Brendan Richards, a partner at insolvency managers, Ferrier Hodgson, has urged caution for those transport companies whose businesses rely almost exclusively upon the supermarket supply chain. It has been acknowledged for some time that the majors are intent upon reducing their freight costs as much as possible, while the freight industry is often already operating on very thin margins in this sector.
“Historically, some transport operators have cut corners or employed subcontractors to cut corners for them. But changing community attitudes means that corner cutting is no longer acceptable,” said Mr Richards referring to chain of responsibility regulations. “Other government steps – the Safe Rates initiative and the Road Safety Remuneration Tribunal – send a clear message: today everybody has a responsibility ensuring safety on the road and corner cutting is out.”
“The only other solution is to start looking for alternative revenue streams. If anything, the competitive pressure in supermarket supply chains is going to increase – not decrease. That means for any transport operators playing a role in the supply chain, life is only going to get tougher,” Richards added.
Mr Richards’ message to transport operators that have built their businesses exclusively around the big supermarkets is to look for a new and suitable niche. “Given the pace of change in today’s marketplace, procrastination is not an option,” he suggested.
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