CTT, postal service company, hires US company specialized in solving crises in the sector

The Portuguese post office services, CTT, have hired a multinational consulting company specialized in turning around crises in the mailing sector. Now, they’re getting ready to put into action a plan to concentrate their distribution offices into main warehouses or platforms, all over the country, according to ECO’s sources.

When contacted by our reporters, the company did not wish to give any details on the abovementioned plan, but it has already publicly announced the investment of €40m in modernizing their network.

The consulting company in charge of the optimizations is A.T. Kearney which, besides focusing on many other areas of expertise, has helped already many companies in the postal services sector and packaging business “to deal with the emerging threats faced by the most traditional businesses”, such as “the erosion of the core volume due to e-mail and the drop in private demand” and “increasing competition from new specialized operators”.

“We immerse ourselves in your company to gain deep insight into your operational and strategic potential, working with you to co-create solutions specifically for you”, one can read on A.T. Kearney’s website. Also, “A.T. Kearney helps your company transform from within, continually accelerating your momentum to stay ahead of marketplace disruption. Momentum demands energy and discipline. Constantly pushing the envelope. Stretching the imagination every day, rather than every few years. The reward? Market-leading performance. And a practical alternative to gut-wrenching strategic transformations.”

CTT saw its profits go down more than 50% last year, which took Francisco Lacerda, the CEO, to announce a restructuring plan which encompassed the adjustment of the network and also laying off some employees.

Now, CTT has understood that its main income growth propeller is the packaging business, and CTT Bank, and as such it is investing in optimizing these two services: both by creating an online retail business with Sonae, and by investing in purchasing the credit institution 321 Crédito.

After the restructuring plan was presented in December last year, CTT’s distribution network was already expected to change, and the company had already looked for options in the real estate market, targeting big warehouses, with specific characteristics such as distribution platforms.

There is no official statement from the company, but CTT’s employees are talking about a restructuring process which will result in major distribution centres, which in turn results from the fusion of small and big distribution centres.

Contacted by ECO, the company said that the details of the official plan would only be “revealed when the time is right”. But some minutes after we published the article, CTT announced that they had €40m to invest in modernizing their postal services through a plan which will take its course over the next two years.

“The investment will be applied in new machines to separate mail, modernizing the network, improving conditions in distribution centres, and investing in work equipment that is adequate to a new traffic volume profile, as a response to the drop in the mailing volume, and the growth in express deliveries, and packages deliveries”, the company announced, in detail.

According to December’s plan, CTT is expecting to improve its network’s operational efficiency, generating with these changes, savings of up to €25m.

In two weeks time, CTT will present the company’s quarterly results, accounting for the first 9 months of the year. Between January and June, there was a decrease in profits of about 65%, or €6.3m.