It is dedicating more vehicles and tankers to the feed sector, setting up a support team consisting of planning and commercial functions that will concentrate solely on animal feed customers.
We caught up with the company’s CEO, Steve Granite, to hear more.
Abbey has already been providing liquid feed road tanker transport, distributing by-product from the operations of the leading players in the sugar or oil refinery industry, but it now wants to up its game in that sector:
“Our liquid food tanker fleet has been able to carry some products such as molasses or crude soy, but we felt that we were not giving enough focus to the feed sector.
“The decision [we have taken] now is [based on the fact] that we see lots of opportunities for expansion in feed.
“Our share of the food market is relatively high; we do not see much room for growth there. However, many of our food customers have [feed] by-products and there is a whole chain of other feed businesses as well that we can start to support, help grow our business and hopefully improve their offer to their customers. Our [feed clients then] will range from the big global food companies to traders to local businesses.”
He said the vast majority of liquid feed in the UK travels long distances: “There is quite a lot going from the North West of England to Scotland or to South Wales, some decent runs.”
However, industry feedback indicates the existing liquid feed transport logistics sector in the UK is quite fragmented and regionalized, with a number of smaller, local operators remaining prudent in relation to investment, and not willing to expand their fleets.
“The local operators probably do a very good job, but we believe there is a great opportunity for a more national solution, and with the national infrastructure that Abbey has, [coupled] with our bulk food logistics experience, we can offer feed customers a collection service from any location across the UK. We can also offer a higher level of flexibility, something we think the sector currently lacks.
“Abbey, as a company backed by a private equity firm, with significant funds to invest, is able to go to the marketplace and say ‘we want to invest, we want to grow with your business’.”
Abbey’s business, in general, is liquids and bulk powder transport. “While, we can do dry [feed] as well, what we are going to focus on initially is having a dedicated liquid feed fleet and then, naturally, any powder or dry product inquiries that come up, we would look to incorporate those into that dedicated fleet.”
In increasing its foothold in the liquid feed segment, the company wants to capitalize on its long experience of transporting bulk liquid food across the UK. “The food sector tends to have a higher level of hygiene and traceability standards and requirements [compared to the feed sector]. Hopefully, we can bring in the benefits of that experience and those levels of operation [to the feed segment].”
The logistics group also intends to leverage its information management services in relation to liquid feed transport.
“We are great with data; we can use data to help feed customers to drive down costs in the supply chain. It is no longer just about chucking product from A to B, there is a lot more to logistics companies today.”
The company has also invested very heavily in technology, to give customers greater visibility on their loads.
“We all expect, nowadays, to be able to track parcel delivery on an app, and that kind of consumer expectation has entered the bulk market. We have a system where customers can log in, track their load, get signed PODs on line, and send orders to us electronically, which are automatically uploaded to our system.”
Spillages or loss of product is a typical challenge in liquid feed logistics, and the discharge process can put the tanker under pressure. Abbey, though, also sees potential for segment growth in that:
“Tankers are expensive equipment, and I see lots of older tankers operating that may not be as safe. We have an in-house fleet engineer who designs all of our tankers in conjunction with the manufacturers, so if there is a particular safety or hygiene issue, we are in a position where we can take a blank page and say let’s design that out in the specs of a tanker.
‘Our own internal expertise allows us to go to tanker manufacturers and say: ‘Okay, this is a particular issue, these are our ideas, what have you got? What is best practice in the sector? Is there anything we can draw from other companies?’ and that is how we have been successful in our bulk powder business, building equipment that is specific to a customer."
Granite does not foresee much impact from the UK’s exit from the EU.
“Like every other business, we are kind of in the dark at the moment. We do expect to see issues at the borders on exports, we expect to see a tightening of the labor pool, but, in general, most of what we do is UK to UK so it should not have much impact [on our business].
“The vast majority of our drivers, probably in excess of 95%, are UK drivers. We are not heavily reliant on European national drivers. We do not use any agency drivers at all, because this is a specialized operation. As the labor pool is squeezed, the marketplace will likely be looking for companies with a robust structure [such as Abbey]. We have our own in-house driver recruitment team, and an in-house driver CPC approved training center. We have enough spare tankers, but it is all about the traction and the driver resource, and, [in that respect], we have a big pool to draw on.”
Abbey Logistics used to be a family-run business. However, in August 2016, Manchester-based private equity group, NorthEdge Capital, invested an undisclosed eight-figure sum for a significant majority stake in the group, to support a management buy-out (MBO) led by Granite.
“In 2009, one of the family owners wanted to step down, and asked me [as finance director then] to take over as managing director, and diversify operations. At the time, we were an £18m UK liquid food business. Within seven years, we had grown to a £45m business, we operated a bulk powder business, a general haulage fleet and a warehouse, and we were active in the UK and in Europe, so we had really diversified. It was at that point that we had a conversation with the owners about the potential growth opportunities, and the investment that would be required.
“The MBO enabled the owners to realize their value [as they existed the company], but also gave the management team a stake in the business going forward. Since the MBO, we have grown from £45m to around £61m (US $80m) turnover annually.”