INSIGHTS

We take 5 minutes with CEO of Freightways, Mark Troughear. We discuss how ecommerce impacts their business, what they look for on the acquisitions front and what challenges Mark most, as CEO. Questions covered include:

1. What does Freightways do?
2. What’s been your biggest tech investment recently?
3. How has online shopping impacted your business?
4. As CEO, what challenges have you faced and what are you most pleased with?
5. Can you tell us about your first investing experience?

FULL TRANSCRIPT:

Craigs: What does Freightways do?

Mark: In a nutshell, Freightways picks up, processes and delivers things as efficiently as possible. So we’ve got courier businesses which are involved in picking up, processing and delivering items nationwide around New Zealand. We’ve got a business mail company which does very much the same thing with letters. With information management we pick up data, physical and digital, bring it in, process it efficiently and deliver it back to customers when they need it. And then with secure destruction we do a very similar thing, with document destruction, medical waste and then electronic destruction. So fundamentally we’re a business that focuses on picking up, processing and delivering as efficiently as we possibly can.

Craigs: What’s been your biggest tech investment recently?

Mark: The biggest investment we made was an automatic sortation centre down in Christchurch. So that was a ten million dollar capex, putting in place a machine that automatically sorts freight, weighs it and cubes it. Now the big benefit for us is that couriers in New Zealand is a self-declared pricing regime, so the customer tells you what they have sent you, how big it was and therefore how much you should charge them. And so that’s been really difficult to check revenue integrity on. Having this machine means every item that goes in and out of that Christchurch hub – we’ve got the weight, we’ve got the size, we know where it came from, where it’s going to. And we can bill the customer accurately for that.

Craigs: How has online shopping impacted your business?

Mark: So ecommerce is a big risk and it’s a big opportunity. The issue at the moment with ecommerce is, typically residential deliveries don’t earn you a margin. So our competitors don’t make a margin, we don’t make much of a margin on residential delivery. So the big fallacy has been, as online shopping has grown, surely that will be great for courier companies. I think the answer is in the opportunity – yes it will be great for courier companies but what we need to do is differentiate the price. So that’s what we’re tackling at the moment, is putting in place some differentiation on price that attracts a bit of margin. And then in fact where we have kept away from a lot of ecommerce deliveries because of the lack of profitability, we’ll now be attracted to go after them, to grow our base.

Craigs: As CEO, what challenges have you faced and what are you most pleased with?

Mark: I think the biggest challenges have come from areas slightly outside of our control. So, what is the government doing in thinking about labour legislation and how might that affect us. And so there’s been a couple of things there where increase in wages at the lower end have certainly pushed, for a lot of our people, higher levels of increase than we would typically have. We need to recover that in pricing from customers and help customers understand why we need to do it. Look in terms of rewarding, we’ve got a fantastic team. So working with that team that we have, who are really focused on finding opportunities to grow has been pretty special. We’ve introduced a lot more collaboration through the business. So we have ten operating companies within Freightways. They’re collaborating together like they never have done before. And that’s been really neat to see because it’s growth for individuals and it’s opened up a few opportunities that have probably been sitting under our nose for quite some time.

Craigs: Can you tell us about your first investing experience?

Mark: If I think back to my first investing experience, it was pretty average. So it was investing in to a fund where I don’t think the fund manager had any idea about what they’d invested in, I didn’t have any idea really about the fund that I’d invested in – I was about 18 at the time. And I put this money in to a fund and three or four years later it was exactly the same level as it had been. I left it for another few years, it was exactly the same level as it was when I’d first invested. I think what that taught me is, if you’re going to invest in businesses and in funds, learn a bit about the companies you’re investing in, and know a bit about the people who are leading those businesses. Because ultimately decisions are made by leaders in the business. And I think if you can align what you’re wanting to get out of your investments with what the leaders of those businesses are looking to do with their companies, that’s probably the best fit you can get with your investment profile.