'Covid-19: the ultimate resilience test for a business,' says Bibby Distribution chief

Bibby Distribution’s well-publicised restructure has seen the business dramatically change course over recent years from a jack-of-all trades to a master of full load logistics.

Gone are low-margin contracts and diversification into driver agency, packaging and training divisions, replaced instead with a desire to strengthen core competencies.

Alongside this, a move to a more efficient regional network structure with radial distribution from warehousing hubs has seen a significant reduction in operational costs.

Guided at the helm by chief executive Richard Morson (pictured) and a slimmed down executive team of four, Bibby Distribution’s latest financial results showed the turnaround strategy was paying dividends: pre-tax losses were stemmed from -£3.7m in 2018 to -£930,000 for the year ended December 2019.

However, nothing could have tested the competency of the remodelled business like the global Covid-19 pandemic.

Running a marathon

“I always describe the Covid-19 pandemic to people as the best resilience test of the organisation we could have ever had,” says Morson.

“If the business was an athlete, then we've spent the past two years getting it into shape and it's fit, healthy and efficient. However we didn't know we’d be running a marathon in March!”

Thanks to Bibby’s freight forwarding division, Bibby International Logistics, which works with customers in China, the business found itself ahead of the curve when it came to learning about the impact coronavirus was beginning to have.

Disaster planning was all in place by the end of February and weekly Covid updates with the health and safety team commenced in March.

“We just feel as though we've been ahead of the game all the way through: from securing PPE supplies to hand sanitiser and so on. We did it all really early, so we've not had any supplier issues as a result,” says Morson.

“We kept the whole business really connected and were really clear on guidance for depots and employees.”

Bibby Distribution’s Liverpool HQ was closed in March and looks set to continue as the work-from-home model continues to perform successfully. While company-wide risk assessments, health and wellbeing training and team consultations have still taken place.

Business impact

“In terms of the impact of Covid on the business, what we've seen is how resilient the operation is,” says Morson.

He adds: “Transport has been really busy this year as we'd expected it to be.”

Around 90% of the transport sectors Bibby Distribution serves fall into essential services, from food ingredient supplies through to consumer paper and packaging used to buoy the surge in online package deliveries. As a result, volumes have not been affected by the coronavirus pandemic.

The remaining 10% falls into what the business terms its ‘industrial’ customers, such as construction, which has seen a drop in volumes. However, drivers and vehicles in the most part have been switched into other sectors until levels pick up.

Warehousing and storage has seen a slight slump of around 10% on average volumes, which Morson attributes to a rapid exodus of retailers’ stock when first lockdown panic buying kicked in.

But levels are now starting to return to a more normal capacity and lifting during peak as they normally would towards the end of the year.

“The performance of the transport business and some of the major new work we've won this year has offset the warehousing,” says Morson. “I can tell you that 2020 will be a significant continuation of the financial improvement we saw in 2019 and we will exceed our expectations financially this year.”

This means “absolutely” returning to a pre-tax profit again, he assures MT.

Streamlined efficiencies

On the restructure front, one of the key success stories for the business has been the move to a regional planning function.

Bibby Distribution used to plan from every one of its 40-plus sites, whereas it now does this from 14 regional planning centres. By next year this is expected to consolidate further.

Trucks and drivers will continue to operate from all the existing sites as they do now, it simply means the planning function is no longer done at local level.

“Our utilisation rates are improving every month, as the planners are working with larger pools of assets they are able to use the fleet more efficiently,” says Morson.

However in an opposite move, interaction with drivers and input into fleet technology is now taken at local level, meaning driver requirements for vehicles are taken on-board before purchasing decisions are made.

This strategy helped influence Bibby Distribution’s £14m fleet renewal programme, with all the specifications drawn from drivers’ input.

“It saw us make a big change in previous procurement processes,” says Morson. “If you take a trailer for example, we were able to speak to the H&S team about the use of curtains and any injuries, talk to drivers about anything that got in the way of them doing their jobs, use incident data from telematics and so on. This all helped shape the design of our new fleet.”

This driver interaction stems from Bibby Distribution’s ambition to become Employer of Choice and the executive team’s determination to involve all employees in the company’s transition.

’You said, we did’ is a key phrase the executive uses in its employee engagement to show that they have listened and acted upon feedback.

Growth plans

Looking ahead, Morson is confident that Bibby Distribution will go from strength to strength in 2021.

The operation has a strong national platform now, with what he believes to be “one of the best full load transport businesses in the UK”.

“We showed [our strength] at the beginning of this year, when we opened an operation in East Kilbride in Scotland, which is our first large site up there. That site is now operating 20 vehicles and 220-plus loads a week. For 2021 we are looking to continue this growth,” says Morson.

However next year won’t be without challenges for the industry, he concedes.

Clean Air Zones will continue to have an impact on smaller hauliers, as well as affecting the second-hand market for HGVs, Morson says. In addition, financial support for operators this year, such as VAT deferments will all need to be paid back during 2021.

“So I think there will be some challenges for some businesses,” he adds.

“But we're in a really strong position to grow our platform. We won a fair chunk of new work in 2020. Year-to-date we’ll have won more than £10m of new work this year.

“That will roll into next year and some of our volumes in warehousing that were depressed this year will come back. So I expect 2021 to be a real growth year for Bibby Distribution.”

And the agility and passion of the current executive team will be on hand to make this happen.

From a team of 11 back in 2018 to four today – comprising Morson, CFO Peter Clarkson, COO Dean Jones and general counsel Elspeth Doyle – the set-up means decisions can be taken quickly and action initiated to make positive change to the business.

“For me, this structure has been key to the work we've undertaken on the business,” says Morson.