City Link should start moving back into profit in the third quarter of this year and is on target to be a profitable £500m business within the next three years, according to Dave Smith who took over as managing director just before Christmas.
“City Link is a rough diamond, but it has some great people and underlying strengths and I believe it has every chance of success,” said Smith.
Before joining City Link, Smith held a number of senior positions at Royal Mail, notably managing director of Parcelforce where he transformed the business from a £200m a year loss-maker into a profitable enterprise.
Smith has had six months since leaving Parcelforce to plan out his strategy. The strategy is to focus on quality rather than shear scale. “I don’t want City Link to be the biggest player in the market place but I do want us to be seen as the delivery expert in the market.
“There are two types of customers emerging – those who want the cheapest price, and those who are prepared to pay for a quality solution,” he said. “I’d rather City Link was a £500 million business with the right customers than a £700-800 million business losing £1 million a week.”
Since arriving at City Link he has restructured the way the company is run and is restructuring the day-to-day operation of the company to improve the end to end quality of service.
Boosting delivery efficiency is a key goal – the aim is to raise the number of deliveries per driver per day from the current 74 to 80 in line with the best competitors. This involves changing the incentive structure to a per drop model from the current daily or weekly models.
Customer service is also high on the agenda. City Link is investing £5m in customer care with the aim of instilling a “right first time” culture across the whole organisation.
“As part of our commitment to improve the customer experience we are soon to introduce apprenticeships and NVQs in customer service for our drivers and other front line staff – a market-leading initiative.”
Looking ahead Smith wants City Link to be able to exploit the growth in internet shopping which he believes will fuel a demand for larger items and more individual, high end items to be delivered both to customers’ homes and to their places of work.
Smith has brought in a new team to see through the changes he has planned including finance director Rob Peto, who has 15 years’ experience of finance within the logistics/ express parcels sector having previously worked for Royal Mail / Parcelforce and Geopost (DPD UK).
The new sales and marketing director Tim Brown was previously chief executive of the industry regulator, PostComm, before which he was sales and marketing director both at DHL and at Parcelforce.
A new operations director, Adele Henderson joins in May. She was previously operations director at Parcelforce Worldwide.