Amtrak goes into administration again

I know there are a few same day courier companies who’ve been subcontracting to Amtrak who will have had their fingers burnt, yet again, on this one. A bit of homework could probably have avoided most serious losses.

Yes, Amtrak Express Parcels has gone bump for the second time in 20 months. This time it’s Netfold Ltd, the ‘white knight’ that bought the business from the administrators of Amtrak Express Parcels Limited in January 2007, that’s been put into administration.

This one caught me by surprise a bit – I predicted last summer that one of the parcel networks had less than a year to survive, but not Amtrak. As it turns out the two companies that I’d earmarked as possible contenders for the wooden spoon have both reported increasing turnover and profits, the one that I predicted would do great things this year seems to be in terminal decline and now Amtrak, acquired on presumably very good terms from the administrators, has gone into administration.

Alarm bells first started to ring in April when I noticed that Netfold Ltd had failed to file its accounts by the due date. It may seem slightly naïve of me but I’ve always held the belief that a company that doesn’t file its accounts by the due date is either suffering from incompetent management, is unable to pay their accountants’ bill or they have something to hide. While incompetent management is only to be expected from many start-up businesses in their first year of trading, it’s hardly excusable when the business in question has a claimed £80m turnover and is run by a team of experienced businessmen.

One of the company’s administrators from Ernst & Young commented “Amtrak has found trading in the current economic climate challenging. It is a business led by consumer demand and as consumer spending power has weakened Amtrak’s business has suffered.”

Possibly they’re right – Amtrak have been keen to present themselves as a B2C carrier rather than B2B, possibly the slowdown in consumer spending is hitting them worse than other carriers who concentrate on B2B deliveries. If that was the case would it really have been so hard to realign their offering? They already carried out a significant amount of B2B work and they certainly had the infrastructure in place to be as successful in the B2B marketplace as any other carrier. Business Post, Tuffnells and TNT Express, to name a few, have all managed to increase both their turnover and their operating profits in the same economic climate that has apparently caused Amtrak’s problems.

In fact, apart from Amtrak, the only major UK carrier that seems to be experiencing any serious problems at the moment is City Link, and in their case, as I suspect might be the case with Amtrak, the problems are entirely due to bad management. In City Link’s case they made the mistakes of buying back the franchises of depot’s that have formerly been micromanaged by the franchise owners and then tried to manage the depots remotely while at the same time trying to integrate two different networks and divest themselves of accounts that they perceived to be unprofitable.

This level of change has resulted in the merged City Link and Target turning round from being well run and profitable, to losing £29m in the last 6 months.

Maybe it’s ‘change’ that’s the issue, maybe it is just bad management, I don’t know. It seems to me that under normal circumstances all the major parcel networks have developed into major players by learning how to turn a profit using their own particular operating methods; they attract customers who are happy to work within the constraints of those operating methods. When new owners come along, or just new management structures, both the employees and the customers have to adapt to the new owners requirements, methods and management. Some companies (TNT is the perfect example) seem to manage these changes much better than others, maybe realising that the co-operation of all their employees and suppliers, as well as good communication with their customers is the key to success.

Anyway, back to Amtrak and Netfold Ltd, reading between the lines it seems that Business Post may have made a ‘goodwill only’ purchase from the administrators and will be keen to establish business relationships with Amtrak’s former customers. Having a vague idea of the operating methods and capabilities of both companies I can see that many ex-Amtrak customers will feel very comfortable with a changeover to Business Post.

Posted under Courier Business

Posted by Alec at 4:29 pm, August 26, 2008

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3 Comments so far

  1. Alec added on  August 27th, 2008 at 20:14

    It’s becoming clear that there will probably be no last minute rescue of the Amtrak business.

    According to various reports Business Post have acquired the personal details of Amtrak customers and are approaching them offering their services, while at the same time delivering the parcels that were left in Amtrak’s system on Friday evening.

    Meanwhile it’s apparently been announced that all the staff at Amtrak’s head office and main hub at Aldridge will be made redundant.

    Parcel firms swift to target Amtrak’s customer base Birmingham Post

    Amtrak’s last post? Road Transport

    Anger as firm sheds 230 jobs Express and Star

  2. Alec added on  August 28th, 2008 at 15:15

    According to this report by The Birmingham Post the administrators Ernst & Young have now confirmed that they have been unable to find a buyer for the business and it is now in the process of being wound up.

    The report quotes an Ernst & Young spokesman as saying: “The business will be wound up by the end of the week.

    “So far 50 staff at the Aldridge site have been made redundant but it is likely that all employees will be made redundant by the end of the week.”

  3. Alec added on  August 29th, 2008 at 16:21

    According to this report Business Post haven’t acquired the goodwill or the customer base of the company, although that doesn’t explain the reports that they seem to have personal details of at least one of Amtrak’s ex-customers.

    “A spokeswoman for Business Post confirmed it had stepped in to deliver the consignments still in Amtrak’s warehouse.

    “There was a large amount, and I know we have been working around the clock,” she said. “But we haven’t taken over the customer base or anything like that.” “

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