Rescue for TCD melts away

By DANIEL RIORDAN transport writer

The collapse of an Australian rescue package has left a big New Zealand trucking firm facing an uncertain future, and customers facing rate increases that are likely to flow through to consumer prices.

Refrigerated carrier TCD Transport, which delivers goods to Foodtown and Countdown supermarkets in the North Island, closed its South Island operations two months ago.

Its competitors have been busy taking calls from desperate TCD staff and owner drivers this week as its problems, which have been mounting for months, reach a peak.

TCD founder and managing director Bruce Clarke admitted that his company was in trouble.

"There's no question we're in difficulty, but that's all I'm able to say at the moment."

In response to a request for operational information, a TCD staff member said the company was going through a restructure and it would be a week or two before its new shape would be known.

The staff member said some redundancies had already taken place. TCD had operated about 120 trucks, using mostly owner-drivers, and directly employed about 60 staff.

The company operates from state-of-the-art facilities in East Tamaki, and its main customer is Progressive Enterprises, owner of the Foodtown and Countdown chains.

The Business Herald understands that Mr Clarke, aided by the company's recently appointed general manager, Roxanne Bakker, had been trying to negotiate a capital injection from Sydney-based Rossfreight to keep it afloat. Industry sources say that deal has now fallen through.

Ms Bakker and Rossfreight managing director Trevor James did not return phone calls yesterday.

TCD (temperature controlled distribution) was founded in 1994 when Mr Clarke left Kevey's Transport, taking that company's refrigerated business with him.

Companies Office records show that TCD is owned by Mr Clarke (70 per cent) and executive director Bruce Gillies (30 per cent).

The company carved its niche by undercutting competitors - a business model that competitors and general trucking operators say was doomed.

Neil Otway, head of refrigerated trucking firm TransOtway, said TCD's pricing was unsustainable.

He said the industry in general was finding conditions tough. "We've never done so much work and made so little money."

There were too many trucks on the road and a major shake out was imminent. "I don't think New Zealand has realised what the costs of distribution really are."

Mr Otway said rates would have to rise to compensate, and with TCD in strife, that likelihood had increased.

Chris Sharples, managing director of Linfox Logistics, which competes with TCD in some areas, said many smaller players were finding it very difficult.

"Users of transport aren't prepared to pay proper rates and fuel costs are rising."

TCD had foundered because of its cut-price approach, he said.

"You can't build a business foundation on that. They tried to get market share but it's only ever a short-term strategy. You can't sustain it."

The biggest refrigerated transport carrier is Tranz Rail, which uses rail and road. The company that lays claim to being the biggest refrigerated road carrier is Halls Refrigerated Transport, which runs more than 100 trucks, with about 200 staff.

Halls chief executive Michael Tibbs said a huge amount of capacity had been added to the industry in the past 4 to 5 years, but the demand side of the business had not grown.

"Conditions have been difficult. There's pressure on margins, predatory pricing, and you can add higher fuel prices to that."

Mr Otway said the need for higher delivery charges was greater in city operations than long haul.

An increase in inner-city apartment living has brought restrictions on the times trucks can deliver to customers, such as fast-food outlets and supermarkets.

This has made it harder to operate efficiently.

Progressive Enterprises managing director Ted Van Arkel said he was well aware of TCD's problems.

"We've had several meetings with TCD. We're working through the issues and the ball's in their court."

Tranz Rail chief financial officer Mark Bloomer on Monday alluded to a competitor struggling financially. He said a pending realignment within the industry was one of the reasons Tranz Rail had decided not to sell its refrigerated freight business.

Industry sources said the main reason for that decision was Tranz Rail's inability to find serious buyers, but any increase in freight charges in the wake of TCD's difficulties would lift the performance of Tranz Rail's refrigerated business.