Dealing with the difficult(GeoPost Corp’s mode of operations)
Looking after a fleet the size of GeoPost's means taking cost – and risk – seriously. Toby Clark talks to Charlie Shiels, who has to keep the parcels moving.
Charlie Shiels is responsible for the GeoPost fleet – under the livery of both Interlink and and Parceline – and has the unusual title of director of risk and transport – perhaps reflecting the importance of managing safety and security issues in such a large operation. Having been a specification and purchasing engineer at Exel Logistics in the late eighties, he worked for British Airways and Argos, before joining Parceline/GeoPost as general manager transport in 1994. Now a member of GeoPost UK's senior management team, the 41-year-old is a member of both the Institute of Road Transport Engineers and the Association of Insurance and Risk Managers. Motor Transport met him at his office in the massive Interlink/Parceline hub in Smethwick, just off the M5. Shiels looks after a fleet of around 1,500 vehicles (excluding trailers) most of which are Parceline vans – around a thousand of them. "The number fluctuates week by week" he says. The main criterion for the choice of vans is whole-life cost, but this depends, Shiels says, on "its ability to cope with a very hostile industry, doing 110-120 drops a day. If there's a problem with the door hinges or starter motors we'll find it first". GeoPost has settled on one supplier: "We've been buying Mercedes for fifteen years," he says, "but we're continually trying other vans, we've run models and the like. There's cheap and there's cost-effective – they're different things." So what's the most cost-effective way of financing the Sprinters? "They are all on operating lease, negotiated directly with Mercedes-Benz in Milton Keynes. If we could, we'd negotiate with Mercedes-Benz in Germany!" GeoPost's economies of scale offer buying power that's not available to smaller fleets, although dealers still have their part to play: "We do a buyback with a dealer, then go to the market for finance. When you think that I took about (pounds sterling)30m of funding last year, the funding is significant. We try to match funding with interest rates – because we're quite clever! Everything's off-balance-sheet where possible – as company policy." The firm's van leases run for a primary period of 48 months. They are all taken through Northside Trucks in Bradford, says Shiels. "All parts go through them as well – except that we take some parts in here (at the hub) – I think we're the only operator that takes Mercedes-Benz parts directly." The Smethwick hub is the only GeoPost location where servicing takes place, and it has an impressive workshop. "Everywhere else in the country we appoint third-party contractors," says Shiels. But this means paying local, sometimes high, servicing rates: "We've been toying with the idea of not servicing in London at all – the van would spend its first nine months in London, then it would be moved to, for instance, Carlisle". Running his own full-time workshop at the hub means that Shiels requires serious resources: around a hundred vans, 300 tractive units and 520 trailers are serviced on site, 24 hours a day, 363 days a year. "We've had to take on eleven new employees and realign our pay rates. We run continental shifts – four on, four off. People with strong outside lives and hobbies love working for us. "Most of our fitters are fully-trained Mercedes-Benz technicians, but we've just taken on some semi-skilled fitters for trailers. But we will be training them up." Pay rates are good: around (pounds sterling)26,000 for a fully-skilled fitter on the night shift, or (pounds sterling)22,000 on the day shift. But, says Shiels, "It's a challenging job: you get a problem on a commercial vehicle and you really have to think". Training applies to drivers too, of course: "We're just about to launch our driver safety programme, taking all our documentation into one programme. We've got on-the-job trainers – OJTs – who are drivers with a bit more about them". Had Shiels considered fitting speed limiters to his vans? There's not much point, he reckons: "we'll rarely see a speeding ticket at over 70mph". "Certainly fuel consumption is a big issue for us," says Shiels. The latest generation of common rail diesels is pretty efficient, and driver training should help, but what about innovations such as alternative fuels? "The numbers don't stack up as far as I'm concerned. There's nothing that will provide a cost comparison for our operations. "We look to be environmental through maximising the efficiency of what we do. We're trying to be innovative for the right reasons – because it adds value to the business". As an example, GeoPost has fitted in-cab weight indicators to 150 vans in the last year, at a cost of (pounds sterling)1,000 each (see box). "Drivers themselves highlight issues with the vans," says Shiels, and other additions to the fleet include rear parking indicators, rear steps and 270 degree opening rear doors. He is fitting a Pioneer GPS navigation system to around 200 vans, at a cost of about (pounds sterling)1,000 each – but he reckons it should easily pay for itself, working out to about (pounds sterling)1.60 per day over four years. All the Parceline vans, and an increasing number of Interlink vans, are fitted with GeoPost's proprietary Saturn PoD set-up, a web-linked system which has been in operation for six years. One reason for GeoPost to be wary of novelties such as alternative fuels is the need for continuity of operations: "When a vehicle breaks down on the motorway it's DefCon One," says Shiels, adding that "A satisfied customer is a retained customer". This attitude is exemplified in what Shiels calls "an aggressive risk management ethos". Safety is part of this, and he says that "It's not an issue we've had with employees". Shiels buys his fuel through Shell, at a fixed rate for the year, and has substantial tank capacity at Smethwick. But, as you might expect, he's gone one better, and bought a fuel tanker at the time of the last fuel crisis, based at Smethwick but intended to serve other depots. "It's about business continuity planning," says Shiels. The hub also has 200 tonnes of road grit on site, and (of course) GeoPost has its own gritter. Security is taken seriously too, and Shiels employs six ex-policemen. All the vans are fitted with slam locks, and after experience, these all have internal releases to them. But one of Shiels' biggest challenges is to deal with the most unpredictable events of all: changes in legislation. Of course the Working Time Directive will have an impact, but the proposed changes to the EC 3820 drivers' hours rules are of more immediate concern: "Getting rid of split daily rest – it's going to be painful for us," he says. "We think we've got enough hours in the pool – it's just making the hours available". He adds that "It's a very innovative industry," but reckons that there isn't enough joined-up thinking at government level: "We need a transport Czar!" Could Shiels himself be the man for the job?
Franchisees Unlike Parceline, Interlink is a franchise-based operation, and as Charlie Shiels says, "We have the experience – but not the pain – of our franchisees". The 108 franchise-holders operate almost 1,000 vans, and while Shiels makes recommendations as to what they should be, he cannot make demands. For the sake of reliability and brand image, he specifies that they should run Sprinters, Ford Transits or Volkswagen LTs, but, he says, "In the past they've ignored what we've said, so they've got anything". But to take advantage of his buying power, Shiels says, "We're putting some packages together for them – looking to get them group discounts".
Sprinters and other vans Charlie Shiels' fleet of Mercedes-Benz Sprinters – all in the livery of Parceline – cover around 35,000 miles a year on average, and some of them have been in service for five years. Their hard lives make them an ideal testbed for components, says Shiels: "Michelin have had their engineers out with our vans to understand how they keep trashing their tyres." All the vans are 3.5-tonners, but the specification has changed in recent years: "Historically we've had Sprinter 308s with 10m3 bodies," says Shiels. "But we've found that our typical load capacity is now around 75-80kg per cubic metre – it used to be more like 120kg per cubic metre". This means that there is a need for greater load volume, so GeoPost now specifies the more powerful Sprinter 311 with a 13m3 body. Payload weight is still an issue, though: "The problem we've found is the diminishing load capacity," says Shiels, who is in the process of fitting in-cab weight indicators to the vans. He's not dogmatic about using Sprinters, and assesses the competition on a regular basis: "Transit's the only thing that's come close – seriously close – in the last couple of years".
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