business.”
Simpson believes consolidation in logistics, such the network of independent hauliers built by investment fund Kinaxia, will continue: “This business is about partnerships. If you think you can plough your own furrow you're probably wrong because other people have tried it and there are many cases where it has not gone too well.
“I think we are in an exciting period because significant consolidation is coming. We've seen it with Kinaxia, we've seen it with the networks buying up depots. There are some great businesses out there in exactly the same position as Nigel was and we’re interested in talking to them.”
At the time of the acquisition, turnover for 2017 was expected to be almost £30m with an EBITDA of £3.7m. Simpson’s goal is to make £10m EBITDA. qualifying that with a laugh and the admission “but I am always a bit ambitious”.
Nothing wrong with a bit of ambition.
