16 April 2021
Interview with Trevor Scott, Managing Director
Simarco Worldwide Logistics - Established in 1997, Simarco is a prominent, mid-sized privately held forwarders operating in the UK, generating revenue of £50m + annually. Recently highlighted in the Sunday Times Profit Track 100, Simarco’s growth is not going unnoticed.
Providing international Air, Ocean and Road freight forwarding services, local UK distribution and warehousing solutions, Simarco manages cargo of all descriptions with a particular expertise in the retail, automotive and industrial markets. With offices located across the UK, they have five distribution centres offering more than 320,000 sq.ft of high security warehousing, as well as an owned fleet of vehicles that provides clients with a nationwide distribution service.
This thought piece will discuss how Simarco navigated the challenges of Coronavirus and the Brexit transition – events affecting many of our connections in the last year.
Given Simarco’s focus on European groupage, the Covid outbreak in March 2020 had an immediate impact as Europe went into lock down. By the end of April, EU volumes were down by 50%, but due to an agile and flexible approach by the management, these numbers have rebounded strongly over the course of the year.
Simarco addressed the challenges headfirst, winning numerous Air Freight and Warehousing contracts, handling and distributing supplies globally of Personal Protective Equipment culminating in being awarded the prestigious BIFA Air Freight Services award in 2020.
With the UK’s impressive vaccine rollout aiding the economic recovery, Simarco are expecting demand to surge, as the hospitality and retail sector looks set to reopen in the UK. This resurrection is likely to drive greater volume through their existing contracts.
Many people will ask whether Covid accelerated the death of the high street, given the shift towards Ecommerce. Simarco believe this trend will continue, but a major issue prohibiting the pace of this change is the complicated customs formalities following Brexit, which is affecting the flow of goods.
Given the added complication, Simarco are seeing greater bulk shipping into regional hubs of the UK for onward delivery into the EU. Simarco are servicing this via their contract logistics warehouses located throughout the UK and Netherlands, as a result of the rise in B2C requirements.
As the Brexit deadline passed in July 2020, Simarco activated contingency plans and came out the blocks early in terms of recruitment. Taking a regional approach, 20x customs staff were hired, and a further 10x administration & finance. By October 2020, another 20x new staff members were recruited and trained across the various branches, in preparation of what was to come.
Even though this was 3 months in advance of the Brexit deadline, it enabled Simarco to stress-test systems, contact regular shippers and delivery points to obtain information for customs clearances, as well as attuning staff to the culture and pace of the business.
From mid-October the Board of Directors started to work full time on engaging with customers virtually, and provided advice in terms of paperwork, commercial terms, and a range of options available to ensure their businesses would have limited disruption.
Simarco prepared for the worse, planning for a “No deal” with full duty on exports and imports and the impact that would have on warehouse capacity as well as cashflow. When the deal was completed on Xmas Eve, like the entire UK logistics industry, the Simarco team were relieved to see that this trade deal would limit duty payable on some goods of non-EU origin.
The drastic change in procedures in the UK and the EU simply left businesses in the dark. It is well documented by the industry and business, that January was nothing short of a disaster. Like every other logistics provider, Simarco thought they had planned for every scenario, but what came to fruition was unexpected and businesses simply were not ready.
Following a turbulent start to 2021, Simarco found smarter ways of working in February both internally and externally. Remodelling their internal processes by improving data flow through integration of systems, as well as providing additional training for staff. As customers and EU partners were starting to understand, Brexit was not just an issue for the UK logistics industry, but for everyone in the supply chain and they all had to play a part in moving goods in a compliant and legal manner.
Where are they now?
The trading trends are as Simarco had forecasted, lower UK export volumes with an increase in the number of units per job, as customers ship more cargo less often to reduce costs. UK imports have increased and look to remain buoyant until full border controls are in place. As a pre-cursor, UK exports have faced full border controls in Europe since January 2021 so when the change also happens in the UK, Simarco are in a positive position, knowing what to expect.
Moving into April, the situation has stabilised, and customers have greater knowledge, expectation and understanding of the importance of logistics companies within their supply chains.
These new challenges have further elevated our industries importance to both exporters and importers in the UK and Europe and Simarco will continue to embrace challenges by investing in people and processes.
Published on April 16, 2021
Head of M&A Deal Origination at Connect Corporate Finance