Logistics provider plans to grow by £50M

Chilled primary logistics specialist provider NFT Distribution has announced ambitious plans to grow its business by £50M over the next three years, with “bolt-on” acquisitions, expansion in fresh and ambient product transport and further organic growth planned.

The third-party logistics provider (3PL), which was formed following a management buyout from Northern Foods in 2006, plans to raise its annual turnover to £175M within three years. NFT has ‘open book’ contracts with Sainsbury and Asda, which account for 75% of its existing business.

Chief executive David Frankish was confident that this growth was achievable given NFT’s advantages in terms of pallet cost movement efficiencies and the sophisticated primary planning systems it uses. He expected to win more business as consolidation continued among service providers in the UK, where overcapacity meant that average truck fill was just 60%, he said.

Frankish expected growth to arise from NFT’s shared user network delivers and claimed that “time critical ambient” deliveries also offered potential for growth.

Frankish claimed UK leadership for NFT in chilled distribution, handling almost one-third of the total. “We do see chilled as an area where we can grow,” he said and predicted the 5% annual growth of chilled food consumption would continue. “But [fresh produce] is a natural area for us to move into … we expect that to grow over the next 12 months.”

“In chilled there isn’t a bigger fish,” he said. “So I see us playing a part in the consolidation, but being an acquirer rather than being acquired.” He expects to make one or two bolt-on acquisitions of hauliers with turnovers of around £10-12M within the next 12 months. These would provide “infill” in parts of the country where NFT’s coverage wasn’t sufficiently strong. “That will initially help our top-line growth of £50M in the next three years as well,” he added.

NFT currently operates from seven UK sites and delivers around 85,000 pallets a week. It is about to expand into new 20,000 sqm warehousing facilities at the Daventry International Rail Freight Terminal (DIRFT). When it starts operations at DIRFT early next year, it will take over transhipment operations carried out on behalf of Asda transferred from a nearby site at Crick. It will also be used to expand NFT’s national shared-user network, giving the company around 65,000 sqm of warehousing space.

NFT plans to invest £30M over the next 10 years in its facilities. Fitting out DIRFT is costing around £4M, said Frankish, and it is installing a new RedPrairie warehouse management system this year at a cost of £600,000.