City Link ahead of schedule on recovery plan

[TrueBlueTerrier]

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Express parcels carrier City Link is "a year to 18 months" ahead of its five-year recovery plan and is on track to return to profit in 2010, according to MD Stuart Godman.

The company has walked away from unprofitable business and next year will turn the losses of 2008 and 2009 following the takeover of Target Express, into a profit.

"We are forecasting a £36m improvement in bottom line results on £40m less revenue," says Godman. "We have exited a number of unprofitable contracts in the past 12 to 18 months. When you get customers asking for a 30% or 40% rate reduction, you would be mad to roll over and accept that."

According to Godman, some UK parcels companies are cutting rates to suicidal levels.

"Rates are going backwards and are getting to levels that are unsustainable," he adds. "We are a premium carrier and are not interested in buying volume."

City Link has recently re-signed three of its top 10 customers on long-term deals: consumer electronics distributor Midwich; Automotive Distributors; and multinational conglomerate 3M.

"Our customers want a sustainable carrier and sustainability only comes when you can charge the right rate for the job," says Godman.

"There are carriers out there in the same position we were in last year. We are on the upward curve now and are ensuring that our customers appreciate that to get good service they have to pay the right rate so we can keep investing in the business," he adds.

City Link currently operates two hubs in the Midlands, one in the North-West, and one in the South-East, and plans to open two more regional hubs in the near future.

[DGP1]

Does part of their recovery plan involve getting RM to do their work for them?