Japan Post responds to Toll write-down

Toll Group parent company, Japan Post, has had to report a ¥40 billion (A$480 million) loss for its first full financial year as a listed company, arising from a ¥400.3 billion (A$4.8 billion) writedown on the Australian logistics business it bought in 2015.
According to The Financial Times, Toll’s operating income tumbled between April and December last year as low global resource prices weighed on the Australian economy and on the company’s core domestic business.
Other news outlets attributed the drop in performance to fierce competition in the Australian parcel industry, as well as redundant operations by independent business units and a high ratio of fixed costs.
In analysing the write-off, The Financial Times also pointed to the “large degree of discretion” Japan Post had initially allowed to Toll’s Australian management, something that Masatsugu Nagato – who became President of Japan Post Holdings last year, but wasn’t involved in the original deal – said would now change.
After bringing in ex-Linfox executive Michael Byrne as Managing Director and John Mullen as Executive Chairman, he told the newspaper that communication between Toll and Japan Post would be “closer” from here on and that governance would be improved by adding Japan Post executives to Toll’s management.
According to The Australian, one of them could be Japan Post’s head of global logistics strategy, Hiroshi Shiraishi, one of the architects of the company’s $6.5 billion purchase of Toll.
Nagato reportedly also pointed out that Toll would remain the “core” of the overall company’s globalisation plans, with the company stating, “We will continue to position Toll as the platform for global expansion and recover its financial results as soon as possible, and will carry out a structural reform program to contribute to the enhancement of the Group’s corporate value.”
Part of the program will reportedly be a renewed focus on “priority regions and businesses”, extensive cost reductions, as well as “customer-centricity, improvement of quality of service, differentiation and fostering an integrated sales-force.”

New growth strategy for Toll Group

In his first big move as Managing Director of Toll Group, Michael Byrne has announced a major restructure of the company’s workforce, to make Toll ‘leaner’ and more competitive – the result of a strategic review Toll undertook looking at the company’s readiness for growth.
“The business is simplifying the number of operational divisions from five to three aligning with core segments in Global Express, Global Forwarding and Contract Logistics, which will form the executive team,” the company said in a statement.
Byrne said, “This is a great company, with a proud history and tremendous potential.
“However, our industry is rapidly changing and faces significant challenges; Toll must adapt, quickly.
“Our 100-day review of the business has highlighted clear markets and opportunities to deliver on our priority to drive organic growth, as well as the need to make some tough calls to reduce complexity and overhead costs.
“As a result of the changes, Toll expects that approximately 1,700 roles will be impacted globally, including back office and operational roles,” he added.
“This is a tough decision that has not been taken lightly.”
Byrne added that Toll will fully support employees impacted by these changes, including offering redundancy entitlements, redeployment opportunities where available and career transition support.
“The restructure I am announcing today will transform Toll into an organisation that is leaner, more competitive and more customer-focussed,” he said.
The Financial Times shared a comment from Japan Post on the move: “We are confident that the implementation of the reforms that have been decided by the new management team will contribute to Toll’s future growth.”
 

Victoria logistics hubs change hands for $27m

Macquarie Capital-backed investment management company Logos has purchased a logistics facility in Altona North, Victoria for $27.3 million.
The Sydney Morning Herald reports that Logos acquired two adjoining buildings through the deal, leased to Toll and Visa Global Logistics, and the facility has a combined gross leasing area of 21,720sqm.
Logos purchased the asset from Cadence Property Group. The facility occupied by Visa Global Logistics was completed in 2016 and the company is currently on a 10-year lease.
The second building is soon to be vacated by Toll, though Logos Managing Director, John March, has reported that there is strong interest from potential occupiers looking to backfill the space.
“We are very confident with the demand and dynamics of the Altona North market, giving us confidence to take leasing risk for an asset of this size and nature,” Marsh said.
Last year, Logos purchased the Oxford Cold Storage facility and the Toll NQX facility in Altona, which together cost more than $250 million.
 

