In 1999 we made a decision that we would not invest in capital equipment but we would invest in people and form strategic alliances with large companies specializing in specific segments of the logistics business. When the boom in the global boom/bust scenario was at its peak, our major competitors invested in trucks, warehouses, aeroplanes and huge computer systems. Albeit the UK economy is still buoyant, most of our serious competitors are foreign owned with mammoth overseas investments that are now strangling them. Our own strategy is paying off handsomely. We have people who understand the industry and partners who predominate in their own field of expertise.



The above is best described by a theoretical example of a logistics provider who purchased an aeroplane. Lets say the initial investment was U$ 20 million and this was financed by a bank. In theory, all that was required to keep the aircraft profitable was to half fill it on a continuous basis and at the time the decision was made; it was possible to ensure a 75% load. However, now it is becoming increasingly difficult to generate a 25% load and the losses far outweigh the profits that were once available. This is because an aeroplane has to retain its airworthiness certificate in order to comply with the financing requirement. In turn, this means that it has to fly a minimum number of hours per month and in turn, this gives two options. The first is to park it up in California and pay a substantial sum for the privilege of flying it without revenue whilst still paying for the aircraft and the cost of the finance or continue to fly it yourself at an uneconomical level whilst still bearing the same overheads such as aircrew and ground handling staff etc. Although this example relates to an aircraft, the same is true for huge computer systems, trucks, ocean vessels etc. Probably more of an impact on many such companies is the fact that they are public entities and the investment cycle in shares has dropped so low that the credibility to raise finance through share offerings can now be assessed as a serious risk factor. The only course of action left is to increase charges in order to stay viable. Alternatively, it is suggested that in some countries, you may be able to use the services of corrupt accountants to distort your figures in an effort to raise finance?

As stated, our own alliances are with those suppliers who specialise in one product only. Namely, the state airlines, the state shipping lines, haulage companies and pick and pack warehouses. We coordinate everything through our own systems and we finance everything we do through our own profits. At the end of the day therefore we manage our own destiny and as long as we continue to perform to the standards we have set ourselves, we will continue to prosper without increasing our tariffs. To coin a phrase from the High Street, " Why pay more when you don't have to?"