It's been a while since the 2009 tumble, but the scars are still fresh in the south of New Zealand, where people have become more sceptical about the global economic system since Europe fell back into a draining double-dip recession.
Hence, business confidence is still not overwhelming on the island that is also known by as Te Wai Pounamu in Maori language, or ‘Water of Greenstone’. Vulnerable to economic change in the Asia Pacific region and fearing a potentially overheating housing market, most people in New Zealand’s road haulage industry are therefore still hesitant to declare the slump over – apart from Peter McAuley, Managing Director at Hilton Haulage Transport.
“When people complain about the slow economy, I usually reply ‘What downturn?’ because we can hardly cope with the workload,” he says – revealing that a smart tactical move half a decade ago has set the business up to be independent from financial turmoil. “Sometimes it’s like we’re operating in a parallel universe, but then again, it’s just a question of which direction you choose. We have changed our core strategy early enough to avoid the crash.”
In fact, the South Island transport company has seen more than one change since it was established back in 1994. Formed after a management buy-out of the former company Hilton Haulage Ltd, which had been in the market for over 25 years, the Hilton management team have gone to great lengths to create what proved to be crisis-proof business.
“We realised early on that surviving in the general freight game would be tough,” he recalls. “To compete in the market, you need economies of scale, but a medium-sized fleet cannot get to that level. You can’t escape those humbling moments where you come face to face with the inherent weaknesses of your business. But while it might be hard to fess up to them, bringing them to light is exactly what we needed to do in order to survive the downturn in the general freight segment.”
Instead of diversifying, Hilton Haulage decided to capitalise on the strong agricultural industry in the region, which has been benefitting from the world’s increasing focus on food security and safety for quite some time now – even though New Zealand is further away from any key target market than most competing agricultural producers in the world. “New Zealand has successfully built highly competitive and efficient primary production systems exporting to virtually every corner of the globe, so we knew we could build on that success,” says McAuley, who has experienced the long and stable growth of the industry first-hand.
In retrospect, the Ministry for Primary Industries estimates the agriculture sector's total productivity has increased by an annual compound growth rate of 3.3 per cent between 1984 and 2007, compared to the wider economy's annual compound productivity growth of only one per cent.
As a result, the agriculture industry has become a major determinant of employment and social wellbeing in New Zealand, inspiring savvy businessmen like Peter McAuley to jump the bandwagon and ‘make a living’ of it. “We consciously moved into carting vegetables and milk because we realised food would remain a crisis-proof market segment,” he says. “New Zealand is famous for quality produce and that’s the wave we decided to ride.”
Today, the company can boast a fleet of 110 trucks and 150 trailers specially built to suit the country’s agribusiness. Competing against the country’s ‘top ten’ fleets, Hilton Haulage is the preferred transport partner of the food producing industry in the Canterbury area, who depend on delivering perishable freight just-in-time, all the way from paddock to factory.
“For the vegetable side of the business, we use ‘Vee Bins’ that are equipped with a special belt system that can unload the vehicle in minutes without compromising the sensitive freight,” he says. “Locally, we also run a range of curtain-sided trailers as well as lightweight skels for container transport, which are often necessary to cover the first and last leg of the supply chain.”
Hilton Haulage also operates a selection of milk tankers, refrigerated vans and side loaders, all custom-made in New Zeeland. “I believe that developing and maintaining close relationships with everyone in the supply chain is the key to success, and that also applies to the equipment side of the business,” McAuley explains. “That’s why we support the local manufacturing industry – there is no way an international corporation could provide the same personal service. Plus, people look after each other here, it’s just in our nature.”
One company Hilton Haulage has formed a special bond with is local side loader expert, Steelbro. “Our association with Steelbro goes back a long way”, says McAuley. “We have used Steelbro side lifters in our business for over twenty five years. Over time, the number of machines has increased as new and existing customers have realised the convenience and efficiency of using a side lifter to handle containerised freight.”
That 20-odd-year head start is now paying off. “Today our side lifters are mainly used on short haul freight from our clients’ premises to the port, a rail terminal or vice versa. We also use them extensively to transfer from truck to skel for better efficiency.”
To be able to provide the best possible service at any time, Hilton Haulage always keep the company fleet up to date and well maintained and don’t think twice when it comes to routine upgrades and replacements. As a result, much of the equipment is less than four years old, and most have them come with ‘all the bells and whistles’ currently available. “Every new trailer we receive is equipped with EBS and the latest telematics system,” McAuley says, revealing that he stills claims testing new equipment for himself. “I want to know exactly what I’m signing up for, so I always go out there myself and experience it first hand.”
After all, purchasing new equipment has become somewhat of a daily challenge to McAuley, who is constantly trying to adjust the fleet to cater to the requirements of the region’s growing food industry. “Especially the dairy business has grown dramatically,” he says. “As a result, we try to adjust the fleet accordingly and keep up with the sector’s rapid growth. But, we’re also looking at growth opportunities in other segments of the food industry in order to become New Zealand’s prime food specialist.”
Recent data has indicated that Hilton Haulage’s story of success will go on in 2013. In its flagship ‘Agriculture in Focus 2013’ report – examining the outlook for New Zealand and Australian agriculture – specialist food and agribusiness bank Rabobank declared that demand for exportable supplies from New Zealand will grow in 2013. In addition, New Zealand’s agricultural sector is currently collaborating with government in a multi-million dollar nationwide programme to ensure a sustainable future for the country’s pastoral industries, indicating that Hilton Haulage’s niche strategy has been a smart move to endure what has been a long and straining economic downturn.