Alan Maher (pictured), MD of Archbold Logistics in Manchester, explains the difficulty of balancing dipping volumes with soaring tractor and trailer prices and lengthening vehicle delivery times
Q: How much is the general slide in volumes affecting Archbold?
A: We’ve tightened our budgets a little this year. This means subbing out less and keeping it in house. Volumes are not what they used to be and there’s got to be a lot people struggling having invested for higher volumes.
One of our main customers is going through an acquisition and we’re reasonably confident of receiving the new business when it comes through. We also have a few customers that we did some work with in 2022 who will come online again. So, it’s not like we’re trying to chase sales.
We’re protected a little because we’ve put a lot of work into customers who'll hopefully increase our market share. Away from that, it would be a worrying time if volumes keep dipping. You’ve got fixed costs and fixed overheads. You can’t just jettison equipment like previously. Our new trucks were delayed so we retained hire trucks that had proved difficult to source in 2022. That will probably come back as people start to slow down. The ability to hire trucks should become easier.
Q: How much investment are you putting into new trucks and trailers?
A: We’ve just had 22 vehicles come in that should have been here last year. We ordered them in September 2021. We’ve got 12 Iveco and 10 MAN tractors. That’s an investment of £2m going in on new equipment. Some of that is replacement vehicles and some of it is expansion.
Q: How much are truck prices escalating?
A; They’re through the roof. The very same tractor I’ve just bought is now £35,000 dearer than it was in 2021. That’s not sustainable. There’s got to be a correction at some point but we’re not seeing evidence of that.
Q: Will those sort of price rises see some SMEs struggle to survive?
A: Possibly. Tractor and trailer prices are going up, labour is going up and we’ve just had a big tyre increase. And a lot of fitters are struggling for maintenance and mechanics. It’s not classed as a sexy industry to be in.
To attract fitters, they need to pay more money and give better working conditions. Even at main dealer level there’s a shortage of mechanics and a shortage of parts.
Q: What attracted you to Iveco and MAN?
A: It’s all about the fuel return followed by the dealer network that supports them. We are confident in our choice given the customer service and experience received so far.
Q: Are you happy with Archbold’s rate of growth?
A: We had another great year in 2022 and we expect some good organic growth in 2023, mainly from existing customers. We’ve seen turnover grow from around £15m a few years ago to £27m.
We’re a bit more complex than other companies. We don’t do just one thing. We do transport, warehousing, global forwarding, contract logistics, that is a bit of everything. We’re selective about what we take on to add on to it now because we’re not chasing volume as such.
The last two or three years have seen us win some good-sized contracts and we’re just trying to bolt onto that as we go and slowly build it up. We’ve got a really good mix of customers now.
Q: Any plans to diversify to win new business?
A: We don’t feel the need to do it. We’ve got a good model and we’re building on it. What we’ve been good at in the last few years is not doing too many things and making a hash of them.
We’re really good at developing existing customer relationships and getting to know what they want. Service is key, but price is also key. It wasn’t in the last 12 months but now it’s creeping back. But it’s all about service at the end of the day. You haven’t got layers of management to get through with us; we’re honest people and if we mess up, we fix it. And we have an open dialogue and regular meetings with customers. We don’t let it get to be a problem. Communication is key.
Q: Has the driver shortage eased?
A: The shortage is still there but it’s masked by the current volumes. If there was another spike in volumes we’d feel the pinch but because the volumes are not there the market has dropped quite a bit and we’re not experiencing that.
Q: Do you use agency drivers?
A: A limited amount, and in what we class as peak. People who were agency jumpers aren’t getting full shifts, because the volumes aren’t there now. They might think the bubble has burst from last year so they can’t pick and choose. They need to get a job so we’ve seen a big movement of people who would previously work with the agencies who now want secure employment.
Q: How far down the line are you with decarbonising the fleet?
A: It’s probably too early. We’ve challenged all the manufacturers who’ve come to us and asked where we’re up to. They don’t have a lot to tell us. Everyone has got some form of electric solution but it’s on a very limited scale. We’re waiting to see the proof of the infrastructure. I’m not seeing the infrastructure to support the miles that we’re doing.
Battery technology is changing at a rate of pace. People are wating for others to get it wrong before they jump in. And what power would we need back at this facility to charge 40 trucks?
Q: How much have you increased driver pay levels in recent months?
A: We’ve given three significant increases over the last 18 months. We want the best drivers so we’ll have to be up there in terms of pay. We’re not the best payers, but we are above the average. We work in conjunction with the driver reps to look at initiatives to save costs which will enable us to fund further wage increases.
Q: Are some drivers taking advantage of the situation?
A: Undoubtedly yes or have done. We saw quite a few drivers leave in the driver crisis because they could earn anything they wanted. The time to command higher pay was 18 months ago.
But I think everyone is struggling to attract quality people. That will slow down growth. The industry is notorious for long hours and we’re trying to change that. We’re working smarter. Twelve-hour days were the norm, but people don’t want to do that anymore. We spend a lot of time together as a group of people and it has to be a good place to come.
Q: Who are your biggest competitors?
A: We punch above our weight to be honest. We could be against Menzies who are superior in terms of fleet size. But we work together with some of the bigger companies like Owens, Elddis and Woodside.
Q: You joined the Palletforce network in 2007. What are the benefits?
A: With smaller consignments it’s not cost effective to be charging off to Cornwall with three pallets so we needed a solution. We were predominantly full load at that point. As we develop with warehousing customers, we need an outlet to distribute smaller consignments. So we offer a one stop shop for the customer but manage it all through the network.