The administrator of Tyne & Wear-based Kent Connection has revealed further details about what caused the haulier's demise, including a double blow from Tesco and Del Monte.
As revealed by MT, the 29-year-old haulier, which specialised in fruit and vegetable distribution, collapsed on 21 January and appointed Daryl Warwick of Armstrong Watson as administrator (MT 31 January). The operator left a deficiency of £730,395.
The business reported a loss of £60,000 in the six months to 30 November 2010, despite a £2.3m turnover. Meanwhile for the year ending 31 May 2010, Kent Connection sustained losses of £100,000 on sales of £4.2m, and in the previous year the company lost £140,000 on a £3.5m turnover.
"Factors such as soaring fuel costs [only 45% of the company's haulage work was covered by a fuel surcharge clause] and insurance costs were believed to have been the major reason why better revenues did not result in better profitability," says Warwick in the statement of administrator's proposals.
Kent Connection held crunch talks last November and deemed that not only was it struggling with running costs, but that its truck utilisation was inefficient. Some 11% of vehicle mileage was empty running.
Disruption caused by snow in December 2010 cost the business a one-off £50,000 while the firm was then informed on 8 January that its second largest client, Del Monte, was to close a plant by the end of the month.
The work lost with Del Monte was worth £70,000 then, at the same time, Tesco reduced its requirements with the haulier by 20%.
As a result of the losses incurred, Kent Connection experienced severe cash flow difficulties and creditor pressure from which is was unable to recover, according to Warwick.
He says he is still unsure whether unsecured creditors will receive any dividend.
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