'Scorpion' Toll hunts Kiwi trucking firms

By Duncan Bridgeman

Friday 6th August 2004

Toll Holdings has embarked on a $120 million spending spree, buying up transport companies across the country.

The Australian-based logistics giant has already snared at least two warehousing companies, including Wellington-based JD Lyons, and Maxwell Warehousing in Christchurch.

Two other freight-forwarding companies Peter Baker Transport and Phoenix Freight have turned down takeover offers, industry sources said yesterday.

Nicknamed "the scorpion" by Kiwi rival Mainfreight, Toll is looking to spread its web south to acquire more New Zealand business.

The company has a track record of acquiring businesses in Australia and has committed itself to building its business here.

Industry players say Toll has earmarked at least $120 million for New Zealand expansion. But Toll is facing increased competition from Australian rival K&S Corporation, which is also eyeing up Kiwi trucking companies.

K&S, owned by Australian businessman Allan Scott, took ownership of Cambridge-based Cochrane's Transport in January and is said to be looking for other profitable businesses to acquire.

K&S and operations associated with Scott have a market share worth more than $700 million in Australia, making it the only comparable transport company to Toll.

Analysts say the Toll spendup was substantial but could not say what effect it would have on Mainfreight, which owns 80% of Owens Group, the next biggest freight company here.

It would depend if Toll went for general freight-forwarding or LCL (less than full container load) businesses, one analyst said.

Had Toll been successful in buying Peter Baker Transport, it would probably have attracted scrutiny from the Commerce Commission, the analyst said.

Peter Baker was seen as a logical target for Toll because of its number of depots and connecting computer systems.

Industry participants said owning a company like Peter Baker would make Toll a powerful freight operator, allowing it to put more cargo on the rail network.

Toll, which controls Tranz Rail (Toll NZ), last year blocked Mainfreight's full takeover of Owens to position itself for industry consolidation.

Toll's reputation for aggressiveness sent the handbags flying in Wellington recently when talks with the government over the transfer of the track network turned sour.

There is no love lost between Toll and Mainfreight either.

"Don't underestimate the smiling scorpion from Australia. He is looking for some advantage," Mainfreight managing director Don Braid told shareholders at the company's annual meeting last week.

Industry sources say Toll plans to pick up a significant chunk of warehousing and then buy a freight-forwarding company to move its own freight around the country.

Several trucking freight companies the National Business Review contacted confirmed Toll had been "sniffing around" but said it would be inappropriate for them to comment further.

Toll Holdings did not respond to calls before press time.

There were also unconfirmed reports that the company had acquired a huge transport ferry for use on Cook Strait.

The "massive" vessel would combat Toll's problem of transporting trains and wagons across the strait and might see it counter the "lost capacity" argument it has been running over Marlborough District Council's plans to cut the speed limit for vessels in the Marlborough Sounds.

Toll Holdings is the biggest player in a number of sectors in the Australasian market.

It is gradually expanding into Asia, where it has partnership operations in Thailand and Singapore.

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