News / Deben Transport the latest casualty of the container unit cost race to the bottom

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Wafer-thin margins and a relentless squeeze from ocean carriers has finally taken its toll on one of the UK’s oldest container hauliers, Felixstowe-based Deben Transport, which ceased trading yesterday.

The firm blamed a  “sustained period of losses”, after failing to turnaround a 2013 pre-tax trading loss of £658,000.

The company, established by Paul Dawson in 1987, operated some 225 tractors and 500 trailers from its Fagbury Road depot, just outside Felixstowe Dock, and employed more than 200 drivers and 50 administration staff, together with some 100 subcontractor owner-drivers.

Deben lost Allport, a major client, to rival Wincanton in 2012, but it was the “strategic” purchase of the goodwill and assets of Manchester-based Elite Transport Services from its administrators in April 2013 for £385,884 that it appears to have been unable to recover from.

In December 2013 the company said: “Strategically, this acquisition is a step on the way to achieving the company’s long-term objective of becoming a nationally recognised brand with a diversified customer base, but in the short-term the integration of the acquired operations had an adverse impact on the profitability of the business.”

Added to this, Deben’s finance director was absent with illness from June 2013 and, sadly, died in February 2014, thus leaving a big gap in the finance, legal and HR issues of the organisation, it said.

With Deben in deep trouble after the 2013 loss, the board brought in new investors last April, issuing 8,001 new shares at a value of £400,000 to Ipswich-based J Norf Investments Ltd, which subsequently became the major shareholder of the company, and Rachael McCall, the majority shareholder of J Norf, was appointed commercial director.

In an industry notorious for late-paying customers, Deben also entered into an invoice discounting facility (factoring) to ease its cashflow problems, but these agreements do not come cheap and would have raised its cost base in comparison with its competitors.

The demise of Deben is further bad news for the UK’s container trucking industry, which is facing an acute shortage of drivers, caused by low pay and new EU legislation requiring all HGV drivers to pass a 35-hour long, module-based Certificate of Professional Competence (CPC).

“Driving is in my family, now the job has had it,” one trucker told The Loadstar. “Hauliers pay rubbish wages; they have not realised that 39 hours in a factory means the same pay as a driving job, where you could be away all week.”

In turn, hauliers complain they are constantly put under pressure by container shipping lines to reduce their prices so the carriers can better compete with their peers on unit costs, given that freight rates continue to head south.

Indeed, in a customer advisory last year Taiwanese Felixstowe-based carrier Yang Ming admitted it was experiencing difficulty in obtaining haulage. It said: “Our customers have squeezed us to reduce costs and we have squeezed our suppliers, of which transport companies are one.”

Little did Paul Dawson know when he started the company in 1987 with two secondhand vehicles, one of which he drove himself, that 28 years later it would become a sad casualty of a container industry entirely focused on short-term cost reduction.