Parcel mergers could relieve price pressure
Recent acquisitions in the express parcel industry will help alleviate downward pressure on rates, according to Petar Cvetkovic, CEO of Target Express.
The wave of consolidation that happened a few months ago was for “negative reasons” as franchise operations such as Hellmann and NCN went bankrupt, Cvetkovic said. “They were offering low headline rates that were not sustainable.”
In the last few weeks, UPS has acquired Lynx and Amtrak bought Nightspeed to grow their respective networks – a positive development for the sector, he believed.
Top-line revenue was failing to match volume growth at Target in the year to date, admitted Cvetkovic. He was strongly critical of one company “on a suicide mission” which, without even looking at copy invoices, had told shippers that whatever they were paying, it would charge 20% less.
“This set industry pricing back three or four years. If the customer’s only focus is on cost, you will never change that. But of six customers we lost on price between January and March, five of them are back,” he said.
Many customers had switched their priorities from pure speed – and price- to quality of service and quality of information. “A lot of people promise good information but still can’t deliver. By giving customers access to our own systems, they can see what we’re doing =, warts and all. No other company gives that level of transparency.”
Price pressure has forced Target to improve efficiency and it had achieved volume growth while remaining at the same headcount as three years ago, Cvetkovic said.
Work to streamline its main hub in Coventry had reduced misroutes and damage, as well as improving productivity. Consignments were still stored manually into a caging system but capacity had increased from 50,000 to more than 60,000 consignments a night thanks to the introduction of a carousel system that reduced the amount of time staff spent moving goods across the warehouse.
Vehicles were averaging two more deliveries per day, Target had halved its misroutes from 0.65% to 0.3% and on-time delivery was one percentage point up, said Cvetkovic.
Excluding Ireland, 6% of Target’s business is international. It was one of four founder members of NetExpress and there are now four additional. One of those, however, is Polish operator Stolica, which has been acquired by UPS and whose position will be reviewed at the end of this year.
Target has added 15 more trailers to its fleet. They will be used primarily on key customer accounts, allowing consignments to be loaded on-site during the working day. The single-deck 26-pallets trailers are in the company’s “silver service” livery, which now extends to almost 80% of target vehicles.
Eighteen double-decker trailers are on order for delivery later this year and will replace existing trailers.
