Firms outsource under pressure

Leading chilled food third-party logistics (3PL) supplier, NFT Distribution has reported rising numbers of manufacturers seeking to outsource warehousing and picking operations as the pressure from their retail customers to improve primary transport efficiencies increases.

Cost pressures are forcing more companies to collaborate and make use of 3PL shared user networks, which offer the benefits of more full truckloads and lower pallet costs, said NFT Distribution chief executive David Frankish.

"By coming into the NFT shared user network they get the benefit of riding with other manufacturers' volumes," he said. "The way of getting efficiencies there is by allowing a 'white truck' operation like NFT to take inefficient bits away from the retailer and put it through [the 3PL's] shared user network."

Frankish claimed NFT's chilled business was growing by around 5% a year and handled around 30% of the UK's total primary chilled distribution. With a 26-pallet trailer, you need to be carrying about 17 pallets a journey to break even, claimed Frankish. "We are talking about over 20 pallets," he added. "And each extra pallet makes you profit. Our margins are about 4-4.5%, so that is what that extra three pallets delivers for us.

"We are getting a lot of enquiries from manufacturers for that sort of service ... some of them quite substantial from major firms," he said. "We have opportunities to grow our chilled [operation]."

Frankish continued: "I've seen many occasions where people have genuinely thought that their own fleet, for example, was more cost-effective than giving it to a 3PL and time and again we have been able to prove they were miles away. I can't believe there are many manufacturers who, in terms of cost, can justify running their own fleets."

Next year NFT will open new 20,000m2 warehousing facilities at Daventry International Rail Freight Terminal, bringing its warehousing space to 65,000m2.

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