Proliferating Parcels and Packages
The figures involved with global logistics are astronomical. Roughly 356 billion packages were shipped worldwide in 2023. By 2028, that figure will increase to almost half a trillion.
To keep up, the logistics industry has had to undergo a dramatic transformation. No longer is technology a luxury but a modern necessity for sector players, ensuring that goods of all shapes and sizes are delivered quickly, safely and conveniently.
Global Freight Solutions (GFS), the UK’s first and largest provider of managed multi-carrier services, technology and expertise for the eCommerce industry, has been at the forefront of this revolution.
Providing more than 1000 different carrier services via one integrated technology platform that has been specifically designed to automate and simplify multi-carrier shipping, from checkout to doorstep and back again, GFS gives retailers everything they need to deliver to customers around the world – in one place.
Today, the company helps in the handling of 30 million parcels every year. But that hasn’t always been the case.
“When we started out in 2001, we didn’t even have a product to sell,” explains Neil Cotty, former IT Director and Chief Executive Officer at GFS. A software engineer by trade, Cotty spent 14 to 17 hours a day for his first six months at the company designing, coding and building the firm’s proprietary despatch platform – responsibilities he continued to shoulder with the support of Peter Liu, the firms current CIO, for the next three years as the company got off the ground.
“Peter and I, concentrated on the technical side, while my business partner handled sales and suppliers,” Cotty recalls. “Together, supported by a couple of our original board directors that had provided capital in exchange for shares, we gradually built the business.
“In those days, my commute between my flat in Gosport and the office in mid-Sussex would often take three hours, so I worked remotely much of the time. But when I wasn’t developing software, my business partner and I were out on the road, selling to new customers and working with existing ones to improve their distribution service.”
Shaping logistics technology in the early 2000s
As a first mover and pioneer in the logistics technology space, GFS’s customers were largely in the B2B delivery market, with few couriers having offered home delivery services back in the early 2000s.
“We supported a lot of delivery services to retail outlets and stores,” Cotty affirms, “helping businesses to both send large volumes of parcels quickly and trace them with ease.”
The solution offered clear value: instead of having to endure lengthy, frustrating telephone queues to track parcels and wait for delayed callbacks, GFS’s proactive tracking service combining technology and proactive customer care empowered its customers to quickly and easily access the information they needed or let GFS manage it on their behalf.
“In 2003, Parcel Management hadn’t really existed before,” Cotty adds. “We were the first to provide it to the market as a specialist service. Fast growing companies were spending far too much time and money resolving delivery issues and not enough time concentrating on their core service.”
Like any successful business, GFS has continually adapted and improved its offering over time as market needs have shifted. Come 2010, the company began developing solutions for retailers alongside its traditional B2B clients – a move that proved to be savvy in capitalising on the boom of the eCommerce market as it began to grow.
Time to consider private equity?
Diversification and innovation efforts such as these have remained key for GFS, with the firm now supporting retailers in providing preferential delivery services to eCommerce customers.
Clearly, it was operating effectively as a self-funded enterprise. So, why then did Cotty and his business partner consider private equity?
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We needed funding to grow, but if I was to provide those funds then it would have meant taking on more risk again. For that reason, private equity appeared to be a more logical route – but only with the right partner.
“Initially, it was circumstance more than anything,” Cotty explains. “Back in 2013, my business partner was looking to take a step back, so we began considering the options and approached several private equity companies and banks. We got close to an offer, but it was clear in the final meeting that the senior figures had little understanding of what our company did.
“It was off putting and left me with a bad taste for private equity.”
Instead, Cotty took out a loan to buy his business partner out. “It was a little daunting,” he admits. “We had never borrowed before as a self-funded company, so the financial risk was new.”
With Cotty’s business partner then retiring, a significant internal reshuffle followed. In 2016, when that process had been successful, Cotty opted to explore the possibility of working with a financial partner again.
“I came to the conclusion that private equity could help to de-risk GFS’s growth plans,” he explains. “To de-risk our position during a period of instability in the economy, we needed funding to grow faster, but if the shareholders were to provide those funds, it would have meant taking on more risk again. For that reason, private equity appeared to be a more logical route – but only with the right partner.”
Finding the right partner
There was no concern about GFS’s ability to attract interest. Indeed, the company had grown year over year throughout its entire history. Instead, the concern was that GFS wouldn’t be able to find the right partner.
“Thankfully this happened somewhat by chance,” Cotty explains.
“I was introduced to Phoenix by someone that I trusted, which was interesting to me. I am generally cynical, and my previous experience with private equity made me particularly wary, but Phoenix seemed to fit the bill, so we began to talk.
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They weren’t just totting up the numbers, it was clear they wanted to contribute positively to the company and its ongoing journey.
“From that first meeting, it was obvious they had a genuine interest in the company, and very strong business services acumen. But it was their natural understanding of GFS that put them head and shoulders above the rest.
“They were obviously successful, but they were also informed and educated. They weren’t just totting up the numbers to see if they could make money – it was clear they wanted to contribute positively to the company and its ongoing journey. That integrity is unrivalled.”
A boost to revenue and profitability
After a series of positive discussions, an agreement was reached with Phoenix investing in GFS in February 2017 to help support the company’s continued development and growth.
In the years that followed, Phoenix helped to transform the company’s sales and marketing approach, with GFS’s revenue and profitability more than doubling during the firm’s seven-year investment period.
“Phoenix’s support was invaluable in helping us hire the right marketing director, who proved to be a great fit, building a new website and developing a successful marketing strategy,” Cotty affirms. “Internal communications had also been a real weakness of ours prior to 2019, but that all changed after Phoenix’s assisted appointment. Now, marketing works with sales to ensure that when we onboard new people, we really get them to come on a journey – get them excited about the brand and what we do.”
Having also helped to find a suitable Chairman, Operations Director, and fill several other key positions for the company, the relationship between Phoenix and GFS remained strong, aligned and transparent throughout the investment period.
“Having someone you can trust, that has lots of integrity and has your back when you need them to have it is incredibly reassuring,” Cotty affirms. “With that kind of support and guidance, everyone ultimately succeeds.”
Phoenix sold GFS to International Logistics Group in February 2024, and we will be excited to continue to watch the company’s next phase of growth, having proudly supported its incredible transformation.
