DHL Supply Chain has been replaced by Knights of Old as Eurocell’s logistics partner after failing to deliver a promised £1.3m of annual cost savings.
UPVC manufacturing and distribution business Eurocell has turned to Knights of Old, offering them a deal that will see the Kettering-based firm take over the transport operations from DHL Supply Chain in September.
The move comes after the 3PL failed to deliver projected annual cost savings of £1.3m from the first year of its five-year contract, which was awarded at the end of 2014.
Eurocell attributed the cost-savings shortfall to “assumptions made at the inception of the contract over the ability to reduce historic warehouse labour costs, which were too optimistic”, in its 2016 annual report.
As a result Eurocell took the warehouse operations back in-house in January 2017 and began working with DHL to “deliver more efficient services and improve end to end customer focus and supply chain support”.
Read more
- Jobs under threat as KFC cuts ties with DHL Supply ChainJobs under threat as KFC cuts ties with DHL Supply Chain
- Suttons Tankers buys DHL Supply Chain’s bulk chemical business
- DHL Supply Chain opens new shared-user RDC in Avonmouth
It is understood that Eurocell will continue to run the warehouse operation itself.
The win follows Knights of Old’s successful bid to become Irish parcel carrier CAE Delivers’ long-distance partner, which was revealed in January. Both contracts will add momentum to the haulier’s recovery from a challenging period that saw it record an operating loss of £2.7m in its most recent trading period, the year to 31 May 2017.
Knights of Old declined to comment on the deal.
A spokesman for DHL said: “On conclusion of our existing contract, on 29th August 2019 DHL will cease to manage Eurocell’s transport operation, which will transfer to a new provider.
"Affected staff have been informed of the situation and will shortly enter into consultation with the company and their representatives to discuss their options, including transferring to the new provider under TUPE regulations.
“Both DHL and Eurocell thank colleagues for their understanding at this time and stress the decision has been taken for strategic reasons and in no way reflects on the quality of service delivered to date."
After the original article was published, Eurocell supplied the following statement.
“We would like to place on record our sincere thanks and appreciation to our current partners DHL. Our decision to replace DHL as our logistics partner was a strategic one and was in no way a reflection of the service they have offered us. Their support and commitment over the last four years is greatly appreciated.
"We also wish to acknowledge their professionalism in seeking to ensure that we continue to work together to ensure the current staff and logistics operations transfer smoothly and efficiently to our new partners,” Eurocell said.
