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Chilled and frozen food chain - storage and distribution.

Chilled and Frozen Food Chain - Storage and Distribution

'The new emphasis on cost-effective distribution within the chilled and frozen food industry means that improvements in vehicle fleet performance and its financing are becoming key considerations', says John Lyons, managing director of Godfrey Davis Contract Hire.

The increasing investment in composite distribution centres is pointing the way forward to a new era in food distribution and the types of vehicle used.

Until now, separate distribution depots have been used, this mainly being due to the differing handling characteristics and storage temperatures of the products concerned. However, the development of composite centres has brought together a diverse range of products under a single roof, bringing with it the need to distribute these products in multi-temperature vehicles.

The benefits of using such vehicles are obvious. The gains in speedy distribution mean that fresh or frozen produce arrives at its destination in better condition, more quickly. Daily deliveries also reduce the stock held by store managers.

Fundamental changes in traditional methods of fleet acquisition are also taking place. Transport costs rising above general levels of inflation, reduced restrictions on vehicle movements and drivers' hours, and a growing insistence of prompt deliveries have all increased the pressures on transport operations.

A company can either own the distribution fleet or subcontract part or all of the operation to a transport hire company. Many companies have recognised that they can redirect finance from the assets associated with distribution, whilst still retaining corporate identity, reliability and control over their vehicle fleets.

There are essentially three alternatives: fleet management, contract purchase and hire purchase, with a fourth - finance leasing - available as a type of hire purchase.

Contract hire can be defined as a support service designed to redeploy rather than replace existing management skills. Fleet management represents a considerable drain on human resources, and time previously spent on preparing budgets, handling maintenance problems, dealing with suppliers and other routine duties can now be applied to more profitable activities.

The benefits of contract hire now have added weight compared with alternative methods of vehicle ownership. Combined with a restructuring of the corporation tax system and the introduction of the SSAP21 accounting standard, contract hire also offers a number of significant financial advantages.

Its main advantages is that it largely eliminates the unknown financial risks associated with vehicle ownership in return for a service which is precisely tailored to the requirements of an individual customer. Vehicles may be supplied in a distributor's livery, to an agreed design and specification, for a predetermined monthly payment over an agreed operating term, usually three to five years. Services provided normally include vehicle finance, licence costs, replacement vehicles, maintenance and breakdown services.

An experienced and well established contract hire company can offer a fleet operator all the benefits and flexibility of vehicle hire.

The customer should be able to specify the exact make of chassis and type of bodywork customisation. This includes temperature control equipment, specialised racking and compartments for multi-temperature storage, cab fittings with or without telecommunication and the livery required. Alternatively, it may be left to the expertise of the hire company to specify, purchase and approve the vehicles for him.

The maintenance package which comes with the vehicle can be just as important. The need for flexibility and experience by the hire company is paramount here too.

The long term future of contract hire in the food distribution industry looks assured. Factors such as the impending single market in 1992 and the uncertainty over the implications of the Channel Tunnel, are making commercial operators reluctant to invest in distribution fleets until the efforts being made to standardise the weights and dimensions of trucks and trailers in the EEC bear fruit.

Godfrey Davis Contract Hire are to be found at Tryford House, Bushey, Herts, tel: 081-950 0950.
COPYRIGHT 1990 Food Trade Press Ltd.
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Publication:Food Trade Review
Date:Dec 1, 1990
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