British express parcels company City Link will invest £31 million (€35 million) this year inrevamping its operating model to increase capacity and consolidate its ongoing turnaround
programme.The company, which has 85 depots across the UK, plans to expand its network by 20% byincreasing warehousing space to three million sq ft. It will enhance its fleet of 3,500 trucks byreplacing 300 hard-sided trailers with 280 curtain-sided double-deck trailers.
In addition, City Link will install one general manager at each depot, creating 20 newmanagerial posts. The expansion, announced as part of the company’s 40th anniversary celebrations,will also see a further 120 jobs created with the decentralisation of the customer care service.The company currently employs more than 6,000 staff.
Sales and marketing director Stuart Godman said the investment reflected the confidence ofowner Rentokil in the company. “This investment shows there is confidence that City Link willcontinue to grow, offering excellent customer care service levels and value for money to ourcustomers,” he commented.
So far this year, the company has opened a new 50,000 sq ft depot at Durham in northernEngland to serve the surrounding region which was previously covered from its Newcastle depot, andopened a new 37,000 sq ft depot at Norwich in eastern England to replace two smaller facilities. Ithas also ordered 300 Mercedes Sprinter vans to replace older vehicles.
In 2008, City Link saw its revenues fall by 8.4% to £381.9 million with volumes down nearly7% to 48 million parcels and revenue per consignment down by 3.6% to £7.94. The British domesticexpress parcels market grew nominally in the first half-year and then declined by 5%-6.5% in thesecond half-year, with aggressive pricing, parent group Rentokil Initial said in its annual report.The company, which was severely hit by the failed integration of Target Express in 2007, ended theJanuary-December fiscal year with a reported operating loss of £59.9 million and an adjustedoperating loss of £43.5 million.
But City Link made significant progress in its recovery plan, with higher service levels,stabilised customer relationships and improvements to systems and processes, Rentokil Initial said.Quarterly operating losses were reduced during the year. The company reduced the workforce by 1,000to 6,600 and downsized the vehicle fleet by more than 10%.
City Link is expected to more than compensate for a “modest drop” in revenues this yearthrough a £30 million cost savings programme.
