'They have gone for short-term gain and crippled themselves'
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gfew parcel carriers are acting A
irresponsibly by being unprepared to meet peaks in traffic volumes, such as in the hectic run up to Christmas. This is due to a failure to plan volume capacity. I know of carriers who had full trailers idle at their depots with absolutely no hope of coping wit, the situation. It is the result of sheer greed and a lack of responsibility that they find themselves in a position which has undoubtedly created a poor image for the industry. Their systems are swamped and they cannot handle the traffic. They will find an enormous exodus of their customers now Christmas is over.They have gone for shortterm gain and have crippled themselves and, in some cases, their customers.
And they do not appear to have a clue how to sort themselves out. The market has peaked in terms of volume and has seen a surge of about 15%—the carriers in trouble have not planned for it.
I do not see the market becoming any less competitive in the coming year. Those carriers that do not have a clear view of their positioning and a strategy in the marketplace are going to continue to struggle. Indeed, their exit from the market may be accelerated as a result of the capability of other players to grow and steal their business.
This is borne out by some franchise operators which claim they are handling 30% more traffic than they were this time last year. When you operate on a franchise basis, it is much easier to bolt on additional resources at short notice.
Most franchises have enjoyed doubledigit compound growth year in, year out. Carriers trapped in the middle ground, sandwiched between the international players and the franchisors, are bound to continue suffering unless they have a clear strategy. As long as there is enlargement in the market size, carriers in the middle ground like Lynx will keep their systems relatively full. Once the market begins to level out again, those carriers with less efficient and, in some cases, anachronistic modes of operation are going to struggle and some will go out of the market.
The polarisation in the marketplace is becoming more pronounced. Imperatives for future survival include European distribution and a balanced service portfolio. Success will also be determined by a creative approach to the resourcing requirements in the business and a fundamental business philosophy and culture that encourages participation and commitment from staff.
Unhelpfully, the industry price war continues. I know of carriers who have adopted the attitude that "we will win business" and say to prospective customers: 'Whatever you're being charged we will cut the rate by Five per cent." Generally, rates have been falling for every service except same-day services. But if the current upturn in economic activity is maintained, prices will level off and will not resume their downward trend until more capacity is put on and carriers start to become more aggressive again. The challenge to the parcels industry is to improve levels of efficiency and that all boils down to resourcing. The customer is as much under the gun as we are. The consumer is saying that we don't have an expectation that your product is going to cost us any more in the marketplace than it did a year ago. The industry needs to be more responsible if it is to go forward successfully.