Saturday 21 April 2018

Delivering the goods from a boxroom to 50,000 sq ft warehouse

Dynamic courier company now major player in domestic parcel market. By Peter Flanagan

The Dublin headquarters of parcel and courier firm Nightline is buzzing with forklift truck drivers and men in high-vis jackets.

The gargantuan 50,000 square foot warehouse in north Dublin is the centrepiece of a company that now employs some 650 people throughout the island.

It's a long way from a bedroom in Castleknock but that is where the business began. In 20 years, company chief executive John Tuohy, along with his co-founder Dave Field, has built the business from that bedroom to being the major domestic player in distribution services in Ireland.

Every night its trucks and vans head out across the country delivering goods and packages to both retail and commercial customers nationwide.

Mr Tuohy's tale is instructive. A senior manager at FedEx by the age of 24, he and Mr Field took redundancy from the behemoth in 1992 and tried to strike out on their own.

Now a fit 44-year-old, and the leader of a very successful business, it's fair to say the plan has worked out so far but, like all entrepreneurs, he struggled in the early days.

"Things were touch and go early on because we were trying to raise finance to buy the two vans and a mobile phone which we needed to run our business.

"We had tried and failed to raise motor finance because we were a start-up, but eventually we went to a bank manager in Ulster Bank at Dublin Airport and said to him: 'We want to start, what do we need?'

"He looked at us and referred us to an accountant in Santry and through him we met a finance broker who got us the finance for the two vans. Then Woodchester financed the mobile -- it was about £900 over two years -- and we were able to get started," he says.

"That stayed with us because we got everything through a network. It was about contacts and getting a foot in the door and that hasn't changed a whole lot since."

The year 1992 was not a good time to be starting a business. Like now, unemployment was rife and would peak two years later. There was not a lot happening on the domestic market, but Mr Tuohy was lucky. A postal strike that year gave the business an immediate boost.

"A number of Irish businesses were doing graphics work for US firms and they had to be delivered to America the next day. That became our speciality because we would fly packages to London and then insert them into the FedEx network there."

Multinationals were just starting to open manufacturing plants here. The first Intel plant opened in 1993, for example.

By the mid-90s. Nightline was taking up all the freight space on Ryanair flights to Stansted in London, and the company had diversified into transporting parts for the burgeoning hi-tech sector here.

Today, the company distributes a variety of high value items, including mobile phones, tobacco and computer parts, as well as the local courier service people will be familiar with.

Mr Tuohy is in a curious position. His company is small by international standards, but is taking on giants employing hundreds of thousands of staff. FedEx alone has close to 300,000 people on its payroll.

"The first thing we do is not take them on directly. That would be crazy. Part of what we do is seeking out niches where the major players are perhaps not flexible enough to provide a service, or where the market is too small for them."

The next step for Mr Tuohy and Nightline is apparently entering the domestic postal industry. The sector has been noted for the apparently irreversible fall in the number of letters being posted and the ensuing struggles of An Post.

Mr Tuohy wants the postal market here to be opened up in the same way as the UK and claims he can turn the industry around. Obviously, it's in his interests to say something like that but his plan, at first glance, does sound convincing.

"The postal market has been liberalised, but we'd like downstream access, which would mean we can collect post, sort it and then give it to An Post for final mile delivery.

"The Royal Mail just revealed record profits but 40pc of letters are sorted by private companies there.

"It's true that the Royal Mail had a massive restructuring but they liberalised the postal market in 2005 and then opened up downstream access so they can focus on keeping the postman on the street and cut costs further up the line, and that's a method I think could work here.

"I think it's an appropriate model for the Irish market but I don't think we're brave enough to do it. As it is, though, the market is dealing with dwindling mail numbers and a shrinking customer base."

If Nightline was to get a piece of the letters pie, though, Mr Tuohy is adamant that he would want reform in the postal code system. The lack of nationwide postcodes leads to higher costs, he contends, and has left direct mail in a shambles.

Direct mailing stirs up strong emotions in a lot of people. To some, it brings business into the home; to others, it is spam clogging up letter boxes. Count Mr Tuohy in the former camp.

"It's spam when it's not relevant to you. If you're living in an apartment, there's no point in trying to sell you a lawnmower. Yet that is what the lack of a postcode system means.

"Proper postcodes would be able to distinguish between an apartment and a house, between a semi-d with a garden and terrace opening on to the street. That would allow more focused direct marketing and it would take away the scattergun approach we have seen to now.

"There is scope to innovate in post but I think the Government and wider establishment consider the postal market to be one company. When people think about the postal market they think of An Post.

"It's like when the aviation market was liberalised, for years people thought of the aviation market as Aer Lingus but if you look at how liberalisation grew the market and allowed good innovation, you can slow the level of decline if not turn it around. I think there's a lot left in the post and if we can access it we can do something about it."

A hint of the innovation Mr Tuohy refers to is Parcel Motel. Launched last week, it is a PO box for the digital age. Users can arrange to collect their package at numerous locations throughout the country, such as petrol stations, or in Dublin, at Charlie Chawke's network of pubs.

"It's convenient and customers don't have to go out of their way to collect parcels. That's important now when people have so little time," says Tuohy.

Mr Tuohy is part of a rare breed of indigenous, successful entrepreneurs running a labour intensive business. Although a much bigger company now, he experienced the same problem of accessing credit that a lot of SME's do now. His solution is for a state-backed bank to step in where the regular banks won't.

"In the old days, we had ICC Bank which was started by the state to nurture business and help the business community. That was eventually bought by Bank of Scotland and has since gone bust, and on the other side was Anglo Irish Bank.

"It sounds strange but 90pc of Anglo's activity, not the funds now but the activity, was good business lending.

"In our business, the raw materials we need -- conveyor belts, computers, servers -- were always very difficult to finance. The mainstream generally didn't do it but Bank of Scotland and Anglo were very good at doing it.

"Now we don't have either, there is a need for specialist lending and the state has a role in that. It should look at establishing a business bank."

After 20 years running his own business, it is clear Mr Tuohy hasn't lost the entrepreneurial streak but his future plans are perhaps a little less outlandish than they may have been previously.

"These days I have 650 people, and possibly 650 families, relying on my decisions so now it's about de-risking the business and making sure it's sustainable, and I hope I'm doing that."

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