The week that was: 18 March 2011
Canada Post could face strike, UK government gives USO promise, and weather dents FedEx results… Good afternoon from Post&Parcel and welcome to the ‘week that was’ – the perfect way to finish off your working week.
Canada Post employees could stage walkouts from next month, after five months of talks with the Canadian Union of Postal Workers have failed to secure a new collective bargaining agreement. Negotiations by the union’s urban operations unit have stalled over issues including “insulting” proposals to reform sick leave, vacation and pension arrangements. Union leaders are also seeking to protect jobs and improve working conditions in the light of Canada Post’s restructuring and technological investments through the multi-billion dollar Postal Transformation initiative. The union said on Tuesday that it will put the possibility of a strike before its membership, and that a “yes” vote could mean postal workers across the country stopping work towards the end of April. The vote is to take place from March 25 until April 17. The CUPW had asked for a formal conciliation process with Canada Post after agreement failed to come by January. However, it said that the impasse at the bargaining table “shows no sign of abating”. “It is difficult to negotiate when Canada Post’s demands for rollbacks stay on the table,” said Denis Lemelin, CUPW’s national president and chief negotiator in the current talks. “They have been going after our sick leave, our pensions, our retirees and our newest members. All this while they are making profits. Why can’t they invest some of these profits in their people and communities instead of machines?” While union negotiators south of the border face the need to cut costs, the CUPW is pointing out through its negotiations that unlike the US Postal Service, Canada Post has been reporting profits for almost 16 years. The company made its last annual financial statement last April, when it reported a profit for the 15th consecutive year, with $281m net income on a $7.3bn revenue.
The UK government has insisted that any sale of Royal Mail will leave the country’s universal service obligation intact – and protected by law. The assurance came from Baroness Wilcox, the government’s junior business minister in the House of Lords, as the upper House debated legislation seeking to privatise the national postal operator. Facing an array of concerns from opposition peers that the Postal Services Bill will open the door to asset strippers or cherry pickers from the private sector, the minister said regulator Ofcom would have the power to protect the universal service provision. She said: “Ofcom will be watching like a hawk to make sure that there is a fair balance between Royal Mail and the consumers of the products that Royal Mail produces.” Royal Mail, currently a limited company owned by the government, would still have the obligation to provide mail deliveries six days a week across the entire country for a uniform tariff under the government’s proposals for private ownership. The debate on Monday – the committee stage in the Lords for the Postal Services Bill, which has already passed through the House of Commons – saw concern among peers that selling off the Royal Mail could see new owners pricing their universal service out of the market to make it unattractive to consumers. But the Baroness said the universal obligation was protected by Parliament under the terms of the Bill, and that Ofcom would ensure the minimum requirements of the obligation were upheld. “As we know, the minimum requirements are above those set out in the European postal services directive in terms of the requirement to deliver letters six days a week and for a uniform tariff and service to apply,” she said.
The winter’s severe weather storms have “significantly” dented profits at FedEx, according to the latest results from the company, released this week. Although the company reported strong year-on-year growth in its revenues for the quarter up to February 28, 2011, its profits were down while margins were tighter. FedEx reported an 11% growth in its overall turnover compared to last year’s third quarter, from $8.7bn up to $9.66bn. Revenues were assisted by increased package volumes, higher surcharges and efforts to improve income per weight of shipments by reviewing unprofitable accounts. Overall operating income was $393m and net income $231m, down respectively 6% and 3% on the same three months last year. Only FedEx Ground, among the company’s divisions, was able to grow its profits as well as revenues. FedEx said its yields had grown in all transportation segments, but added that “unusually severe” winter storms during the quarter disrupted its operations, reduced shipping volumes and increased costs. In all, the company suggested the weather had hit its share earnings by 12 cents per share in the quarter, which saw earnings per diluted share of $0.73, compared to $076 a year ago. Profits were also impacted to some extent by costs involved in the merger of less-than-truckload operations in the FedEx Freight and FedEx National LTL divisions. Other increased costs came from new benefit, pension and healthcare arrangements for employees, the reinstatement of staff bonuses and higher aircraft maintenance costs. Commenting on the results, FedEx Corp. executive vice president and chief financial officer Alan B Graf said: “Successful yield management initiatives helped drive significant revenue growth across our transportation segments in the third quarter, although results were dampened by severe winter storms and higher-than-expected fuel costs.”
And finally…
PosTech 2011 took place in Dubai this week. For an insight into the conference, please click through to the articles below:
PosTech 2011: “Adapting to the needs of the e-customer”
