La Poste, Parceline & Interlink
It is a year-on since La Poste bought Parceline and Interlink from the Australian-owner Mayne Nickless in a deal which Colin Millbanks, a chief operating officer, describes as a marriage made in heaven.
Mayne Nickless was renamed GeoPost, and Millbanks and Kay Philips were both made ceos. Millbanks claims that had the two parcel distribution firms not been bought by such a large postal authority they would have been unable to secure their position as mega players in the parcel market.
Millbanks says: “You can already see that the postal authorities of Germany, France, and Britain have emerged as the power players in Europe.
“Having beaten off the original early ‘90s US integrator invasion here, from UPS and FedEx, the postal authorities with their scale, their financial performance, and the benefit of their postal systems were never going to go away. They were never going to surrender Europe.”
La Poste first looked to buy TNT and Securicor, but they were reluctant to sell. “So La Poste turned to the best available, and maybe the best anyway, Mayne Nickless,” says Millbanks. The acquisition was completed on December 20 last year.
Millbanks adds: “Despite paying £195m for Mayne Nickless, La Poste realised that from day one they could get a better return for their money through us than on the money market.” The intention behind the acquisition was to expand La Poste’s international element as distinct from its domestic; stimulating demand for its intra European and global services.
Millbanks says: “The French have recognised that many of our systems at GeoPost are actually ahead of theirs. They are importing a lot of our expertise. The expectation on us was therefore to grow and to gain a sufficient position.
“There are also competencies to be learnt from our new parent — especially in France, such as same-day delivery.”
There is now between 12% and 14% annual growth within Parceline and it has grown quicker in the past 12 months than was previously expected.
Mifibanks says: “For us, we
want growth but we want profitability. We work very hard at finding the areas of the market where we can win. We like to take on people we can beat — you can’t beat someone offering to deliver for a pound per parcel.
“We are aware that there are cheaper carriers around, but when you choose a carrier, the cost of that decision isn’t the carriers invoice — the consequences are far wider reaching. It can impact on your future revenue stream, your customer service costs, etc.
“The UK parcel market is a commodity-based marketplace where price is the determinate. Parcelforce and Securicor have got most of it, but there is a slight question mark because they don’t make money. The ‘reason
they don’t make money is they create the commodity market by virtue of what they offer but quite clearly they don’t charge enough.”
Last year the Parceline and Interlink group bought a carpet warehouse on their combined site and demolished it to make room for the construction of a new hub for Interlink. The new hub was opened in January 2001 at a cost of £15m giving an additional capacity of 20,000 parcels.
This capacity will be increased further with the installation of a fifth line at the Parceline hub, which is due for completion in January 2002. This will give GeoPost a daily 40,000-parcel capacity.
Millbanks says: “At the moment Parceline is constrained by its size, currently operating at full capacity.
“Parceline cannot do justice to its existing customers if its system is swamped. Interlink has had its restraints removed, the hub has been expanded and as a result, most of GeoPost’s sales activity today is now geared to Interlink.”
Through Interlink, GeoPost is now less than 15 miles away from 99% of the UK population. Kay Philips, GeoPost ceo, says: “Interlink is like a sleeping giant — its biggest growth will be in 2001/ 02.”
Mifibanks adds: “We long run cost everything — we don’t take marginal decisions about anything — and we are not afrai
