The week that was: 19 November 2010
Congress seeks USPS cuts, Austrian Post satisfied with results, and UPS boss says exports are key… Welcome to ‘the week that was’, your weekly news round-up from Post&Parcel. Three big stories coming right up!
We start in the US this week, where senior congressmen on both sides of the political divide said the latest financial results from the USPS underline the need for “comprehensive” reform. USPS unveiled its figures for the fiscal year ending 30 September 2010 last week, posting an $8.5bn loss for the 12 months. More than doubling the $3.6bn losses seen in its 2009 fiscal year, the USPS said the 6.6% decline in First Class mail had hit particularly hard, since the service accounts for almost half of the organisation’s $67.1bn annual revenue. Senator Tom Carper, the Democrat currently steering a postal reform bill through the Senate, said the extent of the latest losses had not been surprising given that the financial challenges facing the USPS. He suggested the “Great Recession” coupled with “systemic flaws” in the USPS business model represented “the most serious threat to the institution in its over 200 year history”. Noting recent concerns that the USPS was currently on track to run out of money by this time next year, the Senator from Delaware said reforms should be undertaken quickly. Sen. Carper said: “This report underscores the urgent need for Congress to move swiftly to consider comprehensive Postal reform legislation, which I introduced in September of this year, in order to avert a catastrophe for the Postal Service. I hope my colleagues and the Administration will take this report to heart and work with me to address the challenges facing the Postal Service so we can protect the vital services American families and businesses depend on,” he added.
Having taken a majority in the House of Representatives, the Republicans also look set to support cuts at the Postal Service. Let’s hope suitable legislation is passed.
In Europe, Austrian Post described its financial results for the first nine months of the year as satisfactory. Group revenue declined during this period. However, the actual decline of minus 0.6% turned out to be very moderate, the company said, adding that growth in the Parcel & Logistics Division almost completely compensates for the revenue drop in the other segments. Austrian Post said it succeeded in counteracting the downward trend on the basis of efficiency-enhancing measures as well as reductions in operating costs and direct personnel expenditures. In the first three quarters of 2010, earnings before interest and tax (EBIT) of Austrian Post rose 1.2% from the prior-year level, and even climbed by 10.9% in the third quarter in a year-on-year comparison. In the Mail Division, the trend towards the electronic substitution of letters and the reduced weight of mail items posted by customers is continuing. However, intensive efforts to attract new customers as well as positive one-off effects managed to limit the revenue decrease to 0.6%. The Parcel & Logistics Divisions posted revenue growth in all regions and an overall increase of 3.8% in the first three quarters of 2010. “Against the backdrop of the upcoming full-scale liberalisation of the Austrian letter mail market as of January 1, 2011, we are confident that we are moving in the right direction. The top priority is to offer efficient and innovative services in line with market requirements,” said CEO Georg Pölzl.
UPS chief Scott Davis said a boost in exports is the catalyst that the US economy needs to rebound. “In my view, global trade is the quickest and surest way to accelerate global growth, create new jobs and improve living standards,” the chairman and CEO said in remarks at the American Competitiveness Forum. “We’ll have to regain prosperity the old fashioned way, not by household borrowing and spending but instead by earning it through innovation, increased production and aggressive marketing in other countries.” More than 95% of the world’s potential customers are located outside the United States, the CEO told the audience. “Frankly, given the massive scale of this world economy, I’m astonished that US businesses aren’t more vocal in demanding better access to this huge wave of global consumers.” Davis, a member of the President’s Export Council, expressed deep concern about Congress’ failure to approve negotiated trade agreements with South Korea, Columbia and Panama, which the US Chamber of Commerce says has cost the US some 380,000 jobs at a time when there is 9.6% unemployment. “In the halls of Congress, compelling arguments for trade get overwhelmed by noisy heated attacks on globalisation,” Davis said, referring to recent mid-year election campaigns. “For the economy’s sake, we need to stop the foot dragging and move quickly on these pending deals.”
And finally…
PosTech 2011 in New Delhi will take on 14-16 March. Post&Parcel will be bringing you an up-to-date preview in newspaper form later this month. The publication will be available for free with each copy of the upcoming Mail & Express Review. Sign up here.
