City Link Hauliers Collapse

30 December 2014 | W.E.U Admin | News

TAGS: Collapse, Hauliers

Workers in England, who constitute the bulk of the 2,727 City Link workforce, now face redundancy following the sudden collapse of the UK parcel delivery company.

Background and Online Sales Growth

Recent data from the Centre for Retail Research estimates a 15% growth in online sales for 2014, sales which inherently require reliable delivery services. Unlike larger retailers—where deliveries arrive in bulk and customers collect in-store—online transactions depend on multi-drop drivers to deliver individual orders at the promised dates.

Industry Oversubscription and Falling Margins

The courier/next day delivery sector has been “oversubscribed” for several years. While online sales have surged, intense competition has driven prices down and profit margins have suffered. To cut costs, many networks now rely on subcontract/self-employed drivers, who receive lower wages in line with slim margins.

Although recent reductions in fuel costs could improve profitability, these savings are too recent to have prevented City Link’s sudden failure. With stagnant wages and long-term low interest rates, the question remains: why did this major delivery firm collapse so abruptly?

Management Oversight and Union Involvement

Questions now arise about what senior management and the Trade Unions knew regarding the looming financial crisis. How did leadership allow the company to fall into such distress, and why were employees informed only on Christmas Eve and Christmas Day?

Looking Ahead

It is anticipated that the full facts of City Link’s collapse will emerge in due course, answering many lingering questions. In the meantime, we extend our support and best wishes to all former employees during this challenging period, hoping the new year brings renewed hope and prosperity.