Major changes at loss-making UK parcel delivery firm City Link are expected to bring“substantial operational improvement” by October this year, although the business’s financial
performance is likely to remain weak until then, according to owner Rentokil Initial.Following a full-year operating loss of £9.6 million for 2010 at City Link, £4 million worsethan the corresponding loss in 2009, group CEO Alan Brown has implemented a series of changes,designed to turn the business around by the end of the year.
The shake-up focuses on four key areas: improvements to customer services; better contingencyplanning for peak periods and disruptions; operational restructuring, including changes to thecarrier’s network and hubs, as well as reduced reliance on sub-contracted drivers; and changes tothe firm’s sales and marketing strategy, to concentrate its efforts on growth in four sectors:healthcare; technology; media; and retail.
Brown, who took over direct control of the City Link business during the last quarter of 2010following the resignation of former MD Stuart Godman, said good progress had been made during 2010in improving City Link’s hub and depot structure and IT capability, but its overall performance hadremained “particularly disappointing”.
He added: “While severe weather at the beginning and the end of the year was a contributingfactor, the principal issue was that operational management of the business was poor, evidenced byhigh usage of subcontractors, inadequate contingency planning to deal with extreme conditions andpoor engagement of front line colleagues. Significant management change has taken place and adetailed operating plan is now being pursued which should deliver substantial operationalimprovement prior to the Christmas seasonal peak.”
Highlights of the operational changes include: moving from 50% employed drivers to 75%, reducingreliance on ad-hoc subcontractors to below 5%; closure of the firm’s Camberley head office by theend of March; implementing a new pricing and billing system in Q2; the design of a ‘depotblueprint’, to be implemented by Q3.
Brown said City Link’s operational improvement programme would be in place by October 2011, butshort-term financial performance will be worse than the previous year.
