Cargo Handling: Heathrow

The fortunes of many companies operating within the freight forwarding and haulage sector have been less than stable over the past year or so. A catalogue of pressures such as crippling fuel prices and increasingly intense competition within the sector has resulted in many businesses suffering acute losses and struggling to maintain a viable cashflow.

It will therefore come as no surprise that a company such as 808 X-ray Logistics Ltd, which worked closely with customers from the road haulage, sea freight and air cargo sectors, has become one of the latest financial casualties as a knock-on effect of these uncertain industry conditions. This independent cargo handling company provided processing, x-ray and labelling services from its base on the Heathrow estate in Middlesex, but entered administration on 11th January 2013.

Problems arose after 808 X-ray Logistics purchased one of its competitors and found that the work gained through the acquisition resulted in a much lower profit margin than it had expected, and was simply not sustainable for the business in the long term. This was compounded by the fact that another company had started offering cargo x-raying services at a lower cost than 808 X-ray Logistics could compete with – a familiar story for many companies involved in the wider haulage sector.

As a result of these difficulties, and in spite of an annual turnover of approximately £1.4 million, 808 X-ray Logistics struggled to meet its substantial rental costs and accrued debts of more than £700,000, including a sum owing to Her Majesty’s Revenue and Customs (HMRC). SFP’s Daniel and Simon Plant – both licensed members of the Insolvency Practitioners’ Association – were appointed as Joint Administrators of the ailing business and, following discussions with a number of interested parties, were able to achieve a sale of part of the business and its tangible assets to a third party buyer.

According to figures released by the International Air Transport Association (IATA), last year saw a 1.5 percent drop in air freight, which the association partially attributes to a slowdown in global trade growth: “The industry suffered a one-two punch,” says Tony Tyler, IATA’s Director General and CEO. “World trade declined sharply and the goods that were traded shifted towards bulk commodities more suited for sea shipping.”

Furthermore, figures published by the Department for Transport at the end of last year showed that the number of registered heavy goods vehicles operating on UK roads had fallen by 5,600 compared with 2011. Geoff Dunning, Chief Executive of the Road Haulage Association, says although it is regrettable to see a reduction in vehicle numbers, many of which would have been members of the Association, hauliers remain the most vital link in the UK supply chain:

“This figure, although down on that for 2010, clearly reflects the increases in efficiency within the industry, the resilience of firms suffering economic difficulty, and the fortitude of its workforce,” he says. “Together these have not only enabled industry to keep the wheels of the economy turning, but are now working hard to increase and improve the UK’s economic future by keeping the supply chain moving.”

However, 2012 was not all bad news for the sector: the UK haulage industry has also been heralded as a ‘national success story’ for its collective achievements throughout the London 2012 Olympic and Paralympic Games, in a document put together by the Freight Transport Association (FTA). ‘Logistics Legacy – Celebrating logistics achievement and innovation during Summer 2012’ acknowledges much of the outstanding work and meticulous planning carried out by numerous individual across Government and industry, ensuring that London’s supply chains – which saw an average of 265,000 freight vehicles visiting the capital daily – delivered the goods and services required.

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