The short, sharp shock of downturn – Irish integrators feel the pinch
Integrators are feeling the pinch as the dip in the republic's economy starts to bite, but TNT remains confident of retaining market share General manager for TNT in Ireland Philip Bracken, says express companies always notice it first when there is a dip in the economy.
"Analysts look at us in Europe and Ireland as they follow the fortunes of FedEx in the US because we are a good indicator of economic health, " he says.
If that is so, then a short, sharp shock is on the cards.
After a strong first quarter in which TNT started operating three aircraft nightly out of Ireland – one aircraft from Dublin which called at Liverpool en route to its Liege hub, and two others from Shannon and Cork. The integrator dropped back to two in early April.
"The second quarter shows a downturn, although there is no evidence that we are losing market share. We are all feeling the pinch, " says Bracken. "Of the top 250 corporate clients we deal with average throughput dropped by 22%."
"There has been a significant shift from air to road transport, from 50:50 to 70:30 in favour of road, but we are still able to provide a two-day service across Europe, " says Bracken.
"It's a temporary aberration, and it's certainly not all gloom and doom. You see the main effect in the first three months of any downturn. Local managers trying to comply with global directives know their key performance indicators, but will take the pain on customer service for the sake of making their internal reporting look good. It looks as if they're doing something."
TNT began domestic delivery around five years ago and now has more than 300 vehicles in its fleet. This segment accounts for 23% of the company's business in Ireland, partly, Bracken believes, because the smaller operators have pulled out of the market.
"The one-man band with a van was the bane of our lives, but larger customers expect a more professional service and an IT infrastructure."
Knowing our customers' needs is "50% of our strategy" for growing our market share but, Bracken says, TNT's management has wideranging experience in key sectors such as automotive, hi-tech and pharmaceutical, and the company is virtually offering "free consultancy".
"You're looking at the market dynamics and advising the client accordingly, " he says.
In the automotive, industry, for example, TNT has fused the benefits of its strength in express and logistics (express accounts for around 75% of the Irish business, logistics just over 20% and mail 3%) to find solutions across the supply chain.
Pharmaceuticals can also involve complex fulfilment operations. For example, where locally manufactured drugs have to be tested across Europe, the company may need to send out samples through doctors – "who may be very good at the medical bit, but bad at administration and logistics, " Bracken says.
In the electronic marketplace, it's the spare parts infrastructure that differentiates service providers. "Customers are going away from large holding banks. We hold strategic stocks in our own locations, it gives them a better service and saves them money."
TNT customers include Compaq and Xerox and the company has exploited service niches such as the installation of Xerox copiers.
"Little engineering knowledge required but it's an important value-added service, " he says.
With Xerox among the companies announcing large-scale redundancies during IFW's visit to Ireland, Bracken hopes there is still sufficient value left to add. m
Posted: 25/06/2001
IFW
