city link running at a loss

http://www.guardian.co.uk/business/2012/mar/02/rentokil-courier-loss-city-link
i found this on the cx forum & have decided to share it on here for all to take a look at & read especially those who are subbing to city link.

That is a very interesting piece .......but will it be good or bad for us?

well in a way it'll be bad for the subbies as they'll get less out of em as they'll expect more out of them for less, i suppose in real terms it'll effect the guys who are subbing to em doing multi drop work as they'll be expected to deliver more volume for less £££'s

Don't extend too much credit to City Link if you're subbing for them!

Arn't we looking at this the wrong way? If big guys like Citylink etc are struggling to make profits at their current rates surely the most logical thing to do is increase them? If the big names increase their prices O/Ds can either increase our prices along with them or keep our prices the same and become a lot more attractive to end customer. Let's face it, most customers would prefer to use same day it's just not economically viable for them. If the big carriers up their prices it just might help us all.

This one is a question of how you play it.

I would imagine that their theory is to operate at a loss "initially" in order to attract "contracts" (not just customers).

During this period they would still pay the subbie the agreed rate per mile. So the subbie shouldn't lose out.

Once they have enough contracts they would then increase the price gradually to bring them a profit.

In effect, standard practice to attempt to shoehorn themselves into an area of the market where they previously have had no piece of it.

Hard competition for the rest of us as a company so large does have the funds to do this whilst the independant courier or small-medium courier company does not, however I don't think that any subbie working for them is in any danger of non-payment.

As with most large "general delivery"/"Multi Drop" services such as these, they will probably not be able to maintain their presence in the same day market and will eventually give it up as a bad joke.

To us, it is essentially a temporary drop in available work from all the companies who figure "Whoa, yeah! City Link are now doing same day deliveries cheap, and they are a big established company. Let's go with it!", they will all be back when they get let down just the same as happens with Hermes, Yodel etc.

However, if you register with them and use them for either backloads or for doubling up on a load in the short term you shouldn't have any problems getting your money from them.

Scott Reid.

There is a thread currently running on Courier Exchange.

Seems that Shitty Link are in serious trouble.  I am no expert but I have been into a few of their depots recently and it is always pain and suffering. Their staff always look so f _ _ ck_ _ _  cheezed off.

Word is that they are laying off drivers, cutting the remaining driver rates and increasing their customer rates, thus making them less competitive.

As my old controller used to say, "happy days".