Menzies expands parcel delivery with Oban takeover

Menzies has added Oban Express to its parcel delivery network

The Edinburgh-based firm has taken over family-owned Oban Express, which handles about 450,000 packages a year. It is the latest in a series of deals to bulk up Menzies’ share of the growing market to deliver goods ordered online.

Founded in 1983, Oban Express has depots in Glasgow and Oban, supported by a fleet of 45 vehicles. It operates throughout western Scotland and the Hebrides.

Forsyth Black, managing director of Menzies’ distribution division, said the strengthened geographical reach will help keep down the cost of deliveries on behalf of national carriers to isolated areas.

The group currently has about 1,900 vehicles in its distribution arm which have traditionally delivered newspapers and magazines overnight on behalf of publishers. By expanding into online deliveries, this fleet will also be put to use during the day.

“Menzies distribution is now perfectly placed to serve carriers working for large mail-order firms by consolidating their parcels into one cost-effective, final-mile delivery, making it easier for customers in western Scotland and the Hebrides to order online and get their goods quickly at a reasonable cost,” Black said.

“This is a model we’ve used successfully for newspaper distribution across Scotland, and now we can do it for mail order and e-commerce too.”

Online deliveries are a key plank in plans to revitalise operations within the group, which earlier this week warned that full-year profits will be about £2 million less than previously expected because of additional costs on a baggage handling contract at Gatwick Airport.

The distribution business, on the other hand, was said to be delivering “ahead of forecast”.

Earlier this month, Menzies announced a tie-up with delivery specialist B2C Europe whereby Menzies drivers will pick up B2C Europe packages destined for the UK and deliver them to processing centres here. That followed a similar agreement with fellow delivery outfit wnDirect in September.

The Oban Express deal builds upon the June acquisition of AJG Parcels of Inverness – the biggest parcel delivery firm in the Highlands – for £7.5m.

Oban Express was set up with just two vans by founder Tommy Owens. After his death in 2006, the business passed on to his children, son Walker and daughters Lorraine and Louise. The three siblings and their spouses have sold the business for an undisclosed sum.

Earlier this week, brokerage Numis Securities reaffirmed its “buy” rating on shares in John Menzies, which is one of Scotland’s longest established businesses, founded in 1833. The firm ran high street and railway station shops through a retail arm which was sold to WH Smith in the late 1990s.

Shares dipped 1.25p to 366.75p.