TOMORROW'S WORLDTHE NEXT-DAY BOOM
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Securicor Omega Express managing director, Ross Benson warns that too many parcels companies are recklessly slashing their prices in a bid to stay in the game: "I don't think they can sustain that, and I wouldn't be surprised if we saw at least one firm drop out of the market this year," he says. "Omega Express is still finding it a profitable business to be in, but margins are under extreme pressure."
But at least the market is expanding, argues ANC managing director Andrew Callaghan. "We're now seeing growth of around 56%, and I believe that this will continue over the next 12 months," he says.
"I think the market will expand, though not dramatically so," says City Link director David Kennard. "Growth will be slow this year, with a lot depending on how fast we lift out of recession," agrees Amtrak marketing manager, Roger Gamlin.
Callaghan reckons that the future lies with wellfunded players willing to invest in information technology. After a leveraged buy-out last May from then-parent Securum AB involving Montagu Private Equity, ANC has embarked on a £10m investment programme; much of this cash has been sunk into track-andtrace equipment.
"Customers now expect more information about the movement of their goods, about proof of delivery, and want an absolute guarantee that items will arrive on time and undamaged," says Callaghan. "We'll also be seeing a burst of strategic alliances being set up between UK express parcel companies and their counterparts on the Continent as British businesses extend their boundaries into Europe."
Next-day delivery now dominates the industry, says Benson. "Demand for two to three-day services has fallen by 27% since 1991, while overnight nextday traffic has risen by 33%," he points out.
For every player who drops out, another seems to pop up. Two years ago, for example, a group of 38 couriers set up the Alternative Parcel Company. "Around a million parcels are sent through the APC system each year," says Daryl Burton, managing director of Slough-based Scarlet Couriers, one of the firms involved, "and 30% growth is anticipated during 1996."