Having always had in the export and import sector, Andrew Baxter, Managing Director of leading logistics provider Europa Worldwide talks to BLM about starting in business with his father’s company RH Freight, the story behind acquiring Europa and his biggest challenges when it comes to running one of the UK’s leading logistics firms.
CAN YOU PLEASE GIVE AN OUTLINE OF WHAT THE COMPANY DOES AND THE SERVICES YOU PROVIDE?
The largest part of the business, 75%, is distribution of goods between the UK and Europe. These are goods being collected around the UK, brought back to our hub in Dartford and being transferred to 30 continental hubs. This is our core business and it’s the same process in reverse with exports from Europe to the UK. We are one of the largest businesses and a market leader in this sector.
The rest of our business is divided between air and sea shipping, which takes place around the rest of the world. This part of the business now has a turnover of around £35m.
The final part of our business is warehousing – we have three warehouses where we take care of storage, logistics, packing and dispatching. We work with online companies, where we’ll import goods for them, store them in our warehouse, pick and pack goods and then dispatch them through a parcel carrier to a customer.
WHAT INSPIRED YOU TO GO INTO BUSINESS IN THE FIRST PLACE?
My father developed a freight company where he went from being an employee to carrying out an MBO in 1970. That company was called RH Freight and my three brothers and I also worked in the business.
But it was complicated due to family politics and in the end one of my brothers and I bought out that company and went onto sell it for £60m to Kuehne + Nagel in 2011. I had a non-compete period of two years and after that I acquired Europa, which was smaller, but similar. We’ve restructured and have been developing Europa since, which has grown substantially.
What does your role involve?
I have a team of seven directors and they run all of the individual divisions and central functions. I manage them and control the overall direction. In all honesty, I don’t do a great deal of the overall work. What I do is check the overall direction, make sure everybody is pushing in the same direction and that we’re implementing one strategy across the business.
What makes Europa unique compared to others in the market?
We have a very clear vision of what it is we’re trying to achieve, and we’ve got a very capable, ambitious management team. We are relentlessly pursuing that strategy and because we have a good bunch of people we’re able to attract and keep other good people.
WHAT DO YOU BELIEVE MAKES A GREAT LEADER IN BUSINESS?
The most important trait is being able to manage a team of people and to direct them with a clear guidance to what the company wants to achieve. Ultimately if you can’t manage a team of people or motivate them, then you’re always going to be limited by what you can do yourself. Therefore, you’re only going to be able to run a small, limited business.
In any size of organisation, it’s got to be about man managing and motivating your team. That is the most important thing.
But it’s also important to have a plan, clear vision and understanding of what it is that needs to be achieved and how this will happen. If you can manage and motivate but can’t convey a clear vision of what the objective is then it’s not going to work.
WHAT HAS BEEN YOUR BIGGEST CHALLENGE IN YOUR CURRENT POSITION?
When we acquired the company, we believed we needed to do some significant restructuring and we did that and carried it out relentlessly – not taking any soft options. We did a huge amount in a very short space of time, which shook the company because it was carried out during such a short period.
It gave us quite a difficult time in the short term and we actually financially went down in performance as we didn’t have very good financial reporting systems when we came into the company. We’re now ahead of where we expected we could be five years down the line.
EUROPA RECENTLY RELEASED ITS FINANCIAL RESULTS FOR YEAR-END 31 DECEMBER 2017, IN WHICH TURNOVER INCREASED BY 24% TO £144M – A £28M INCREASE ON THE PREVIOUS YEAR. to WHAT DO YOU ATTRIBUTE THIS GROWTH?
We have restructured the business so it has a very clean operating model and I believe we have the best model of any European groupage operator in the UK – much better than any of our competitors.
This model drives a lower level of cost and it also drives a higher level of quality which is at the absolute core of why we are growing quite quickly and profitably in the market place. Our operating model has been difficult for us to achieve, which also means it has been difficult for people to copy. All of our competitors are operating through a regional hub structure where they are collecting goods from regions in the UK, taking them back to a hub and then operating direct from there to distribute to Europe.
We’ve moved to a single, national, one hub structure where we bring goods from all around the UK down to Dartford and then they are shipped from there.
WITH BREXIT ON THE HORIZON, WHAT ARE YOUR THOUGHTS ON BRITAIN LEAVING THE EUROPEAN UNION?
I am in favour of Brexit. Even though it could represent a range of very complicated challenges for our business. I don’t believe a no deal will happen, I believe there will be a deal and it will be a free trade agreement.
There are perfectly satisfactory solutions to the Northern Ireland border issue and they will ultimately be implemented. If you look at the border between Norway and Sweden, for example, people flow freely through those countries and if we can replicate the same type of system then it’s pretty much what is going to happen – it’s an obvious thing
I believe it’s frustrating that we’ve been around the houses talking about, frankly, things which aren’t going to happen. If the UK left without a deal in March next year it would create serious issues because it would mean we have to leave the customs union. Continental customs would not be prepared for this and therefore it would be an issue.
In the end Brexit will be good for the country, there will be a transition period, but ultimately it will be for the best.
DOES EUROPA HAVE A CONTINGENCY PLAN FOR EITHER EVENTUALITY?
We will be able to ensure that our internal procedures are adequate and in place for March next year. That doesn’t mean if the borders grind to a halt then we can just click our fingers and solve it. We can’t.
For our business to work properly we have to have the borders working freely and its dependant on customs to achieve that. Which is all in their hands. One thing we can guarantee to our customers is we will be ready to our part in it and making sure we perform in the way we should. But that doesn’t mean we can solve unsolvable problems, because they will be out of our hands.
WHERE DO YOU SEE THE COMPANY IN FIVE YEARS’ TIME?
We’re hoping to get to over £200m turnover this year. Our five-year objective, which we’re currently a year into, is to get to £400m, so I think by 2022 we should be there.
The expectation and aspiration is to continue growing and developing the business as quickly as we possibly can.
We’re seeking to grow and develop the business within existing areas of operation, principally within the UK. We have an office in Hong Kong and we may develop further offices in China, but our principle aspiration is to continue and advance operations within the UK.
We want to grow the company substantially and have a plan in place to do just that.