The efficiency of Crossrail
A former VP of Project Management at Bombardier Transportation discussed Crossrail – the new high-speed railway line that crosses London from Berkshire to Essex – explaining that although Bombardier is attempting to increase efficiency for the Crossrail and Lotrain projects, it could have a difficult time reducing costs, especially considering the core of the infrastructure for London Underground is fifty to sixty years old. The former VP suggested that instead, Bombardier should focus on finding low-cost suppliers “where the labour rate is far lower,” but that this could reduce the quality level of the final product if it isn’t adequately monitored. The specialist added that obtaining meaningful price concessions would be difficult, especially considering high start-up costs for new suppliers in the rail industry. Although “negotiations have taken place at the highest level to seek reductions within the supply chain,” the former VP hinted that the lack of new suppliers could continue being an issue for the company.
Competition for multinational courier services
A former CEO of E-Commerce at DHL Express explained the impact of Amazon’s entry into the shipping and logistics market on multinational delivery services such as FedEx, UPS and DHL. The specialist stated DHL, in particular, would be heavily impacted by the move as Amazon is DHL’s “biggest customer globally” in their crossborder business. The specialist also continued by discussing the three international courier companies’ viability in the Chinese market, stating that although all three companies “recognise that China is… hugely important,” the market is “dominated by… three players”: SF Holding, JD.com and Alibaba Group Holding’s Cainiao. The former CEO stated that China’s dominating carriers charge just USD 0.50 for next-day delivery, which, when compared to the USD 8-15 charge in the US, would make it “really hard to make money.” The former CEO continued by saying that FedEx, UPS and DHL were “so late to the game in comparison to… the other carriers… that any sort of organic entry would be almost impossible.”
Employee attrition across the industrials sector
The industrials sector has seen recent developments in employee turnover, with two specialists raising concerns for both less-than-truckload (LTL) carriers such as YRC Worldwide’s YRC Freight and chemical distributor Univar. A former VP of Pricing at Estes Express Lines said that one of the biggest challenges for the LTL segment is that companies are “having a hard time getting the younger people into the driver pool,” but the labour force is aging. Considering approximately 55 to 60 percent of an LTL carrier’s cost structure is labour, this will likely drive company prices, especially considering the specialist projected an “influx in business.” Likewise, following the acquisition of Nexeo Solutions by Univar – a leading global chemical distributor – a former SVP of Digital and Customer Experience at Univar explained that Nexeo Solutions could face “significant” risk of sales-people attrition as Nexeo Solutions employees face job insecurity. The former SVP discussed how time-consuming finding and training new talent would be, saying that it takes almost a year for employees to reach “full output.” The specialist added that a high employee turnover could also “put the customer relationship at risk” as it provides customers with an opportunity to “look at an alternative distributor while… trying to build a relationship with the new seller.”
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
For any enquiries, please contact sales@thirdbridge.com
