Summer 2008

Nightfreight has made a name in handling *difficult' parcels, but is also a national leader in two-man home delivery. Peter Rowlands hears from chairman Robbie Burns and MD Peter Louden how it all fits together

You probably think you know Nightfreight. Its striking blue delivery vans seem to be everywhere, apparently doing exactly what the company's name suggests: delivering parcels that have been trunked into the area overnight.

But the name is actually a clue to the paradox in Nightfreight's proposition. It says 'freight', not parcels, and that's what distinguishes the company from other parcels carriers. Nighfreight is about parcels É and then some.

Robbie Burns, top man at Exel in the years before its acquisition by DHL, is now chairman at Nightfreight, and takes a pragmatic view of the market in which the company competes. 'Parcels is a global game,' he says. 'We know we're never going to be in the league of the international consolidators.'

 

That's why Nighfreight takes a different approach, he says. 'Our focus is on service, not volumes. We aim to get the simple things right first.'

Size is a relative thing, of course. Nightfreight is substantial by most standards, turning over £150 million, running 1,400 vehicles from a network of 50 depots, and employing 2,500 people. 'We're big enough to have scale, but not so big that operations become unduly complicated,' Burns says.

Nighfreight is, when all's said and done, a significant parcels carrier. It has 5,000 customer accounts, and about two thirds of its business consists of network operations – chiefly what Burns calls 'classic overnight deliveries', plus 'difficult' freight (of which more later).

But the company is also a major player in another market – two-man home deliveries, which it operates under the brand name Deliver2home. This accounts for at least £40 million of its revenue, and the company is keen to see volumes increase further. As managing director Peter Louden puts it: 'It's a growing market, and there's a clear move towards outsourcing among users. That adds up to an opportunity for us.'

While there are plenty of other companies offering two-man deliveries, Nightfreight is almost alone in doing it in parallel with a parcels business. This means it has a ready-made network of depots on which to base two-man activities. Currently 22 of the 50 depots host two-man operations, and the company is planning to increase that number to around 28 or 29.

'It's an ideal mix,' Robbie Burns says. 'Generally the depots are involved with the two-man operations during the day and the parcels operations at night.' The two types of operation don't usually share vehicles, he says, but there are always opportunities for this when the need arises; and they do share other aspects of the infrastructure.

'Parcels and two-man operations also have different seasonalities,' Burns points out, 'so we have a more balanced work load over the year.'

The two-man business has also given rise to a further business offshoot – dedicated distribution contacts. Nightfreight has 'a couple of dozen' customers of this kind, Peter Louden says, many of which are using liveried vehicles that are unidentifiable to those not in the know. Probably the highest-profile operation is for retailer B&Q, for which the company provides a range of services including two-man home deliveries. Another well-known user is Office Depot.

The contracts include both B2B and B2C operations, and in theory Nightfreight could take on any kind of contract distribution, but generally the company tends to exploit the skill and resource base of its existing operations. And crucially, it can handle low-volume traffic flows through its network, reserving the dedicated activities to those operations that demand them. It's an ideal mix-and-match opportunity that few other contractors could match.

Burns fleshes this concept out further. 'Integration is the key to profitable operation.' He says. 'Customers want variable costs and dedication. Hybrid solutions are the answer to this.'

In support of the two-man and contract operations Nightfreight operates a contact centre at its Willenhall hub, and uses a range of online and telephone resources to ensure that pre-planned deliveries run smoothly.

Within the home delivery business there are further variations, including an ultra-high quality white-glove service called Pacemaker, which includes assembly and installation of furniture and similar products.

Whilst two-man home deliveries are very much a business on their own, Nightfreight also actively promotes a one-man home delivery service. So what is the magic formula that enables a medium-sized carrier such as Nightfreight to make a success of home deliveries when even large carriers sometimes avoid them?

Robbie Burns agrees that it's a challenging market. 'Business-to-business carriers look for *coincidence of clicking',' he says, explaining that this means orders placed from the same PC or destined for the same addresses. 'B2C operations, by contrast, tend to involve one-off deliveries to random locations, so they need a very high volume of throughout to achieve the same economies of scale.

'But prices are often screwed down quite tightly,' he adds. 'Suppliers have to deal with margin pressures.'

So how does Nightfreight compete? Partly it's by running 7.5-tonne vehicles – bigger than those of typical parcel fleets – and avoiding smaller, cheaper products where price pressures are likely to be most intense.

Partly it's by putting those vans to good use by exploiting another special skill that has been fine-tuned by the company over the years: its expertise in 'ugly' freight, or what the company has dubbed IDW goods (products of irregular dimension and weight). Such products could be long, thin, wide, tall or generally asymmetrical in some way; the common factor is that they don't fit particularly well on high-volume carousel sortation systems run by the volume parcels carriers.

'We do have some small-box automation at our main Willenhall hub,' Peter Louden says, 'but it's limited compared with what some of our rivals operate. The advantage is that we can be much more flexible in our handling methods than they can.' Again, very few other parcels carriers welcome this kind of freight, so Nightfreight has carved a distinct niche for itself here.

Because it can deal with both conventional and IDW goods, Nightfreight can present itself as a plausible one-stop shop for customers. However, one possible fly in the ointment here is the emergence of parcels selection systems such as MetaPack's, which allow users' despatch systems to select carriers automatically on a mixed bag of criteria that can include service levels, consignment size and type, capabilities and price.

Robbie Burns is sanguine. 'MetaPack is a fact of life, and we work with them,' he says. 'Our message to customers is to beware of other carriers claiming to offer the same range of services as ours.'

Much of the company's IT development is conducted in-house, including work currently under way to roll out in-cab Symbol computers to drivers, enhancing its track and trace capability. It also offers its own Despatch Manager software, which can be either installed by users or accessed over the internet.

A distinctive feature of Nightfreight's operations is the emphasis it places on customer service. 'We have three or four customer service staff at every depot,' Louden says. 'Each deals with a set group of customers.'

He explains: 'Consumer deliveries are much more demanding than ordinary B2B deliveries, and we're determined to stay on top of this.' Lately the company has launched an initiative called 'It's personal' to drive home the message that this is a company where customer care is important.

Significant training resources are directed at the customer care operation. 'For instance, the staff go out on the road so that they have direct experience of the kind of problems the drivers have to contend with.'

Nightfreight has been around since the 1980s, but is a very different organisation now from its earlier form. It was once an agglomeration of separate businesses working under a single identity, but now it owns all but three of its own bases, and Louden says those three operate closely along corporate lines.

Burns says the company 'is full of people who love the business,' which perhaps offers a useful counterpoint to another of his comments. 'You have to be grown up to be in the business,' he says, then adds: 'But you also need a youthful outlook.'