City Link losses widen despite cutting ad-hoc subbies
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By Joanna Bourke
CITY LINK’S PLAN to cut its use of ad-hoc subbies is under way as the parcel irm looks to ight back from deepening losses.
The parcel division of Rentokil Initial recorded an operating loss of £10.7m in the three months to 31 March compared to a £4.4m loss in Q1 2010. Revenue dropped 13.4% to £72.3m.
City Link sales and marketing director Duncan Faithfull says a number of regular subcontractors have moved into the City Link livery and onto payroll as part of plans to reduce its reliance on ad-hoc subbies and return to proit.
City Link is increasing its fulltime employees to 75% of the workforce from 50%; reducing owner-drivers to 15% from 25%; and having a maximum of 10% of ad-hoc subbies. Faithfull says if “all goes to plan, by October we will be back in black”. However, he warns rival Yodel that the consolidation of its depots and employees is going to be troublesome.
City Link’s botched integration with Target Express in 2006, which was followed by years of losses, has taught it the value of getting a restructure complete before marketing a new merged business, he says.
As revealed by CM, Yodel – the rebranded name for the merged operations of the domestic B2B and B2C businesses of DHL Express (UK) and HDNL – is expecting to shut up to 60 of its 120 depots and a number of strategic hubs by the end of 2012 (CM 28 April).
Faithfull says: “Yodel has done the marketing and verbal side of the integration ahead of the physical integration, which I think could be troublesome. We have been through all of this before and it is very dificult. I think the market place is nervous about Yodel’s restructure.”