The year that was: 2012 (Part One)

Bringing you the first part of our annual review of the year, and the major stories shaping the mail and express industry across the world.

January

The start of the year came on the back of record parcel volumes over the festive period, driven by exploding ecommerce markets around the world.

In the biggest ecommerce growth centre of them all, China, the authorities were looking into how to solve serious shortcomings in the nation’s delivery infrastructure. The European Union was concerned about the barriers to cross-border ecommerce, while even the global integrators were having to get their heads around the major changes in the business caused by the worldwide boom in Internet-based distance selling.

Mail and express operators were continuing to respond to the slow recovery and shift towards parcels by selling non-core assets and streamlining core operations, to concentrate on what they did best in the most efficient manner possible. TNT Express completed the sale of its domestic road business in India, PostNord sold off its Dutch and Belgian express freight units, Itella sold off its Danish printing business, DHL Global Mail decided to pull out of the UK publishing segment, PostNL set about reconfiguring its letter delivery network.

Regulators and governments were also heavily involved in postal transformation, with the US Postal Service pressing its regulators to speed up a review of its network cutbacks, Japanese lawmakers discussing a major restructuring of Japan Post, Brazilian ministers setting the first ever quality targets for Brazil Post, while in the UK Royal Mail was continuing its reshaping on the road to possible privatisation, seeking deregulated pricing powers and the end of its huge legacy pension burdens.

Meanwhile, one of the major storylines of the year in the express industry kicked off 2012 with TNT Express facing calls from investors for leadership change after a torrid first half-year of independence.

February

The $8 trillion mailing industry urged US lawmakers to quickly act on much-needed postal reform, something they would continue to do – in vein – throughout 2012. President Obama proposed a $25bn rescue package for USPS, but remained powerless to enact the plan as the Postal Service posted quarterly losses of $3bn.

A lively World Mail and Express Americas conference in Miami highlighted how the postal market around the world was changing much more quickly than ever expected. Some postal operators were facing service quality issues as they continued efforts to respond to such trends, including An Post, PostNL and Royal Mail.

Australia Post reveals that it now sees itself as a “two-speed business”, with much of its potential in parcels while the letters business steadily fades. PostNord says it is preparing itself for new ownership structures and a possible IPO as it continues restructuring.

There are some positive moves in the letters market, however, such as Swiss Post expanding its direct mail activities and the important announcement by La Poste that it has decided all its services will become fully carbon neutral later this year.

Meanwhile, TNT Express fended off attempts by certain investors to bring fresh thinking to its board, and rejected an initial offer from rivals UPS to buy the company.

March

Polish mail and parcels company Integer.pl revealed some impressive growth figures as it continued its major growth programme for automated self-service parcel terminals, under a EUR 350m plan to install 16,000 across Europe over the next few years.

Germany’s Deutsche Telekom unveiled its plans to take on former sister company Deutsche Post in the digital mail field, revealing preparations for its new De-mail service.

Deutsche Telekom launched its De-mail service, to take on Deutsche Post’s ePostbrief service in Germany

During March, two staff suicides rocked La Poste in the north-west of France, but while the company investigated a troubled work culture, chairman Jean-Paul Bailly warned that modernisation plans could not wait.

A second offer for TNT Express from UPS was accepted by the Netherlands-based integrator’s board, valuing the company at about EUR 5.16bn. The offer was subject to shareholder and regulatory approval. UPS executives revealed that such is the size of the acquisition and the need to maintain service quality following the takeover, UPS was planning a four-year integration programme to unify its two networks.

Separately, UPS was caught up in a freight forwarding price-fixing scandal, but rivals DHL escaped the total EUR 169m fine handed out by the European Commission for whistle blowing the actions of a cartel of forwarders who fixed prices between 2002 and 2007.

And, Royal Mail showed what happens after a regulator grants price-setting powers to a postal operator that has had its prices tightly limited for years. The UK operator announced a 30% price hike for first class and 40% hike for second class stamps.

April

UPS wasn’t the only US-based integrator seeking a stronger presence in Europe this year – and in March Fedex made its interests clear with the announcement of plans to acquire Polish courier firm Opek and French express firm TATEX.

Pitney Bowes revealed that it would provide the technology behind Australia Post’s planned new digital mail service, pitting it against fellow US digital mail provider Zumbox in chasing the Australian market.

Parcel delivery firms in the UK decided it was no longer possible to survive on such tight margins, signaling the need for price rises despite the competitive nature of the market. Yodel faced particular difficulties in hiking its prices with customers displeased about service issues. CEO Jonathan Smith said his firm had to change its business model if it was to survive. Meanwhile, the UK parcel industry was also making its preparations for the summer’s upcoming Olympic Games.

Parcel terminals continued their move towards the mainstream of the industry’s infrastructure, with ambitious manufacturer InPost forming a key alliance with mail technology and services giant Neopost to expand the technology globally. Perhaps signaling the important potential for parcel terminals in an ecommerce world, the US Postal Service launched its own trial in Northern Virginia.

But what the USPS needed most of all was legislative reform and a way out of its financial crisis. The US Senate granted some of its wishes this month, although notably not an elimination of Saturday deliveries – but the reform bill was not going to go anywhere without similar action in the House of Representatives.

May

Canada Post recorded its first annual loss for 17 years, unable to shy away from the ongoing decline in mail volumes with its 2011 performance stunned by last June’s strike-inspired nationwide shutdown.

With no sign of the US House of Representatives following the Senate’s achievement in passing postal reforms, the US Postal Service got on with its own effort to rectify its jaw-dropping finances, laying out a phased plan to close hundreds of mail processing plants. However, plans to close up to 3,700 underperforming post offices were revised into a new plan to reduce opening hours.

The IPC declared that while postal operators were facing up to the modern postal era of rapidly declining letter volumes, regulators were focusing on the wrong kind of targets in monitoring them. With the Internet providing rapid communications these days, the IPC suggested that postal operators needed to concentrate on predictable, reliable services, not delivery speed.

The world’s largest mailroom equipment provider, Pitney Bowes, announced its intention to step up its efforts in the digital world, as it secured a multi-year contract with Facebook.

And, FedEx Express took home two prestigious awards from the year’s World Mail Awards, with Deutsche Post, Swiss Post, DPD, Eesti Post and Saudi Post among the other winners at this year’s ceremony in Geneva.

June

The struggling US Postal Service wasn’t getting any support from Congress, and the other arms of government weren’t helping much either, including plans to cut federal mailing costs by $1bn. US Postmaster General Patrick Donahoe said he did not want USPS to develop its own digital mailbox service, but suggested some kind of digital ID verification service could be appropriate.

Royal Mail was doing much better in the UK, revealing that it was now cash positive for the first time in four years. However, its rival TNT Post UK was revealing its ambitions to take on Royal Mail in an end-to-end delivery service spanning the nation.

While parcel terminals appeared to be the buzzword in this year in terms of improving first-time parcel delivery, parcel carrier Hermes launched a new network of parcel shops in the UK as its answer to widening access to parcel services.

June also saw UPS making its interest in TNT Express official, with the Atlanta-based corporation going down on one knee to ask shareholders to accept $6.3bn (USD) for their pride and joy.

The other global integrators were busy reshaping their networks to suit their priorities in the challenging economy, with FedEx restructuring its air fleet and DHL continuing to withdraw from domestic businesses, this time in New Zealand.

• Click here for the concluding part of Post&Parcel’s review of 2012, featuring a look back at the key stories shaping July to December 2012. The year that was: 2012 (Part Two) »