Toll Group under pressure to improve performance

Melbourne’s Toll Group, which is now owned by Japan Post, could see a major reshuffle during the second half of the Financial Year.
According to the Australian Financial Review (AFR), senior Japan Post executives were in Melbourne earlier in the month to review the company’s performance since the $6.5 billion take-over last February.
“The expectation was that Toll would prove the springboard for Japan Post’s diversify away from its traditional and unprofitable post service by acquiring a broad and profitable channel into the Pacific freight and logistics business,” the AFR’s Matthew Stevens reported. “[However,] Toll’s new owner is deeply unhappy with the performance of the business since its acquisition.”
Earnings are said to have gone back during the current Financial Year, forcing a strategic revision, the AFR found.
Toll refused to comment on speculations regarding the consequences of such a revision, but told Stevens that, “we need to be positioned to deliver better solutions for our customers and to have an organisational structure that takes into account the challenging environment in the logistics industry.”
Brian Krueger, who led the negotiations with Japan Post as Chief Executive, retired in December and was replaced by ex-Linfox Chief Executive, Michael Byrne.
Since then, ex-Asciano Executive, Saul Cannon, has reportedly come on board as the company’s Director of Strategy.

Logistics magnate takes stance against toll price hike

A planned toll increase on Melbourne’s CityLink has prompted transport company Linfox to assess alternative routes, according to the Herald Sun.
The newspaper revealed today that Linfox founder, Lindsay Fox, made his opposition on the price hike known to Transurban Chief Executive, Scott Charlton, who is in charge of the CityLink road.
The toll increase on heavy vehicles would lift some daily CityLink fees from about $12 to more than $26 from 1 April, with Transurban hoping it will help fund the still-ongoing CityLink-Tulla widening project.
Linfox’ critique is thought to be based on the fact that there will be no change to the toll cars and other passenger vehicles pay, with trucking forced to cover the balance before the project is finished and able to provide measurable time savings.
“It is understood Mr Charlton stood firm on the issue, saying state and federal governments had endorsed the price changes as part of the $1.3 billion Tulla widening deal struck in 2014,” the Herald Sun said.
“But Transurban is willing to help Linfox analyse logistics such as the timing of trips, in a bid to keep trucks on CityLink.”
Luke Donnellan, Minister for Roads and Road Safety, commented:  “Trucking rates are being brought into line with other states and territories – Vic­Roads and Transurban have been working with the freight industry over the last two years to ensure they had time to adjust.”
In line with Fox’ sentiment, the Victorian Transport Association (VTA), has put the pressure on key government, industry and other stakeholders to reinforce the need for fairness and equity around user charges for heavy vehicles.
“Unfortunately, the new CityLink pricing discriminates against the heavy vehicle industry compared to other road users, and is dependent upon the ‘industry’ passing on what can only be described as dramatic cost increases to remain viable,” said VTA CEO, Peter Anderson.
“The VTA continues to have discussions with Transurban and the Victorian Government about this sensitive issue, and is pressing for a range of measures to incentivise heavy vehicles to use privately operated tolled roads – especially in relation to the Western Distributor, where we are proposing multi-user discounts and rebates to offset mooted curfews and bans in the inner west.”

