A collapse in demand, volatile fuel prices, tighter environmental legislation and more cost-conscious customers are all taking their toll on the moving sector, yet it is rising to the challenges. Ruth Holmes finds out how.

Global mobility has had a tough year. Two-thirds of businesses report scaling back their overseas assignments. And, for the short-term at least, the outlook remains grim, despite some pockets of strong demand (for example, to Australia, the ‘economic wonder Down Under’). For those companies and jobs reliant on an increasingly mobile global workforce, these trends can’t help but have a knock-on effect. “International movers have seen a strong decline in volumes and allowances this year,” says Al Mithal, of Star Worldwide, in India, president of the FIDI Global Alliance.

The latest figures from the British Association of Removers (BAR) underline the extent of this retrenchment. While the removals industry is well used to its seasonal peaks and troughs, the sector has seen its workforce shrink. It lost 16 per cent of its jobs in the year to date for the first half of 2009, with the number of removals vehicles on the road falling by 12 per cent.

BAR data also reveals the extent of declining move volumes. The number of European moves fell from Q1 2008 to Q1 2009 by just 3 per cent year-on-year. Yet Q2 2009 shows a staggering 38 per cent reduction on Q2 2008. For international moves, the figure, though large, is more stable, with around 20 per cent fewer moves each quarter.

Source: British Association of Removers

Now that companies seem to have finalised their workforce recall and redeployment in the aftermath of the global financial crisis, the figures give a good indication of the buffeting the sector is experiencing.

Cost is clients’ key priority

Amid increasing competition from movers previously focusing on the now-quiet domestic market, removals firms looking to adapt to and survive the new realities are taking the lead from their clients.

The latest Brookfield Global Relocation Survey highlights that cost is the number-one priority for businesses relocating their employees. 68 per cent – the highest figure in the survey’s history – reported reducing assignment expenses, mainly through localisation policies and reducing policy offerings or amounts. Brookfield “expect[s] to see companies encouraging assignees to request and use benefits wisely and responsibly based on their family circumstances and needs.”

The cost issue, together with emergent trends in relocation, is focusing minds on what level of service is needed and when. With some interpretation of local-plus contracts rising in popularity in now ‘emerged’ destinations like China and elsewhere, the level of removal support may be affected.

Moreover, with extended business travel assignments becoming more commonplace, serviced accommodation and furniture hire are increasingly attractive options, limiting the need for international shipping. Alongside the more established pattern of long-term assignments that require more wholesale packing, removal, shipping and storage for an entire family’s personal effects, mobile workers are also looking to ship smaller consignments of personal items.

New providers and services

In this price-sensitive market, the internet is proving to be a real winner for alternative move service providers. The removals sector is not immune from the web-spun competition that has completely transformed other industries, like aviation.

From do-it-yourself professional (‘DITY Pro’) movers that work in partnership with established courier firms like Federal Express to services that mean people can buy elements of the traditional removals package, like insurance, separately, there is now a potentially endless array of options available for corporate clients looking to cap relocation costs – particularly for those managing the process in house.

“More and more service providers are entering the market using the web as the medium to sell their products, and will only instruct a removal firm to perform the packing and shipping services. This now allows the consignee to create a bespoke package for their move,” says John Taylor, director of online move insurance broker Insure Your Move. “For insurance, sourcing cover independently can save a lot of money – up to £200 on a sum insured of £20,000 on a move to China.”

In some cases, a service bought independently of a package has additional benefits. For insurance, for example, a premium may well offer more comprehensive cover, such as new-for-old replacement based on the cost of replacement at the destination, as well as no excess.

Galleon International is one established removals firm that is facing the future by focusing partly on its online offering. “While we are continuing to focus on delivering first-class service for our core service offering, we are also remaining flexible, to be quick enough to adapt to our clients’ requirements,” explains Corinne Hearne. “We are using the recession as an opportunity to review and enhance our website, including our online client services.”

The larger number of service providers entering the market, and the growing focus on driving up service, are great news for companies managing moves in-house. The complete care plans offered by Galleon International, for example, and others mean greater peace of mind and value for money for clients.

A balancing act

Yet internet-sourced or separately-brokered services – while clearly an excellent option for some companies and assignments – won’t be ideal in every case. The cost of in-house expertise to broker the necessary deals may well exceed the savings achieved when compared to buying removals as a complete package.

In the case of movers new to the international corporate sector, clients may also be missing out on the additional security of commissioning established shippers – especially with it comes to navigating correctly the complexities of customs. Seeking a FIDI-approved or other respected industry body-accredited firm, like FAIM, should, therefore, be part of the procurement process.

Nevertheless, the pressure on costs and budgets remains immense. “Some clients have requested a 25 per cent reduction without being able to specify the number of moves,” says Bob Sullivan, vice president of commercial operations at Arpin International. “While we do everything we can to accommodate these requests, sometimes the margins means that it just isn’t possible. We have walked away from half a dozen or so contracts for this reason. Our philosophy is that we always aim to offer the best combination of price and service, which means there is a level that we just won’t go below if we can’t achieve that. Our reputation is too important.”

Knowledge is power

Key to choosing the right service provider – at the right cost and avoiding hidden costs further down the line – is having realistic expectations and the technical knowledge to negotiate with suppliers and compare rival offers during the tendering process. With any cost reduction, there is likely to be a trade-off in terms of shipping time and support when things go wrong, for example. It is, therefore, essential for HR and internal relocation managers to be informed about what this means in relation to the level of service provision.

Removals companies like UniGroup Worldwide UTS and Arpin International are actively engaging with clients, either directly through workshops or via sponsorship of roundtable events, to exchange ideas and improve understanding of procuring removals services. By understanding how to structure and what to include in requests for quotations, as well as effective procurement management, companies can make significant cost savings. [See Box 1.]

Looking ahead

As with the wider economy, including on the international side, the green shoots of recovery are just about sprouting. BAR’s latest quarterly statistics indicate a slight upturn in activity, and the UK’s professional body is tentatively positive. “These encouraging results imply that the industry is continuing to recover, and a brighter economic forecast is widely predicted. Overall, the domestic removal market has witnessed a growth over the last few months, although a climb back to success is likely to be a long process.”

The removals sector is not on its own when it comes to the pains of recession. As an industry, while sadly there have been casualties this time round, many firms have weathered previous recessions, and this one is no exception. Removals companies and their clients can, by equipping themselves with the right knowledge and responding to it, position and adapt themselves to be fitter for the future.

© 2009. This article first appeared in the winter 2009/10 edition of Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.

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