Team Global Express ups bet on EV trucks for Aussie roads

Freight major Team Global Express says a case can be made for EV trucks, but there's one transport innovation which won't be rolling out anytime soon.

Team Global Expressed launched its electric trucks trial in Sydney’s Eastern Creek last year. Picture: Damian Shaw

After more than a year of trials, Christine Holgate-chaired transport player Team Global Express is getting more confident in adding electric trucks to its fleet full time.

The prospect of another closely watched technology, driverless vehicles, hitting Australian roads is well over the horizon.

That’s the view of TGE’s new chief executive, Nick Stratford, who took charge of one of the nation’s biggest delivery players last month. He steps into the role following the promotion of Christine Holgate to executive chair.

Christine Holgate became executive chair of Team Global Express last month. Picture: John Feder

The private equity-owned TGE, which is one of the nation’s biggest freight operators outside Australia Post, has been trialling a fleet of 60 Daimler and Volvo EV trucks across Western Sydney.

Given challenges with distance, these aren’t the highway huggers or B-doubles, rather, they are smaller trucks designed for short city-based routes or parcel delivery.

The trial was launched by Prime Minister Anthony Albanese in TGE’s Eastern Creek depot last March. The trial is being backed by Canberra’s Australian Renewable Energy Agency.

There’s still a big gap in the total cost of ownership between EVs and traditional diesel trucks, but Stratford says thanks to a lot of test runs, there’s different ways and different routes which can make EVs work.

“We like electric trucks — and that’s probably the next step forward for our industry,” Stratford tells The Australian.

“As we start planning out for next year, we’re starting to say: ‘Where can we put an EV in?’ A large part of our customer base is pushing us there. So we see it as viable in the right areas.

“It’s just about making the economics work versus the customer”.

Autonomous trucks are in the early stages of being rolled out on very select routes across the US through companies like tech start-up Aurora, but Stratford says “there’s nothing of the sort” around planning for the technology to be tested in Australia.

His comments follow the Allegra Funds-owned TGE showing continued signs of a recovery as it formalises its split from the legacy Toll Group and one time parent Japan Post.

TGE posted full year pre-tax earnings of $104m for the year to end March, according to documents filed with the corporate regulator. This compares with earnings of just over $4m a year earlier, with the rebound helped by lower costs following the split from Toll Group. Annual revenue was flat at $2.9bn as transport volumes slowed on a slowing economy.

Writedowns and separation costs are still hitting the bottom line, with TGE posting a full-year loss of $115.6m, although that narrowed from nearly $190m a year earlier.

Now, TGE runs over 7000 trucks, the bulk of these being heavy transport for interstate work.

It also looks after intermodal, putting heavy freight onto trains and a courier business. Its key clients are across mining and agriculture.

Prime Minister Anthony Albanese launched the EV truck trial last year. Picture: Damian Shaw

Stratford says the bulk of the restructuring is done for TGE, including a hefty IT spend, which gives it a platform to grow. The latest figures show the underlying business has been running at a profit.

Still, there’s more balance sheet repair to go with the business in net negative equity, although it remains funded through medium-term debt facilities.

Allegro has not flagged its intentions for TGE, with a stock market exit or a trade sale expected over time. Stratford says all the cash has been reinvested back in the business.

“I can generally say what we generate, we put back in. Allegro are taking a medium-term view to valuation. We’re in a good place. We still see more upside in value,” he says.

He acknowledges it’s been a tough period for the transport industry, with the weakening volumes across the board testing major players. Over the past 18 months several major trucking players have closed, sold or some have been placed into administration.

While logistics is regarded as a defensive industry, Stratford says this makes it more important to have a broader customer base. Where some manufacturing volumes were down last year, parts of retail and cross boarder e-commerce was robust.

“Transport generally runs on 7- 8 per cent earnings margins. It’s pretty skinny. The benefit we have is a diverse customer portfolio”.

Allegro acquired the loss-making Australian operations of logistics player Toll from Japan Post four years ago. Since then its been round-after-round of painful restructuring. The biggest step was finalised in the past year with TGE finally splitting off from several legacy Toll businesses, including its mining services and freight forwarding operations. These are still owned and operated by Japan Post.

TGE has also started a process to sell its stake in TGE Tasmania business to its associated Strait Link Australia, raising another $25m.

The business, (including Toll Australia) all emerged from the former ASX-listed Toll Holdings which was acquired by Japan Post for a bumper $6.5bn a decade ago. While Japan Post was eyeing Toll’s Asian franchise, it suffered deep losses through its Australian footprint.

Stratford says there are signs of a recovery in freight volumes across with more volume coming into Australia from Europe and Asia. E-Commerce deliveries is now an increasing growth driver of TGEs freight volumes.

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