CEVA Logistics opens Australasian HQ in Victoria

CEVA Logistics has officially opened its transport, distribution and logistics hub in Truganina. The facility is the largest in the southern hemisphere and will service clients including General Motors Holden, Continental Tyres, NBN Co, Michelin, Caltex, Accent Group and Mazda.
The $80 million, 166,000 square metre supersite – equivalent to eight MCG playing fields – will employ 250 workers in Melbourne’s west and create around 40 new positions.
CEVA will also operate Nissan Australia’s new state-of-the-art National Distribution Centre.
CEVA joins other major companies such as NewCold Logistics, Border Express, Toll, Linfox, DB Schenker, Silk Logistics and Australia Post who’ve chosen Melbourne as the location for their corporate headquarters.
In a press statement, Minister for Industry and Employment, Wade Noonan, welcomed the news. “Transport, distribution and logistics are some of Victoria’s most important industry sectors, contributing $21 billion annually to the state economy and employing around 260,000 people across Melbourne and regional Victoria,” he said. “The Andrews Labor Government will continue to support the logistics industry in Victoria – a huge contributor of jobs and economic opportunity state-wide.”
“With Australia’s largest container port and a 24-hour, curfew free airport – it’s little wonder Melbourne has become the logistics capital of Australia” said Minister for Industry and Employment, Wade Noonan. “Transport, distribution and logistics are big sectors for our state, contributing billions to the Victorian economy and creating tens of thousands of jobs.”
Member for Tarneit, Telmo Languiller added, “This is an exciting investment for the Truganina area, supporting local jobs and strengthening the state’s logistics industry.”
CEVA employs more than 42,000 people in more than 160 different countries, including around 1,800 in Australia.
The Sydney Morning Herald reported that Andrew Jenkinson, CEVA’s Vice President of contract logistics, announced that the group handles ‘reverse logistics’, transporting and dealing with defective items returned from stores or car dealerships and warranty issues or replacements of goods.
“We’re very involved in their supply chain. We have assessors in every state who go and inspect and say it’s a genuine warranty claim or not. It’s all processed online.”
Eight B-doubles will be able to unload at once at the new CEVA structures, on continuous loading docks with levellers.
The structures feature 4,000sqm of rooftop solar panels, rainwater storage, smart movement-sensing lights that switch on and off automatically and technology including advanced racking, traffic management and material handling systems. The facility is also trialling forklifts motion sensors that detect the specially tagged safety vests one people walking nearby. This equipment can shut the forklifts down in case of accidents, and can also track their movements and cargo weight to increase efficiency.
The 166,000sqm site is one of eight major sites on Australia’s east coast leased to CEVA by developer and builder Frasers Property Australia.

Paul Coutts joins SingPost as Group CEO

SingPost has announced the appointment of Paul Coutts as Group CEO, effective 1 June 2017. He will also serve as a Non-Independent Director of the SingPost Board.
Coutts joins SingPost from Toll Group’s Toll Global Forwarding division, where he has served as CEO since 2013.
Simon Israel, Chairman of SingPost, said, “The SingPost Board is delighted to announce Paul’s appointment as Group CEO. Given his seniority and the experience he brings from an extensive logistics and postal career including global leadership roles, Paul is well positioned to provide overall leadership to the transformation of the Group, integrate SingPost’s eCommerce logistics platforms and build out a globally competitive business.”
Coutts said, “It is exciting to have the opportunity to lead SingPost through a transformation into an eCommerce logistics company. The natural fit of postal services with eCommerce logistics, together with Singapore’s strategic position as a hub, provides a platform to build a world-class business.”

Toll Managing Director to step down

The Toll Group has just announced the retirement of its Managing Director, Brian Kruger, after five years in the role and eight years with the company.
Effective 1 January 2017, Kruger will be succeeded by Michael Byrne (pictured below), who most recently served as Chief Executive of Coates Hire and before that as CEO of Toll rival Linfox Logistics, from 2006 to 2014.
“The chance to join the Toll team is tremendously exciting and a great privilege,” Byrne said. “Toll is a wonderful 128-year-old global company with much history and much potential under Japan Post’s ownership to expand its already leading position in the Australian logistics market as well as overseas.”
On the back of Byrne’s appointment, Toll also announced that John Mullen has been appointed as the company’s new Executive Chairman.
One of his first actions as incoming Chairman was thanking Brian Kruger for his service: “I have known Brian for many years and greatly respect the contribution that he has made to Toll and to the logistics industry,” Mullen said.
“Brian has led a number of transformational changes at Toll over the last five years and his unwavering focus on the importance of safety has become deeply ingrained across Toll’s 30,000-strong workforce. We thank Brian for his tremendous contribution to the company and wish him every success in the future.”
Kruger himself commented, “It has been an honour to be Toll’s Managing Director for the past five years. The acquisition by Japan Post 18 months ago was a clear highlight for me and I have enjoyed being involved in the successful integration of the two companies. I welcome John’s appointment as Chairman and know, given his experience as the Global CEO of DHL Express, CEO of Asciano and his current role as Chairman of Telstra, he will be an invaluable partner for Michael Byrne.”
President and CEO of Japan Post, Kunio Yokoyama, said: “Despite the difficult market environment, Mr Kruger has been establishing the foundation for Toll’s successful future. We regret Brian’s decision to retire from Toll.”
Yokoyama said Byrne brought important experience and a fresh perspective to Toll. “Mr Byrne and Mr Mullen bring new perspectives to Toll, drawing on their extensive international transportation and logistics experience.”
Kruger will reportedly remain available to assist the company for an appropriate handover period.
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Toll teams up with Driver Reviver

