Losses deepened at British express parcels carrier City Link in the July – September third quarterdue to lower volumes and prices, parent group Rentokil Initial announced today. But the parcel firm
stressed it is ready to handle peak volumes in the weeks leading up to Christmas.City Link’s Q3 operating loss of £6.8m is £5.5m (or 423 per cent) worse than the prior yearwhile revenues declined 7.9 per cent to £74.4 million. Over the first nine months, revenues were11.7 per cent lower and losses quadrupled to £24.6 million.
Throughout 2011 the business has been impacted by lower volumes arising from customer lossesin 2010, and Q3 volumes declined 5.5 per cent year on year, Rentokil stated in a trading update.“Price cutting continues to be an ongoing market dynamic and revenue per consignment declined by3.5 per cent. While the market remains extremely competitive, we are particularly encouraged by thestrength of the new business pipeline (well in excess of £50m) and by the conversion ofapproximately £25m of leads into new customers.”
The group stressed that operationally City Link had improved customer care and wasimplementing a depot network restructuring. It had launched the ‘My City Link’ initiative tocustomers in Q2 and was on track to deliver an Estimated Time of Arrival (“ETA”) offering tocustomers in Q4.
Alan Brown, Chief Executive Officer of Rentokil Initial plc, said: “Revenue projections forCity Link have improved significantly for Q4 and 2012 and we anticipate the financial performanceof the business will also improve in Q4, assuming no repetition of the very unusual weatherconditions in Q4 2010. The new business pipeline for 2012 is very strong, and our operationalexcellence initiatives in Customer Care, service and contingency planning are in place, though moreprogress needs to be made on productivity.”
Meanwhile, City Link stressed it is ready for the Christmas rush having spent six monthsdrawing up contingency plans to ensure its network will run smoothly in the event of another ‘bigfreeze’. With the peak season only weeks away, City Link is confident that it will be able to copeeven if extreme winter weather sweeps in during the Christmas and New Year rush – as it did lastyear.
Blizzards and record-breaking cold temperatures last year wrought havoc on the UK’s roads,railways and at airports, bringing many carriers’ networks to a virtual standstill at their busiesttime of year. Backlogs of parcels built up in warehouses then took weeks to clear – with someChristmas presents finally reaching their destinations well into the New Year.
City Link claimed it is leading the industry with its detailed contingency plans that buildon the inherent advantages of its caged network system that proved to be especially resilientduring last year’s winter storms. The firm has taken the precaution of setting peak volume limitswith all of its large customers, as well as promising its customers it will not take on any newclients from 1st November until the New Year.
Duncan Faithfull, Sales & Marketing Director, said: “Planning is the key. Although wecannot control the weather or the effect that the weather has on the roads, we have been workinghard to produce effective plans that will ensure our customers will get a continuous servicewherever physically possible. We all hope there will not be another big freeze like last winter –but if there is, City Link is prepared for action. We will have snow-clearing machinery in everydepot and hub and a Central Command Team has been formed to cope with emergencies.
“Customers can be assured that parcels will not languish for weeks in warehouses – we haverobust systems in place so that parcels will be delivered on a strictly “first in, first out”basis. And of course our new My City Link service will convey virtually real-time information aboutparcel status to our customers – a service which sets us apart from our competitors.”
City Link has radically overhauled all of its contingency plans in the wake of last year’swinter storms, and has tested its plans extensively over the past few months and found them to berobust. Preparations include monitoring long, medium and short-term weather forecasts and makingarrangements to bring in extra vehicles and drivers for peak periods, such as Christmas, ifnecessary.
Should there be an emergency, the Central Command Team will spring into action and will havethe power, if a backlog builds up at one depot, to re-direct parcels to the next nearest depotinstead. They will also be able to redeploy colleagues if necessary.
The command team will be given updates on key data, so they can make well-informed decisions,and they will be responsible for pro-actively telling all customers about the status of the networkvia daily bulletins during a crisis. This in turn should ensure that customer care teams are notswamped with enquiries from anxious or irate callers wanting to discover when their parcels aregoing to be delivered – as they will be kept up-to-date.
