Menzies Distribution looks to parcels growth as traditional market declines

Menzies Distribution is looking increasingly towards the parcels market as it looks to diversify the business to offset falling revenues from its core newspaper distribution business.

Paul McCourt, Menzies Distribution MD, told Motortansport.co.uk that the parcel division, dubbed Menzies Parcels, had grown rapidly after the operator introduced its diversification strategy 15 months ago.

Pointing out that Menzies Distribution was almost entirely a newspaper distribution business until 2013, he said: “We are now working with every single national parcel carrier.”

McCourt said Menzies Parcels is not seeking to compete with national parcel carriers, describing the firm instead as a neutral consolidation partner.

“That means we work for all parcel carriers. We favour none of them and we offer the same levels of customer service to each of them, with a focus on delivering to hard-to-reach areas. We are a collaborative partner,” McCourt said.

He attributes the parcel division’s rapid growth to a major acquisition drive, which has seen the firm buy Scottish firms AJG Parcels, Oban Couriers and Thistle Couriers in quick succession.

The second factor driving growth is its ability to use the newspaper distribution division’s existing warehouses and fleet during daylight hours and its extensive reach into remote areas.

Add to that its 800-strong fleet, high levels of staff training and the financial backing of parent group John Menzies and the firm makes a formidable competitor in the market, McCourt added.

Contract wins

The firm’s logistics business has also seen significant growth in the past 18 months landing a number of significant contracts under the diversification strategy.

These include deals with wnDirect, Card Factory, WHSmith and B2C Europe and the acquisition of Scottish-based arts and tourism leaflet display specialist Edinburgh Arts and Entertainment.

Menzies Distribution has also recently resolved a long running pay dispute with drivers and warehouse staff after it made an improved pay offer.

McCourt said: “The national living wage has had a major impact on our business and finding the right solution and one that was fair and reasonable took some time to establish but we are delighted that’s now been resolved.”

Major change is also on the horizon with parent company John Menzies considering splitting its two businesses – Menzies Distribution and Menzies Aviation - into two separate companies.

“The two companies will only be split if both are stronger apart and so, if that happens, it will mean that Menzies Distribution will have taken a significant step forward in its business,” Court said.

Looking to the future McCourt takes a cautiously optimistic view.

Pointing to the twin challenges of the declining newspaper sector and the national living wage, he said: “To grow our profits and overcome those challenges has required a humungous effort but we have had a lot of success over the past two years and the prospects of the business growing are strong as people become more aware of our story and what we can offer.”