Green Shoots

Ireland’s economic woes offer opportunities for growth to delivery firms bold enough to confront the challenges, argues John Tuohy, CEO of the independent logistics firm, Nightline. Since being established in 1992, Nightline has had to overcome many challenges. However, we have always believed that in order to grow, we must confront difficult circumstances head on rather than shrinking from them.

Having started as a two van/two man operation from a back bedroom in Dublin, we have managed to retain a commercial fleetness of foot, enabling us to identify new areas of potential.

This approach has been invaluable in helping us navigate our way through the choppy economic waters which have encircled all businesses in recent years, without needing to follow Irish ministers in asking for a bail-out.

It has also allowed us not just to survive but to thrive, to the point where we now handle one in-four of all parcels carried on Irish roads. Having reached a position of domestic success, it is not in Nightline’s DNA to stand still, nor do we believe it wise to seek to merely hold on to what we have built up.

The rapidly changing face of the logistics industry means that we constantly have to explore and exploit those opportunities which come our way.

The impact of recession

While many parts of the globe appear to be making headway in escaping the grip of recession, Ireland’s economic prospects remain rather bleak; largely, say brokers, bankers and pundits, because domestic consumption has slumped as people tighten their belts.

Private and corporate thrift has arguably been to Nightline’s benefit. As the recession increased in severity, we focused on identifying growth areas.

One was the burgeoning popularity in internet retailing. Because of its reliance on flexible yet robust delivery systems, we honed our delivery and IT infrastructure to make it leaner and more efficient, more able to cope with larger parcel volumes, and more in tune with the sensibilities of discerning online shoppers.

The need for retailers themselves to be cost conscious has only fuelled the boom in e-commerce. We have seen a gradual but noticeable shift in the nature of our business as a result.

Just over 12 months ago, we were moving greater numbers of B2B consignments. Now, we find that our B2C volumes have increased, even though our clients are largely the same. What has changed is that they have recognised the need to meet the demands of bargain-hungry consumers, who are more inclined to shop online rather than on the High Street.

That change, and our ability to attract business from major retailers, has led to double-digit growth in the volumes of internet retail deliveries and collections which we now handle.

British bonds

Ireland and the UK are not only close in terms of distance, but economically too. The relationship results in more than EUR 27bn of business between our countries each year, making the UK one of the most vital trading partners that Ireland has anywhere in the world.

The critical nature of the relationship was behind our decision to open a regional office in North West England in July 2010 to add to a network of seven wholly owned depots covering the island of Ireland.

That move also reinforced our increasing emphasis on e-commerce.

The majority of large retailers doing business in Ireland have centralised supply chains, with much of their shipments originating in the UK. The fact that we are the only Irish carrier able to cover the entire country without having to rely on a chain of sub-contracted hauliers, coupled with the simplicity both of cost and operation which that brings, has generated millions of pounds worth of business for us.

Strategic partnerships with the UK’s leading parcel and carrier manager, Global Freight Solutions (GFS), and UK Pallets have also been crucial to that growth. We already have a very strong cooperative relationship with UK Mail, a company with which we have worked since 2004.

The importance of being able to handle ever larger volumes of UK consignments has also been central to our decision to treble the size of our facility in Northern Ireland. To do so has meant investing several million euros and followed our commitment to spend several million more, increasing capacity at our principal Dublin depot by 40%.

Competition at home and from abroad

Unlike the UK, Nightline faces little competition from the major international parcel carriers in our domestic market. What rivalry there is tends to come from the overseas postal operators, such as La Poste, Royal Mail and TNT, in addition to DPD, which is part of Deutsche Post.

The Irish domestic market is, in my opinion, already heavily over-subscribed, something which presents a challenge to every company operating within it.

Profits and margins are being depressed, which places an even greater premium on our ability to control costs and take advantage of new opportunities to build volumes.

Postcodes and potholes

Ireland is almost unique among modern, developed nations in not having a system of postcodes. It means that delays and costs are added to the sorting and delivery processes at a time when the country’s economy can well do without any extra burdens.

Implementing postcodes became the policy of the Irish Government six years ago. For various reasons, including all non-essential items being placed in abeyance in late 2010 while the country teetered on the brink of bankruptcy, the system is now not expected to come into effect until the end of this year.

I believe that it cannot come too soon. Having a simplified method of processing huge amounts of mail and parcels will be of great advantage to every business, every resident, and to the delivery companies which serve them.

It has been a happy coincidence that our development as a business has coincided with the improvement of Ireland’s roads. In the last decade, Ireland has acquired a thoroughly good motorway network between Dublin and the island’s other major cities, which constitutes a dramatic improvement on what had existed before and a significant benefit to our nationwide operations.

Postal priorities

Our decision to branch into post is another example of our extracting commercial benefit from changing circumstances.

Ireland is one of 11 countries that is meant to open up its domestic mail market to competition this year. Even though the economic and political crisis saw us miss the 1st of January deadline, great efforts have been made to catch up.

Nightline already possessed a comprehensive national infrastructure before the opportunity of liberalisation presented itself. Adding mail to that system allows us to increase efficiency by generating extra volumes to flow through it.

Nightline has no intention of providing final mile deliveries. It has established a new division, Eirpost, to capitalise on our collection know-how combined with the delivery expertise of the state service, An Post. We will act as a mail consolidator, helping reduce costs for small and medium-sized businesses, and hopefully helping to reverse the decline in postal volumes in recent years.

Diversification into mail has also enabled us to develop a partnership with one of the world’s leading postal companies, Swiss Post, in order to provide a simpler, faster, cost-effective and more customer focussed international mail operation than Irish firms have ever seen before.

The future

After nearly 20 years of business, our core belief is exactly the same as when we started: we cannot stand still.

The economic problems of recent years have crystallised our belief of the need to continue to diversify in order to reduce our risk. As well as identifying and acquiring new business, we will remain as efficient as we can.