'Financial drain' forces McColl's hand

Date: 12.02.2010

Bulk carrier to give up warehouse leases and turn its back on selected freight services to maintain general freight

'Financial drain' forces McColl’s hand

By Brad Gardner | February 12, 2010

Bulk liquids transport operator McColl’s has been forced to scrap its leases on three warehouses and shift its focus due to financial losses.

An internal email circulated to staff by CEO Simon Thornton and obtained by ATN says a review into the company’s operations recommends a new approach to ensure the company can maintain its freight division.

Leases at three warehouses in Altona, Sydney and Adelaide will not be renewed when they come up in the next six weeks.

"These warehouses have proved a financial drain on our entire business and have not been a focus for McColl’s for some time," the letter to staff reads.

"The review has also found that to maintain a freight division we need to focus solely on full load line haul to our blue chip client base."

As such, Thornton writes that from March 31 the company will stop all services that are not full loads, with resources to be funnelled into specialised interstate operations.

However Thornton says the company will do its best to ensure employees are looked after.

"It is our aim for full time staff affected by the closures to either be redeployed or retrained to work in other areas of our business," the letter reads.

An official release from the company says the change will help McColl’s maintain high customer service.

"McColl’s is not only Australia’s largest independent carrier of milk and bulk chemicals but also has the most modern and specialised food grade tanker fleet in the country," Thornton says.

"Now with new resources being added to these divisions we expect the quality of our service to improve even more."

McColl’s began as a single vehicle operation in 1952. According to the company, it now boasts a fleet of more than 300 vehicles and a 450-strong workforce.

McColl's was swooped on by private equity group ABN AMRO Capital in 2005 and combined with Scott’s Refrigerated under the banner of Pure Logistics.

It was a failed partnership, however, when the cold chain division largely made up of the former Scott’s Refrigerated business went into administration in 2008.

The McColl’s name returned to the market as an independent entity, with the company saying the Pure Logistics venture was a mistake.