City Link closure has major implications for consumers and business, warns ParcelHero MD Roger Sumner-Rivers

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Customers left stranded as 1 Million parcels stuck as City Link parcels closes its doors after 45 years.

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City Link closure will have a huge impact, says ParcelHero MD Roger Sumner-Rivers

There are serious concerns about how the carriers left will absorb 76 million additional parcels

The closure of City Link, the UK’s sixth largest courier, will lead to less competition and higher prices, warns Roger Sumner-Rivers, parcel delivery industry expert and founder of London based UK courier ParcelHero.

‘City Link’s closure has major implications for the UK parcel market,’ says Roger. Ernst & Young, the company’s administrators have failed to find a buyer for the company and over 2,700 people are expected to lose their jobs following the shock announcement. Roger says: ‘Depots will open again on Monday for customers to collect the estimated 1 million parcels stuck in its network, no further deliveries will be made.As the BBC reported on December 25th Citylink’s well documented problems stemmed from its merger with Target Express in 2007, which left it with a significant cost base which Rentokil Initial, its owners up to 2013, and Better Capital the private equity company that acquired it in 2013 for £1, worked hard to address, but eventually ran out of time to solve.’

Large retailers like John Lewis and Amazon have to now quickly adjust their operations to divert shipments to other suppliers. However it is SMEs - who will often not have established relationships with multiple couriers, and rely on Citylink for all their deliveries - that are in the biggest quandary. They will have to find a new supplier and set up account facilities before 2nd January or face not being able to deliver orders to their customers.

Roger says: ‘SME’s who depend on City Link have a major headache that threatens serious disruption which could seriously affect their businesses. We expect to see a huge increase in demand for our services as businesses turn to online couriers such as ParcelHero; as our customers do not even need to register to use us.’

UK couriers have been working hard recently to increase productivity and profits by cutting capacity (For example Yodel has halved the number of depots they operate since 2010) this has led to capacity constraints, such as Yodel’s announcement in Dec 2014 that it was suspending collections as it could not cope with the volumes it was receiving.

As recorded in Post & Parcel (September 8th, 2014), this September IMRG said they expect UK carrier-delivered orders to increase 19% year on year to 895m parcels and UK Mail announced volumes up 16% to March 2014. Carriers are responding to this increased demand with new investment, DPD is spending £175m over the next five years to expand delivery capacity, and Parcelforce £75m over four years. However, these investments will take time to come on stream. For example DPD’s plans for a new £100 hub in the East Midlands got the green light in July 2013, but it’s not to go open until Sept 2015.

Roger warns: 'As a result, there are now serious concerns as to how the carriers left in the market are going to be able to absorb the estimated 76 million additional parcels City Link delivered each year, and how quickly they will be able to sign up customers and set them up to ship. The companies will all require immediate service, which will put a huge burden on every carrier’s infrastructure, from the sales department right through the network to the delivery couriers at the other end.'

For more information see http://www.parcelhero.com

Roger Sumner-Rivers is available for comment now on 07779993777

For more information please contact David Jinks, Head of PR, on david(at)parcelhero(dot)com or by phone on 0208 7584962 (07772 055748 out of office hours)

Leading international online courier ParcelHero® strategically partners with the world's leading, logistics companies, including DHL, UPS and DPD to provide a flexible, cost-effective range of parcel delivery services to over 220 countries worldwide. Huge bulk purchasing power allows ParcelHero® to offer highly competitive pricing with no compromise in service quality

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David Jinks
ParcelHero
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