British parcels carrier City Link further reduced its losses in the second quarter of the yearand stepped up its network restructuring with seven depot closures and three openings. It has also
picked up a customer service award.The company reduced its April – June Q2 adjusted operating loss by 66.7% to £0.3 million (€0.4million), while the half-year loss declined 32.9% to £4.7 million (€5.6 million), parent companyRentokil Initial announced in its interim results. City Link is now targeted to return to profit in2010 as a whole, with the main contribution expected in Q4.
City Link revenues rose 1.8% to £83.6 million (€100.6 million) in the second quarter, whilehalf-year revenues were flat at £167.1 million (€201 million). The carrier managed to increasevolumes by 4% during the first half of 2010 but its yield (revenue per consignment) dropped 4.3%due to industry-wide price-cutting.
On the cost side, City Link’s distribution costs increased £4.6 million in the first half of2010 due to higher volumes but also on account of “sub-optimal route planning resulting in highsub-contractor costs”, Rentokil Initial commented. The carrier aims for “significant improvement inrouting efficiency” in the second half of the year thanks to restructuring and recruitment of moreemployed and owner drivers, thus enabling a reduction in the use of ad hoc sub-contractors.
The company pressed ahead with its ongoing network reorganisation, designed to streamline thedepot network and reduce operating costs. City Link closed seven depots between January and June,reducing the network to 77 locations and cutting costs by about £15 million. Since then, it closedits Wednesbury hub in late July, completing the transition from a hard-sided to a curtain-sidedtrailer fleet.
City Link will switch to a regional hub network centred on Coventry in the second half-year.This follows the opening of three new depots in Heathrow, Warrington and Peterborough which alsoact as regional hubs.
The company’s customer base remained broadly stable and customer service remained consistentlyabove 98.5%, apart from during the heavy winter conditions and minor service disruption associatedwith the hub closure, Rentokil Initial noted. In particular, City Link was awarded the 2010Customer Care Award at the UK transport & logistics industry’s annual Motor Transport Awards inJuly.
Commenting on the award, managing director Stuart Godman said: “We are delighted to have beenpresented with the Motor Transport Customer Care Award. It is a major accolade and one whichrecognises our continuing efforts to deliver a level of service which is best in class. We are acustomer-centric business and we pride ourselves on our reputation for delivering a first classservice and to this end we constantly seek new ways in which we can improve the experience for thebenefit of existing and prospective customers.”
