UK Mail seeks efficient way to put round pegs in square holes

[TrueBlueTerrier]

http://www.ft.com/cms/s/0/beba7f20-fbef ... z459EAPLVI" onclick="window.open(this.href);return false;

When it comes to excuses, the public sector cannot compete with privatised businesses

Nationalised industries are enjoying a reappraisal of late. Fears for the future of Tata’s UK metals factories have inspired paeans to state ownership not heard since XTC’s 1979 (irony laden) hit Making Plans for Nigel: “He has his future in a British Steel, Nigel’s whole future is as good as sealed.” Recent television documentaries have challenged 1970s critiques of British Rail, and its very British catering. Newspaper letter writers hark back to the decades when Royal Mail delivered a second post before the first arrives today.
But there remains one area where the public sector just cannot compete with privatised businesses: excuses.

FirstFT is our new essential daily email briefing of the best stories from across the web
Take the railways. In the 1970s, frustrated sitcom commuter Reginald Perrin was perpetually 11 minutes late for mundane reasons: “signal failure at Vauxhall”, “staff shortages at Clapham Junction.” It was not until 2009, post-privatisation, that 100,000 people were delayed for hours by “the wrong type of snow”. And it took the Go-Ahead and Keolis-owned Southeastern Trains to raise the bar this year, with delays because of “the wrong kind of sunlight”.

So, when postal group UK Mail blames sluggish performance on “out-of-gauge freight in our network”, there is a temptation to read this as “the wrong size of parcel” — not least because analysts say that was exactly the cause of the problem.
Having being forced to move its parcel base to Coventry (funnily enough by plans for the “high speed” HS2 rail link), the company did away with manual parcel sorting in favour of a brand new automated system. This, according to one industry watcher, worked perfectly when tested with “50,000 boxes all perfectly square” — but less well with packages containing “curtain rails and car bumpers”.
Hence an 81 per cent fall in pre-tax profit before exceptionals in the six months to September 30, and the expedited dispatch of a chief executive.

However, UK Mail’s year-end update has delivered news of a mere 1 per cent fall in revenues (due mainly to mail access charges), no further hits to profit, and signs that “our new automated hub continues to operate well and to achieve good throughput”. It seems the curtain rails are no longer quite so out of gauge.

By the company’s own admission, the automated hub must now make the more difficult transition from working effectively to working efficiently. It has a lot of ground to make up. Even if better sorting can take parcel margins from 6.5 per cent to 9.4 per cent by 2018, as Investec forecasts, that still only lifts pre-tax profit to £18.8m in full-year 2018 — four years after it stood at £21.9m.
Still, UK Mail seems to realise where some of best ideas originate. It has just hired Peter Fuller as operations director, a logistics expert who spent 19 years at Royal Mail’s Parcelforce, and recently achieved 16 per cent quarterly volume growth. Even if it takes him a while to get UK Mail moving, he should bring good excuses. After all, it was British Rail, in 1991, that first gave the world “the wrong type of snow”.