New Parcelforce losses bring crisis talks with unions

BRITAIN’S state-owned express carrier Parcelforce Worldwide is in crisis talks with its unions after taking a Pounds 201m hit in exceptional half year losses.

The deep red ink for Parcelforce, a business with an estimated annual turnover of Pounds 500m (Dollars 704m), compounds a decade of losses and a Pounds 50m writedown 18 months ago.

The latest asset writedown for the troubled domestic parcels division was a big factor in the Pounds 281m half year post-tax loss for parent company Consignia, previously known as the Post Office.

Consignia chairman Neville Bain said: ‘The urgent need for structural changes in Parcelforce Worldwide is underlined by its incoming cash consumption, which is expected to approach Pounds 200m by the end of this year.

‘This follows a decade of losses and is a position we cannot sustain. We are determined to take the action necessary to give Parcelforce a profitable future.’ Parcelforce management was not available for comment but a spokesman at Consignia confirmed that discussions were taking place with the unions representing 13,000 staff at the parcels division.

Consignia has already started a root-and-branch rethink of the delivery networks for its separate mail and parcels businesses, which handle 80m letters and 500,000 packages a day.

It has also announced plans to outsource its 40,000-vehicle fleet to the private sector, an operation at present worth Pounds 400m a year in-house.

The ‘no options excluded’ review of its letter and package distribution networks will look at converting salaried staff into owner-drivers, a common practice in the private sector.

Test trials taking place for home delivery, excluding business-to-business traffic, already use milkmen and private couriers to deliver parcels.

The poor set of results has put increasing pressure on Consignia’s management.

The chairman of the consumer watchdog Postwatch has called for changes to be made at the top.

Peter Carr said: ‘Consignia remains a monopoly and it is difficult to understand how a profit in excess of Pounds 500m five years ago can be turned into escalating losses at a cost of more than Pounds 2bn in capital expenditure.

‘The management has referred to the urgently needed cost savings of Pounds 1.2bn.

‘As yet no action hasbeen taken, and it begs the question if this will be enough to turn the business round.’ Mr Carr added: ‘Surely the time has come to review the future of the Consignia leadership following yet another set of appalling results.’ The Parcelforce results are separate from the growing international parcels business, which is focused on acquisitions in Germany and elsewhere.Parcelforce’s parent company chief says:follows a decade of losses, a position we cannot sustain.’ Copyright 2001 Lloyds List. Source: World Reporter (Trade Mark) – FT McCarthy.