Logistics firm GXD increases turnover by looking to Far East

Rapid expansion in the Far East is expected to drive a 30 per cent increase in turnover for logistics firm GXD over the next year.

The Goole-based company, which handles imports and exports for clients throughout the UK, has seen exports to China, particularly household products, increase in recent months.

Managing director Graham Cross said: “Traditionally we are an importing country when it comes to China but there is a change going on. Their standard of living is improving so their level of demand for products is increasing.

“There is a significant opportunity to develop that with a local representative in China.”

GXD, which employs six staff and has a turnover of £2.5m, handles import and export work for clients throughout the UK using the Humber ports and others including Felixstowe, Tilbury and Southampton.

Imports include steel, gardening and DIY products, chemicals and white goods. Steel is also exported, along with grocery products and garden furniture.

Most exports to the Far East, including China South Korea and Malaysia, have been steel, chemicals, scrap metals, waste paper and packaging materials so far, but GXD is starting to see enquiries for manufactured products such as fridges and microwaves.

In the last eight months, GXD has increased the volume of products it exports – from 120 to 190 containers a month – although imports from China into the UK have levelled off, said Mr Cross.

Traditionally, the company operated in Europe, particularly in Germany, Italy, Spain and France. However, when the recession hit, Mr Cross said he decided the company had to be more proactive in expanding into new markets.

“The margins of the European business have been squeezed so we saw an opportunity to expand in the Far East,” he said. “Three years ago the market started to shift in that direction on its own but we decided to shift our focus and invest more in developing that side of the business.”

He added: “When we started the business in 2002, 80 per cent of our work was exports, 20 per cent imports and all of it was European.”

“Now the Far East accounts for 75 per cent of our activity – and it’s increasing.”

With Asian markets becoming increasingly sophisticated, Mr Cross embarked on his own research mission to establish new links and make new contacts. He visited China last week to recruit agents in Hong Kong and Shanghai and to attend the Canton Fair, China’s largest import and export event.

Mr Cross said: “The trip to China went very well. I met two agents: one will work with us on developing links with Chinese companies – suppliers of customers in the UK and customers of customers in the UK to allow us to generate new business. The other agent will represent Indonesia, Australiasia and Malaysia.

“Establishing links in China is challenging but not insurmountable. You can do so much at a distance but you get to the point where you need to sit down in person and go through the detail.”

He added: “What we keep hearing is that wages in China are increasing and the consumers there have more buying power, so that’s something else I was looking into on this trip.

“Trading in the Far East is more challenging than just trading within the eurozone.

“I could see that the European market was changing significantly, with cost pressures leading importers and exporters to deal direct with haulage contractors.

“So we took a conscious decision to change the profile of the business and develop the deep sea routes where we can really add value for importers and exporters.”

Although travelling solo, Mr Cross was supported by the Hull & Humber Chamber of Commerce, which helped organise his schedule through the Link To China partnership between British Chamber of Commerce and their Chinese counterparts.

Pauline Wade, director of international trade at the Hull & Humber Chamber, said: “British exports to China increased by 40 per cent during 2010 and the Link To China programme is designed to help companies capitalise on that.

“GXD have worked hard to build their business in China and the Far East generally and we would expect this visit to result in new opportunities for them and their import and export clients in a variety of sectors.”

The company has had to adjust to the complexities of trading with places like China rather than Europe.

Mr Cross said: “It’s significantly different. In Europe there is a limited requirement for paperwork. Most goods move freely in the European market. In China there are document controls and import and export licences.”

He added: “We are still active in warehousing and distribution in Europe but the European market hasn’t been growing much in terms of what we do and now only accounts for 25 per cent of our business.

“Volumes are down 14 per cent on this time last year. However, we should remain relatively comfortable in Europe. It’s more concerning if there are fewer customers but luckily we are still managing to hold on to our customers.”

Going forward, Mr Cross said the company was in a strong position to continue growing. He said he expects to see a 30 per cent growth in turnover this year and the company is on the look-out for acquisitions.

Mr Cross said he is currently looking at a potential acquisition in Yorkshire. He said: “The recession has presented a lot of opportunities for acquisition and this is another way we can grow the business. We have to be cautious and keep our costs under control but we are in a fortunate position to look at the market and see where the opportunities are.”

He said the biggest challenge for the company was to provide services at a lower cost for customers. “Prices and margins are being squeezed for us and our clients,” he said. “Customers want a lower cost but better service and the challenge is for us to deliver that.

He added: “I am very optimistic for the next year and the business developments we are moving forward. It will be a different organisation in the future.”

Growth to be built on Brics

Demand from China, India and other emerging economies will boost Britain’s exporters over the next decade, according to a report from a forecasting group the Ernst & Young Item Club published earlier this year.

British exports are up by just eight per cent but economist, Andrew Goodwin, the report’s author, said that by “reorientating” its trade to the emerging economies, Britain could deliver a stronger performance.

Item predicted that exports to the Bric countries – Brazil, Russia, India and China – will expand by 12 per cent a year over the next decade, contributing to an 8.5 per cent annual increase in overall exports.

At present, almost half of Britain’s exports go to EU countries, and less than five per cent to the Bric countries. Mr Goodwin said government help would be necessary if British firms were to win their fair share of these markets. Germany and the US send more than 1,010th of their exports to the Brics.