Parcel firms fight to deliver results

Newsroom 02/03/2009 | 16:20

Consumer becomes king
Some B2B services-orientated parcel delivery firms are trying to adapt their business strategy to the new market demands. Ciprian Pulpa, executive manager at Fastius Curier, a regional courier company set up in 2002, says that the current business strategy – of all industries, not only delivery operators – will be to consolidate the custom-targeted approach. The management intends to pursue a new business-to-consumer (B2C) segment and look closer at its books. The firm has two B2B divisions offering fast courier, express mail and package delivery services, but its same day-delivery “Prioritar” division has been vulnerable in Q1 2009, due to the greater cost and difficulties involved in providing this type of delivery service.
Besides Prioritar, Fastius Curier delivers round the clock in Bucharest and Ilfov with its MultiMesager corporate division. “In 2008, the 24-hour delivery service posted a significant increase. But evidence suggests the segment of rapid delivery – within a few hours – will be more successful, especially in the corporate segment,” Pulpa told BR. To achieve this, the company might invest in enlarging its existing fleet, if it has the business to justify it. As a general trend, Fastius Curier estimates a more moderate growth in the B2B segment in 2009, and foresees satisfying figures coming from B2C.
After 11 years of operating in Romania, Fan Courier is more optimistic, and hopes to see an improvement in the business environment in H2 2009. Adrian Mihai, development manager at the firm, told BR that the company had estimated a 10 percent turnover growth in early 2009 but is now hoping to keep it at the same level as last year. In early 2009, the company enlarged its customer base by around 8 percent, from 11,000 at end-2008. It has assigned EUR 11 million of investment for this year, mostly from its own funds.
“The company's ongoing investments will not be stopped because of the general crisis. Previously, we had considered taking out some bank loans to sustain the developments but this is no longer feasible,” Mihai told BR. In a business environment when all companies are cutting HR or training costs, Fan Courier has increased this type of investment by 20 percent in 2009, from EUR 300,000 last year. The firm has also signed a partnership, joining a European road transportation carrier network, thus moving into international-based delivery operations.
The delivery market is sensitive to the overall business climate. Fan Courier's core business is 80 percent-based on B2B, with the rest targeting consumer-orientated courier operations. “In a paradox, the very fields which registered record growths in 2007 and H1 2008, such as financing, automotive and construction, have posted dramatic decreases lately. The largest volumes came from these segments in H1 2008 but this year is unpredictable and all the estimates made at the beginning of the year are now irrelevant,” said Mihai. Fan Courier had a turnover of EUR 40 million in 2008, a 40 percent increase on 2007. It expects a similar sum this year.

Rebranding and expanding
Rebranded as DPD as of 2008, Pegasus has been controlled since March 2008 by Armadillo GMBH, a company formed of GeoPost, the French postal company's delivery division, and Turkish group Yurtici Kargo. Estimates put the deal at between EUR 6 million and EUR 9 million. For Pegasus, set up in 1997 and with a turnover of EUR 4.2 million in 2008, this year will bring consolidated road transportation delivery services due to the lower costs compared to air carriers, according to James Gray-Cheape, CEO at DPD (Pegasus).
For this year, company representatives are focusing on the ongoing rebranding of Pegasus and the development of new delivery services to include operational systems and the IT segment too. The firm believes the B2B segment will shrink in 2009, as a result of companies' falling sales and cost-cutting measures. It says the future could lie online, following the European trend, and has high hopes for B2C. “We estimate a 20-30 percent increase in the B2C segment in 2009, following the increasing trend of online commerce in Romania,” said Sorin Ghinescu, the firm's marketing & CR manager. This year, Pegasus-DPD expects y/y turnover growth of 40 percent, from EUR 6.4 million in 2008.

UPS considers it tough
“We have weathered many storms,” says Michael Mavropoulos, country manager of UPS Romania, which has been on the market for more than 100 years. “Should there be no economic recovery, as most experts are predicting, 2009 will certainly be one of the most difficult in UPS's history.” But the firm will continue to make strategic investments, Mavropoulos told BR.
The parcel company's is relying on efficient express and logistical services to businesses to see it through 2009. The crisis has hit UPS's fields of operation: US small package, international small package and supply chain & freight. It is company policy not to predict future results. However, according to its financial reporting so far, the group posted USD 51.5 billion of consolidated overall revenue in 2008, 3.6 percent more than in the previous fiscal year. UPS's total operating profit globally in 2008 was USD 5.38 billion, compared with USD 578 million in operating profit in 2007. “It is important to note that our 2007 operating profit numbers were affected by a USD 6.1 billion (one-time) payment to withdraw 45,000 teamster employees in the US from a multi-employer pension plan,” adds Mavropoulos.

By Magda Purice

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