Express delivery industry slowing down
Domestic express delivery firms are experiencing a rough ride as the retail sector continues to take a battering from the recession.
Domestic express delivery firms are experiencing a rough ride as the retail sector continues to take a battering from the recession. A continuing stream of retail receiverships is eroding the market and pushing carriers operating in the UK, to slash jobs and depots.
Whilst DHL Express (a subsiduary of Deutsche Post AG) remains profitable for international traffic, its domestic UK market continues to run at a loss and has been in recent years to the tune of £90-100m. It is thought that although the losses are not in quite the same league as those incurred in the United States, more UK hubs could face closure.
TNT Express, Royal Mail’s largest competitor, has cut some 300 jobs after what it described as “the sharpest downturn in decades” and is cutting the use of sub-contractors on the line-haul operation.
City Link has cut some 1,000 jobs over the first nine months of 2008 as part of a recovery plan, and has reduced its fleet by 10% but continues to see a 10% annual volume decline. Thirty jobs at a City Link’s call centre in Cardiff are to go.
Loss-making Home Delivery Network (HDNL) is to cut almost 700 jobs, closing six depots from its delivery network at Daventry, Northants Sheffield, South Yorks Burslem, Staffs Newcastle [outbase] Basildon, Essex and Eastleigh, Hants
A spokesperson said that even mid-way through its financial year, it was making a bigger loss than anticipated, blaming aggressive competition and a difficult financial climate. With all the signs that it would see a bigger erosion of the market, it had little choice but to implement a rapid scaling back of its network to avoid further losses. It also plans to close another network hub in Edmonton, London, by September.
A swathe of retail collapses has lead to uncertainty among operators and vehicle rental firms over the future of contracts for high street businesses.
Steve Lawson, editor for Hellmail, the postal industry news site said that 2009 would be a make or break year for many in the express delivery business, adding:
“As we indicated last month, a struggling retail sector and damaged confidence has a knock-on effect. Most will be looking to down-size in order to weather the continuing downturn in business and wait for better conditions. Normally its the case that when the market gets really tough, you will often see buy-outs, but with loans now a problem, the trend is far more likely to consist of redundancies and the closing of some operations altogether.
