Parcelforce to bear brunt of cost cuts at Consignia

CONSIGNIA, the state-owned UK post office losing GBP1.5m ($2.13m) a day, is shedding 15,000 jobs over three years.

But Parcelforce Worldwide, Consignia’s lossmaking parcel delivery arm, will bear the brunt of a group-wide cost-cutting package that will save GBP1.2bn by 2005.

The cutbacks reflect the gradual loss of Consignia’s letter mail monopoly, while Parcelforce _x0014_ carrying 120m packages a year _x0014_ competes head-on with the private sector.

Parcelforce, a GBP450m turnover business losing GBP15m a month and with a decade of red ink, will axe 6,700 of its 11,700 staff and close half its 101 UK depots.

It will also withdraw from the three-day parcel deliveries _x0014_ the so-called granny post _x0014_ and focus on the premium business to business, next day and two-day markets.

The cutbacks at Parcelforce will save GBP370m over the next three years, said Consignia.

Last December, Parcelforce confirmed that it was in crisis talks with its unions after taking a GBP201m hit in exceptional half year losses, following a GBP50m writedown 18 months before.

Around 900 Parcelforce staff will be given the chance to become owner-drivers, a growing trend in the private sector.

As part of a GBP90m cost-cutting review of its entire letter and parcels transport network, Consignia is to end the overnight mail train _x0013_ currently operated by rail freight company EWS.

Instead, Consignia will carry greater volumes of letters and mail during the day on fewer trains.

Consignia chairman Allan Leighton: “We need to renew our operations and halt the financial losses which put key services at risk. Both measures announced today are far reaching _x0013_ but they are just the start, not the end.”

Mr Leighton, added: “Parcelforce Worldwide has been out of step with the marketplace and its business model does not work.

“In contrast we see real potential in the express marketplace where we&’ve grown our next-day revenue by 5.5% in the past 18 months.”