The week that was: 3 December 2010
Bakker to leave TNT, India Post push ahead with modernisation, and Donahoe says customers must come first… Bbrrrrrrrr! It’s very cold, isn’t it? Make a cup of tea, grab the hot water bottle, and catch-up with the latest on-goings in the world of mail and express – it’s ‘the week that was’.
Surprising news in the Netherlands this week, as it was announced that Peter Bakker will leave TNT after the planned demerger of the company’s Express and Mail units. Bakker has been at the TNT for almost 20 years, and has served as chairman and CEO since 2001. His planned departure was announced after TNT revealed it will retain a stake of 29.9% in the Express unit to cover separation costs. These shares will be returned to shareholders as soon as possible, the company said. “Separation will enable greater internal focus on each business, with single-business investment discipline and capital allocation and leaner, more flexible organisations,” a spokesman said. Company targets were revealed too! The Express’ target is to generate an EBIT of EUR 900m to 1bn by 2015, whilst Mail’s target in 2015 is stable Cash EBIT (including cash pension contributions and restructuring cash flows) of EUR 300 to 370m. Commenting on the news, Bakker said: “Today, after the most thoughtful preparations, we announce the capital markets transaction that will separate TNT into two strong and successful companies. The proposal realises all stakeholder objectives in a low-risk and efficient demerger transaction and provides shareholders the opportunity to invest in two sector leaders. The value of the 29.9% financial minority stake of Express retained by Mail, required to realise the demerger, will be returned to shareholders as soon as possible, up to the level allowed by Mail’s targeted credit rating.” Bakker will remain in charge until the demerger is complete.
Across to Asia now, where the Department of Posts (DoP) gave the go-ahead to a major modernisation project of India Post. The scheme has been setup with the aim of advancing customer service levels and improving operational efficiencies, whilst also giving the operator sufficient capability to provide new services. Modernisation and transformation of the postal network forms a major part of the India Post 2012 plan – which could lead to an investment of more than Rs 1,000 crore (approximately $218m), according to sources in the country. Now a number of leading technology and IT companies are vying for key contracts, which cover differing areas of India Post’s business – including human resources, financial services, postal insurance, and mail operations. Expressions of interest have already been sent out, with a view to finalising partnerships next year. Indian publication, Business Standard, cited “sources” as saying “TCS, Infosys, Wipro, HCL, IBM, HP and Capgemini have shown interest to participate in the contract, which will be for a duration of two to three years”. Developments at India Post will be timely and relevant with the industry-leading post and technology conference, PosTech, taking place in New Delhi in March 2011.
In the US, the incoming postmaster general told a Senate subcommittee that one of his highest priorities would be to improve the customer experience, making the Postal Service “leaner, faster and smarter” in the years ahead. Deputy postmaster general Patrick J. Donahoe, who will become the nation’s 73rd postmaster general on Monday (6 December), said he is looking at all the ways the Postal Service deals with its customers. “Every interaction with us,” he said, “with a carrier, a clerk, at a kiosk, at a contracted desk or online must be a great one.” Addressing the current state of the Postal Service, he acknowledged that the past several years have been challenging but there are significant accomplishments that should not be overlooked. He pointed out that the Postal Service achieved $3bn in spending reductions in 2010, for a three year total of $10bn and despite reaching the lowest career complement since 1970, “service levels, customer satisfaction and trust in the Postal Service have never been higher.” Donahoe, a 35-year postal veteran who has served as deputy postmaster general since 2005, said the $8.5bn loss the Postal Service experienced in 2010 was “a stunning number” but were it not for two legislatively mandated payments, $5.5bn to the Retiree Health Benefits Fund and a $2.5bn non-cash workers compensation adjustment, the loss was less than $500m, a “significant accomplishment,” especially in light of a 6.6% mail volume decline. Post&Parcel wishes the new postmaster general the very best of luck in his new role.
And finally…
Don’t forget that World Mail & Express Americas Conference 2011 is heading to Mexico City in February. Post&Parcel will be there and we hope you are too. For more details, click here.