Toll, in partnership with Driver Reviver, is calling for drivers to wake up this long weekend to reduce fatigue related incidents.
Fatigue is one of the biggest causes of fatalities on our roads. Between 20 to 30 per cent of fatal road accidents around Australia are due to driver fatigue, with this number increasing in rural areas.
Driver Reviver has been operating on roads around Australia for 26 years, dedicated to reducing fatigue and promoting safe driving behaviours, by encouraging motorists to take regular breaks on their journey by visiting Driver Reviver sites.
Sites around the country are staffed by volunteers committed to supporting drivers and their families to arrive at their destinations safely. Since 1990, there has been more than 23 million cups of tea and coffee served, more than five million litres of water boiled, and around 27 million snacks provided.
“Toll is proud to be the national partner of the Driver Reviver program,” said Brian Kruger, Managing Director, Toll Group. “At Toll, we strongly believe that all injuries are preventable and everyone has the right to get home safely – and the Driver Reviver program is strongly aligned to these values.”
“With the long weekend ahead, it’s critical for road users to understand the dangers of driving while fatigued, as driving tired can be as dangerous as driving intoxicated. With over 200 driver reviver sitesaround the country, there is plenty of reason to stop for respite from a long journey.”
Toll understands the impact of driver fatigue, operating nearly 3,000 heavy vehicles in Australia, which travel more than 300 million kilometres each year.
“At Toll, our professional drivers spend more time on Australian roads than anyone else and we are acutely aware of the role fatigue plays in road safety,” says Kruger. “It’s critical for government, for businesses and the wider community to work together to raise awareness of safety on our roads.”
“The October long weekend is a very busy time on the roads,” said Allan McCormac, National Director, Toll Driver Reviver. “With increased holiday traffic comes the increased risk of accidents and fatalities, which is why our volunteers across the country swing into action to help save lives.”
Driver Reviver volunteers come from a wide range of organisations including Lions Clubs, the SES, Volunteer Rescue Association (VRA) and the Rural Fire Service (RFS).
Toll Driver Reviver is helping to make safety top of mind for motorists, by driving awareness of the simple steps they can take to make the road a safer place. “Toll’s drivers know that planning to take rest breaks every two hours, getting a good night sleep and arranging to share the driving – these small measures can make a big difference to your safety and the safety of others on the road around you,” said Kruger.
Driver Reviver is also supported by The Arnott’s Foundation, Bushells Tea, Bushells Coffee and Sunshine Sugar, helping to fuel the national initiative.
 
 

New Toll investment in servicing ESS

Freight transporter Toll has launched a new refrigerated fleet which has been co-branded with support services company ESS.

The investment of $11 million in prime movers, refrigerated trailers and pantechnicon by Toll means that the company will have greater flexibility for providing cold transport to the biggest mining camp services provider in Australia.

The new fleet will be used to make 70,000 deliveries of fresh food, laundry and heavy equipment each year to more than 125 remote ESS sites around Australia.

ESS is a subsidiary of Compass Group, which selected Toll as their primary logistics provider in WA in 2002, which in turn has expanded Toll’s remote haulage operations through Queensland, Northern Territory and South Australia.

Compass Group executive director (supply chain) Chai Alexiou said it was fantastic to see ESS and Toll co-branded trailers delivering goods exclusively to ESS sites. 

“This will extend our ability to provide the freshest food possible to our clients, their employees and customers while maintaining the highest safety standards and maximising the economies of scale made possible by a fully integrated logistics model,” he said.

ESS locations include remote mine camps, corporate headquarters, universities, cultural venues and hospitals.

Toll Express General Manager Larry O’Regan said the investment made in servicing ESS sites was part of a long term commitment to improve business efficiency.

“Toll works with more than 190 different suppliers daily on a JIT (just in time) basis to ensure food and equipment are delivered to ESS sites in a timely manner,” he said.

“By working directly with ESS at our upgraded depots, we have been able to average a 99 per cent DIFOT for our deliveries.”

Toll and ESS have also implemented a recycling product program which results in more than 138 pallets per month of cardboard, plastics, oil and glass being returned and properly recycled from West Australian sites, with a similar program also being rolled out in Queensland.

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