THE PARLIAMENTARY REVIEW
Highlighting best practice
2| JP BULL TRANSPORT
Challenges of a small
transport company
As with many other sectors, there is
a large subcontracting culture within
the transport industry, and this can
lead to difficulty in acquiring suitable
third-party contracts; to do this we
have to prove that we can supply at
least the same level of service as a
provider with a national network and
hopefully demonstrate the benefits of
being small. These are usually based
on the ability to make decisions and
implement them more quickly, thus
giving benefits to our customer and
ultimately their customers. We are
lucky; we are a third-party logistics
provider to 80 per cent of our clients
and so can maximise our margins.
Transport in any form is very exposed
to economic activity, be that growth or
recession, factors directly affecting our
customers or the volume fluctuations
from month end or month beginning.
All these bring huge challenges in
terms of resource requirement, and
finding a balance between permanent
and temporary resources in terms of
people and equipment is essential.
The River Severn crossing
Having two out of three of our bases
either side of the River Severn has in
the past cost us up to 2.5 per cent
of our turnover or potentially half of
our profit. Therefore, you would think
that when the tolls were removed
late last year that this would result
in higher profitability. However, the
tolls were not only a physical barrier
to some trade but they also hugely
affected the free flow of labour.
Due to the accessibility to Wales and
the West Country, Avonmouth is
strategically placed and has seen huge
development over recent years in
distribution and warehousing, which
has led to huge demand for drivers
and warehouse staff.
While tolls were applicable to the River
Severn crossing, a huge disparity in
the cost of labour had developed, and
as such during 2018 labour costs in
these sectors began to rise sharply in
anticipation of the complete removal
of tolls, and as a result any cost savings
have been depleted. The increased
freedom of labour has also led to
a change in the dynamic according
to which some of our customers
work, which has led to lower levels
of revenue and new challenges for
revenue streams.
Payment terms
Cash flow is an important part of
any business, and for us, as with any
similar company, managing our cash
flow is a challenge. All our outgoing
costs are settled on average 30 days
from when the work was carried out.
In contrast, our invoices are settled
45 days from the end of the month in
which the work was carried out, so jobs
completed on the first of the month
are not paid for 75 days. This creates
a high level of negative cash flow with
as much as 20 per cent of our annual
turnover tied up while our nett margin
is typically three to five percent.
The time Jonathan spent
on a farm in his youth
became the inspiration
for establishing his own
business
Transport in
any form is
very exposed
to economic
activity, be
that growth or
recession,
factors directly
affecting our
customers or
the volume
fluctuations
from month
end or month
beginning
“
“
Rt Hon The Lord David Blunkett
Rt Hon The Lord Eric Pickles
