'Sell Parcelforce' call
Calls for Consignia to sell Parcelforce, its struggling package delivery arm, are increasing as losses continue to mount.
“The business would be better off outside Consignia, because mail, parcels and retailing are separate businesses, ” said Paul Jackson, MD of parcels industry consultant Triangle. “They could consider a management buyout scheme.” Disposing of Parcelforce could help solve Consignia’s financial problems, at least in the short term.
The state-owned postal services group saw interim pre-tax losses rise to £281m (t450m) in the half-year to 23 September.
Total mail and parcels traffic grew by only 2.7%, compared with 7.7% for the same period last year.
Parcelforce played a big part in the poor performance and its cash consumption is expected to approach £200m (t320m) by the end of the year.
Jackson said: “Problems are mounting in the rest of Consignia’s business, with the opening up of the letters market to competition and industrial relations problems.
Consignia’s management won’t have time to sort Parcelforce’s problems out.
“The government does not need to be in the parcels business – or retailing for that matter. If Parcelforce wasn’t owned by Consignia, it would be a market leader today.” Consignia’s management has pledged to make savings of £1.2bn (t1.9bn) by April 2003, equal to 15% of its cost base.As part of the cost-cutting drive, Parcelforce is planning to make about a quarter of its workers self-employed owner-drivers.
Commercial director Chris Kalla-Bishop said the scheme looked “quite promising”.
Although it has been seen as a drastic solution, he said the company was “unique in using only employed drivers”.
Welcoming the owner-driver plan, Jackson described it as “only one of 20 things Parcelforce needs to do”.
There had been progress in developing track-and-trace technology, but the service needed “more innovative products, improved service levels and a reduction in the depot network, ” he said.
Posted: 03/12/2001
IFW
