TDG, the UK based logistics provider, has announced changes in its senior management that appear to indicate issues with its strategy.

The head of its Contract Logistics business in the UK, John Winston, has resigned and this business has been grouped together with TDG’s activities in continental Europe and its freight forwarding business to create one division. The only part of TDG this does not cover is its chemical business, which accounts for a third of sales.

TDG’s results over the last year were disappointing, with profits and sales flat or declining. The company illustrates the difficulties that many medium sized LSPs now encounter in competing against the major players. The remedy for this is to find a niche where margins are better and this is what TDG has done with some success. Its chemicals business is strong and delivered an operating profits’ increase of 25% to £6.5m ($13m/€9.8m).

But Chemicals alone cannot carry the rest of the business and any impression of drift is dangerous for TDG. There are now a number of big predators on the look out for acquisitions. Most of this attention is going into regional groupage companies which will complement the network transport operations of the likes of K+N and DB Logistics. TDG is not that sort of company, but its general contract logistics business could be of interest for larger companies looking for volumes to feed through their transport networks and whose contract logistics business could run TDG’s clients with less overheads.

For example TDG’s chemical business, which has been augmented by several acquisitions, might even make a nice fit with K+N’s own chemical logistics activities.

TDG at present is not cheap, trading on a p/e ratio of almost twenty. But should the latest management issues suggest a weakness of strategy, the company’s institutional shareholders might start considering their options.

Source: Transport Intelligence

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