At the end of October 2013, China’s HNA Group and Bravia Capital of Hong Kong announced the completion of HNA’s acquisition of TIP Trailer Services Group (TIP), a wholly owned subsidiary of GE Capital.
Headquartered in Amsterdam, TIP is specialised in trailer leasing, rental, maintenance and other value-added solutions to transportation and logistics businesses across Europe. Most importantly, though, it is able to help the transport industry improve on cost control, as Rogier Laan, European Commercial Leader, told Global Trailer. Under new ownership, that expertise is now becoming the company’s main asset.
According to Laan, many a transport company does not exactly know the cost of running and maintaining a commercial truck fleet. “As long as they make a profit, things are considered to be just fine. A lot of opportunities to increase efficiencies or improve processes are often ignored,” he says – revealing that the takeover by HNA caused TIP to reassess its core competencies and align the overall business focus accordingly.
“Our core business is to supply our clientele not just with the right equipment, but with the knowledge to utilise it in the most efficient way,” he says. “It’s much more than just providing a trailer to ensure they can fulfil a new contract. It’s about helping them manage an profitable fleet. That’s one of the key reasons HNA took an interest in purchasing TIP in the first place.
“Our consultants actually prefer providing a complete fleet management solution instead of just renting out equipment. Such a solution can include everything from planning service intervals to finding the right parts suppliers and managing the stream of invoices coming in every day. It can also mean handling the entire maintenance process and dealing with accident repairs, for example.”
According to Laan, that new, holistic approach to fleet management was part of the takeover negotiations from day one, as it can help businesses avoid the episodic “slashing and burning” that often becomes necessary when overheads grow too big.
“We always said that we don’t just rent out trailers, but provide guidance and advice as well. These services are sought after in the market today and have huge growth potential.”
As TIP owns and manages around 48,000 pieces of equipment – boasting one of the largest and most diversified fleets in Europe – it is safe to say the company’s core competence is lean and efficient fleet management. Laan: “We know a lot about operating a fleet and are happy to share our know-how. Many of our clients don’t see the areas of improvement we uncover because they are stuck in their own way of thinking.”
He adds, “But once you allow a professional independent advisor to take a look at how your fleet is run, someone with a fresh and unbiased perspective, it will open up new opportunities for the business and new ways of thinking for the management team.”
However, the TIP service is not about bringing in a standard concept, but about finding the right balance between proven business practice and traditional business acumen. “We try to find the right balance between the traditional way small and medium-sized operators work and the new ideas our independent specialists have access to. The right solution lies somewhere in between.”
According to Laan, cooperation is the key to success. By discussing costs holistically up and down the supply chain, customers are often inspired to find additional ways to reduce them. For example, how to take waste out of the process, or how to plan jointly to smoothen production, or maybe even how to change the product mix to get rid of costly items and replace them with some that are more profitable. “Talking to the customer is never a bad thing,” he says.
While every business is different, Laan says one common mistake is disregarding the cost of avoidable downtime. “There are a lot of hidden costs, especially when a vehicle breaks down. Regular maintenance is one strategy to avoid these issues.”
According to Laan, TIP operates a number of workshops all around Europe to keep downtime to a minimum and ensure every trailer is ready to be used at any time. In addition, the company has a network of “Centres of Excellence” around the continent.
Trying to explain what the new TIP vision is all about, Laan recalls a recent visit to a turbine factory. “The whole factory was a highly efficient organism built around a perfect operating system to control the flow-process. Sensors mounted at strategic positions measured whether everything functioned properly or if there was an issue throughout the production process. It was eye-opening.”
He adds, “We intend to have such a sensor in every part of the TIP business and in each country. That’s basically what our Centres of Excellence are. Sometimes I call them iCentres as we gather vast amounts of information there. In the future, they will be able to assess remotely whether a piece of equipment needs to be maintained or not. That intelligent maintenance scheme, called Condition Based Maintenance, will replace the old system based on a certain time interval and help us bring costs down by treating each trailer individually.”
Despite that centralised approach, Laan emphasizes that physical maintenance on vehicles will always occur locally. “Next to our own service locations, we have over 100 service-vehicles in operation that act as mobile workshops. That way we are able to supply any customer with a personalized solution. As you can see, trailer rental is not just about picking up the vehicle in the yard. It’s a science in its own right.”