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By Jennigay Coetzer – first published in Business Day newspaper, 28 January 2011

Many of South African courier services companies, which number about 2000, are struggling in a shrinking market where the value of parcel deliveries has dropped considerably during the downturn. This has resulted in fierce price cutting to win what business there is, says Stephen Gleisner, MD of The Courier Guy.

He says this is the time of the year when many of those that have barely scraped by through the peak period, go out of business. A number of larger courier companies closed down last year, and this in turn put some of the smaller operators out of business. “This was a major shock to the industry,” says Gleisner.

Some courier companies are diversifying into road freight and warehousing, although they are not necessarily succeeding, says Gleisner. He says The Courier Guy’s strategy is to stick to its core business and its franchise model has proved successful during the recent tough economic climate, without the need to diversify.

“It has enabled us to adapt to the changing dynamics of the market.” As a result the company achieved a 15% growth in 2010, despite the downturn, and is positive about the coming year.

Gleisner says many South African players are following international trends by automating their delivery processes and moving to a paperless environment. “We have invested R1.5 million in handheld devices and all of our 80 drivers now have them.”

This enables drivers to stick barcodes on parcels and scan them with the devices, and the information is uploaded to a central system, allowing the company and its customers to track parcels through the delivery process.

Recipients then sign for their parcels on the drivers’ handheld devices with a stylus to confirm receipt, and the information is uploaded into the system, says Gleisner. “The price of these devices has dropped from R40,000 to under R18,000 each over the past three years, making them more affordable.”

He says this has created the opportunity to be more proactive, results in less errors and service failures, and saves the cost of having an office full of people scanning waybills “We expect to achieve a return on investment within two years.”

The Courier Guy is also investing in IT systems that allow customers to track expenditure on their account and obtain a quotation online, says Gleisner. “Those that do not automate will lose their customers to those that do.”

The prolonged recession is driving courier companies to focus on retaining and expanding their customer base and becoming more flexible, for example in terms of the time frame in which they are prepared to collect and deliver, and exceeding service level expectations, says Gleisner. “This has required an attitude shift.”

Jennigay Coetzer is a freelance business and technology journalist with 25 years experience, and she writes regularly for Business Day. She also runs media training and writing skills workshops, and is the author of A Perfect Press Release – or Not?, a guide to writing and distributing effective press releases, an electronic version of which can be downloaded free from her website: www.jennigay.co.za.

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