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Will peak 2015 see another City Link style collapse?


This week kicked off for me with a planning session, along with eDelivery Magazine editor Emma Herrod, and editor-in-chief Ian Jindal.
Despite the current peak being so close you can almost taste the anticipation surrounding it, it didn’t figure heavily as a topic of conversation across the table at lunchtime.

One question I was asked though was whether I was expecting peak 2015 to involve the collapse of a carrier, evoking memories of the demise of City Link, which was put into administration on Christmas Eve, hitting the headlines on Christmas Day.

The short answer to which was no, I don’t think that particular chapter of history is going to repeat itself in the next few weeks.

It’s not a ridiculous question to ask by any means. A lot of opinions were voiced after City Link went to the wall as to the likley causes and explanations. It was too inflexible, some said. Others that it hadn’t made the right investments in automation and service delivery, or that it hadn’t made them in time. A number of people said it had put too much emphasis on competing on price, and ended up eroding its margins to the point of no return – retailers were getting their value-added services elsewhere and putting the higher volume, lower margin business into City Link. Some pointed an accusatory finger at City Link’s owners, saying they should have continued bankrolling the firm a little longer to allow it to turn the corner.

All of which really just underlines, for me, the poignancy of something Tim Robinson of Doddle said to me a few weeks ago: “It must be really scary being a parcel carrier these days. In businesses like that you spend 10 months of the year paying down your fixed costs, covering your costs and making sure the business is solvent, and you make all the money in the last two months of the year; that’s how it’s been, historically.”

It’s my view that the set of circumstances behind the City Link collapse were close to unique. Whether those stars will be in alignment once again this peak is – and again, this is my personal view – unlikely.

You, however, may think differently. In which case, it’d be good to hear from you. You can leave a comment below, or email me directly.

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