New Amtrak bosses start efficiency drive
The new owners of UK parcel company Amtrak claim they can make significant cost savings without wholesale redundancies.
But the linehaul and hub operations had to become “a lot slicker”, said new MD Alan Jones.
“It’s all about making sure costs are in alignment with revenues, ” he told IFW. “Clearly we cannot leave things exactly as they are. We have got to take costs out of the business, because you can’t just put GBP 1 on a parcel.
“But a couple of million off our trunking costs would go straight to the bottom line.” Amtrak has 14 double-deck trailers out of a total linehaul fleet of 120, and more will be added. “We carry a lot of fresh air around.
Double-deckers help to reduce that, ” Jones said.
Funding for re-investment in the business has been secured from Lloyds TSB, but it has taken no equity. Netfold, a five-man consortium, now wholly owns Amtrak.
Netfold comprises Ron Series, former executive chairman of Tuffnells Parcels Express, plus four former directors of the Seawheel shortsea business: Jones, Gerry Ruffell, Tom Naylor and David Bardsley.
Venture capitalist 3i sold Amtrak, after owning it for eight years, to Saints in August as one of 10 disposals (IFW 22 January).
A home delivery specialist, Amtrak has contracts with catalogue and internet retailers including JD Williams, Virgin Vie, Kleeneze and Comet.
But it was the company’s relationship with the Christmas savings club Farepak, which collapsed last October, that intensified its financial difficulties.
It saw an upturn towards the end of the year, however. “Amtrak enjoyed busy trading during December, which should provide a good platform for the business in 2007, ” Series said.
He was confident the company’s financial performance could be restored “to a level that will ensure a profitable and secure future for customers, suppliers and staff”.
Jones turned around Seawheel’s fortunes over a two-and-a-half year period before the business was acquired by Samskip in August 2005. He had been out of the market but looking for an opportunity since.
Netfold approached Amtrak administrator KPMG on 9 January. “We couldn’t find a business where all four of us [from Seawheel] could work together again, ” said Jones.
“Ron had been my chairman in a previous role and had done some work in Amtrak over the previous couple of months. But it became clear the business was not going anywhere. A commercial sale was not in the offing and we said: ’Look, we could buy this.’ “We’re not out to make a quick buck. We’ve put a lot of our own money in.” Customers “didn’t feel the bump” from Netfold’s acquisition, Jones said. Suppliers were “largely satisfied” at the outcome.
Following its acquisition of Nightspeed in 2005, Amtrak had a structure of 80 depots, half-owned and half-franchised. “I think there’s a place for both, but I’m not sure what the mix is yet, ” Jones said.
Amtrak needed to assess whether all its depots were “strategic enough”. The aim was to reduce stem mileage and make trunking more efficient.
Some cost savings might come from streamlining delivery options, he added.
“People want home deliveries when they’re there, but following the Nightspeed integration we might have 20 delivery options and most customers are probably using only six.
Some may be past their sell-by date.” Amtrak goes live with a credit card payment facility in the next few weeks to support its B2C focus.
