Delivering the goods

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CTS Logistics is the heavy duty delivery firm touted by BASC as the solution to the gun trade’s ammunition problems. Commercial manager Doug Overett has been with the company for a little over a year. He’s a straightforward man who brings formidable freight and logistics experience to the role. As he explains, “I moved into CTS for a lifestyle change – moving to something specialist and working with the owner [Nick Collins] to plot our future with an SME in that specialist world.”

Joining a highly specialised sector requires a lot of learning. “The primary challenge has been understanding the technical side of secure logistics and hazardous goods transport,” Doug said. “It’s a different language to regular freight, particularly when you start talking about things like section 5, given the vagaries and ambiguities that go with that. Getting to understand the regulations and the compliance issues surrounding that is the biggest learning curve.”

I asked Doug if he could give me a summary of precisely what section 5 classification entails. “I’d probably rather not try,” he laughed. “The problem is that there are grey areas within the legislation, which I think is recognised across the trade. Our position is reasonably straightforward; we live in a troubled world. If there’s any ambiguity around any legislation then we act conservatively and opt for the highest level of compliance.

“The companies we’ve been dealing with have taken a similar view. They don’t wish to find themselves in a legally difficult position – and there’s also the security of the public to consider – so they don’t try to wriggle around what may or may not be the law, they err on the side of caution.”

These legal issues are exacerbated by inconsistent enforcement. “This is administered by local police forces,” Doug explained, “and I tend to get a sense that it’s not very joined up. That’s a worry – a police force that makes me compliant in Reading doesn’t necessarily know what I do with that product when it moves out of their jurisdiction.”

I suggested to Doug that this problem is like shooters’ issues with firearms licences. He pointed out  a freight business suffers doubly from inconsistencies. “What a police force does within their own territory is fine, but when you’ve got transportation that moves between jurisdictions, it starts to get questionable. My local force tells me one thing, then I drive 200 miles and there could be a different interpretation.”

This ambiguity is part of what informs CTS’s procedural caution. “Our compliance position is absolutely fixed,” Doug said. “We can’t jeopardise our tremendous reputation in the defence sector by our engagement in this marketplace. We don’t want to appear arrogant in that, but we are non-negotiable about it. We have compliance by virtue of our established business; we didn’t set it up to meet the need of the gun trade. If you came at it from the other way you might have had a different approach, but we were compliant through 20 years of the defence sector. It just so happened that the gun trade business could fit onto the back of it, rather than us designing a solution from scratch.”

red_grouse_webWith legislation constantly debated, the ground may still shift under the gun trade’s feet. This is something else that Doug is keenly aware of. “The question will always remain as to where the law is going in terms of whether or not we see more product falling into section 5 or falling out,” he said. “We move section 1 product, but clearly that can be taken by less secure solutions than ours and therefore we are an expensive option. Typically we’d direct people to other solutions.”

It felt like we’d jumped ahead a bit, so I asked Doug to make a pitch for his company in general terms. “CTS is all about dangerous, delicate and difficult movement” he said. “We specialise in anything that fits within those criteria, using premium transportation solutions in terms of our hardware and a very high focus on compliance and security screening. That tends to be the case whether we’re talking about explosives, military goods or indeed computers, which we might do for governments where there’s sensitive data. It’s all about safety and security.”

Doug’s a man who believes in acting as a motivating force for the company he works for. “My approach to doing business is to try to do big things, to try to look for big opportunities. Particularly in an SME you can tinker around the edges without actually making a difference. So what we’re doing in CTS is trying to bring about step change in our business by doing exciting things that are motivating and interesting to us. That’s the philosophy that I try to bring to the business in terms of building a strategy.”

Boldness means turning  small opportunities into a big one. Doug told me, “We’re taking a clear strategy in developing customers’ business, working as closely as we can with manufacturers and wholesalers. We see what we can do for them, not only in terms of downstream deliveries, but also upstream; where does their product come from and can we support that? Where else do they sell their product, who else do they sell it to? It’s not just about the UK; if they’re also exporting we can support that.

“We’re beginning to make some pretty decent headway. This is a sector we only entered in Q1 this year, after the TNT departure on the expanding ammunition. We now rank some of the big manufacturers and wholesalers as solid customers with whom we are increasingly doing business other than the delivery of their UK product to gun shops. That was where we started, but it’s already got bigger than that.”

This growth is essential for CTS’s involvement in the gun trade. Doug explained to me how the company was looking to build its stake. “The reality is, for us distribution is not massively exciting because that’s not our business model. We’re a heavy end military service provider, who works directly with the MOD. That’s our heritage, that’s our history. Delivering expanding ammunition to high street shops is not our core business. Nonetheless we’ve managed to bring compliance to a sector that is going through some pain, and that’s given us an opportunity to develop additional business. If we can do enough business with our new customers then we’re all happy and it becomes mutually beneficial. The gun shop that wants to deliver a single two kilo box of ammunition? There’s no money in that for anyone, quite candidly.”

For Doug, it’s crucial that a cultural change takes place that enables him to work with the gun trade. The stringent regulations imposed by the section 5 classification mean that CTS can’t operate as previous services did.

“The big manufacturers and wholesalers have been used to being able to sell next day delivery,” he told me. “Customers have become complacent, expecting that level of service. Free of charge freight is also a bit of a nonsense. There’s no such thing. Transportation is an expensive commodity.

“We’ve needed to explain that we’re going to have to do deliveries with a window of four or five days – even up to two weeks. We’re educating the market about the new normal, and I think we’ve done it reasonably successfully. There hasn’t been much push-back, and, candidly, if there was then it wouldn’t be something we’d be able to support. We have found the industry very understanding of our position. Even the gun shops, when we’ve explained to them what we do and why, have said ‘OK that seems perfectly sensible, we’re good with that’.”

BASC have had a role in getting this information out. “They’ve been able to share information with their membership about the service we’re providing and how it’s working,” Doug said. “They’re giving the sector confidence, because it was struggling. Probably parts of it still are, because either they are not comfortable, or they just don’t understand the problem. BASC are able to say, ‘OK, the service may look a little different, and it will be more expensive, but there is a compliant solution that allows you to continue to receive product’.”

Doug finished with a forthright summary of CTS’s strengths as a business. “We are not a network service provider; we typically work on a point-to-point courier basis,” he said. “As long as we’re picking up from the big inputters – the wholesalers and manufacturers – we’re able to consolidate that into volumes that make the collection justifiable and provide a delivery.

“Without support it’s not a sector that’s big enough in terms of section 5 goods alone. There have to be economies of scale. If we continue to bring in most of the major inputters, we can continue to provide a viable service. If those companies are able to help us with our other activities, then that guarantees them our continued interest.

“Assuming we can build and maintain volume, then going forward we have development plans for an up-country depot so we can cross-dock and operate fleets further North. That will make deliveries to that area faster and more efficient, because we won’t have to consolidate them in the same way. That’s part of our development plan. If the business is there then that will drive those plans.”

It sounds a lot like CTS are here to stay. “It’s an exciting sector,” said Doug. “We’re meeting new friends and it’s working well for us. There is a natural synergy.”

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Posted in Business, Interviews
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