FRANCHISING, OUTSOURCING COULD PLAY LARGER ROLE IN EXPRESS SERVICES

FRANCHISING, OUTSOURCING COULD PLAY LARGER ROLE IN EXPRESS SERVICES    A former postal executive said the day-definite or “economy” international express market offers potential growth for franchising and outsourcing in the express services industry.
   International traffic is likely to be switched to more economically priced options, rather than overnight, time-definite deliveries, said Ulf Dahlsten, former president and chief executive officer of Sweden Post. This trend could make integrators vulnerable to competition because of their high costs, he added.
   “From a purely financial point of view, there ought to be an opportunity in the economy express market, or whatever it is called, for a franchise concept which could be very competitive with the existing integrators,” said Dahlsten, speaking at the World Mail & Express Europe Conference in Amsterdam.
   Dahlsten said there are still independent local and regional parcel companies, along with independent postal administrations, who could be participants.
   Another speaker at the conference, Simon Clayton, vice chairman and chief financial officer of DHL, said the express industry should investigate the potential for franchising some operations. Such an action has limits, however, he said.
   “The franchising idea is a very sound one in theory,” Clayton said. There are areas of activity where carriers can partner, but global dynamics of the business mean a pure franchise philosophy is difficult to apply.
   DHL has started moving back from working with partners on a “quasi-franchise” basis because it needed more control on the ground, Clayton said. In certain Asian countries, for example, the companies DHL had been working with lacked the investment capacity to keep up with the integrator’s growing business demands, he said.