Maxi Haulage is on course to deliver “acceptable” profit levels this year after driver wage rises and a steep hike in shipping costs to Ireland saw the firm’s pre-tax profit take a 41% hit in 2017.

Reporting its annual results to 30 September 2017, the Irvine-based Maxi Caledonian subsidiary revealed that whilst turnover rose 11% in the year from £56.1m to £62.3m, pre-tax profit fell 41% from £2.3m to £1.3m.

Maxi Haulage MD Alan Miles told MT: “The biggest impact on profit has been the steep rise in shipping costs to Ireland and the cost of increasing our drivers’ wages - by 6% last year and another 4% this year.”

With around 50% of the company’s turnover generated by its trade with Ireland, Miles said the rise in shipping costs had a significant impact on the company last year.

“If you are shipping 1,000 trailers a week, as we are, then an £8 increase per trailer is substantial and although we will recover these costs ultimately, it takes time.”

Miles said profit levels at the firm are already recovering, largely driven by rising demand in all sectors and a booming Irish economy.

“This is the first time in our history that we have seen a steep increase in turnover in all sectors – in our retail, industrial and parts business,” he said, adding that the company had delivered record turnover and profit in the first week of May this year.

Tender activity during last year and this year has been strong, Miles added, with the company able to bid selectively. “With the amount of tenders in the market we are only responding to around one in 10 tenders – it’s about supply and demand and it appears that the balance is shifting away from the customer and back in favour of the haulier, which has allowed us to return to acceptable levels of profit this year.”

On top of wage rises the company has also embarked on a fleet renewal programme. The firm, which operates around 160 trucks and 700 trailers from its three depots in Warwick, Warrington and Bellshill in Scotland, invested £3.5m in new trucks last year, adding 34 artics to the fleet. It also plans to add 33 new rigids to the fleet over the next three months.

Miles said the strategy was partly aimed at attracting and retaining drivers in the face of the national driver shortage, adding that between December 2016 and December 2017 the number of Eastern European employees at the firm, which employs around 340 staff, had fallen from 48 to 12 “with most moving to Germany and Belgium.”

Looking to the future, Miles said the biggest challenge facing the company is managing demand. “We need to be careful we don’t overheat. Our like-for-like business is significantly up, year-on-year, and it is very hard to get additional resources. We are already planning for Christmas in terms of getting our MOTs and servicing ahead of time, so that we can free up as much of the fleet as possible.”