Establishing a global footprint

This article is an extract from the Summer Edition of MER Magazine published in May 2020. You can read the full article as well as other articles from MER for free by becoming a member of Post & Parcel today.

MER speaks to Rachael Manson, Market Development Director (Asia & Europe) at New Zealand Post, to find out how the company meets the country’s geographical challenges and why they are expanding their offshore operations.

Can you tell me a bit about your job?

My role is designed to build new revenue sources for New Zealand Post and I do this by developing our offshore footprint through the establishment of Extra Territorial Offices of Exchange (ETOE) operations.  An ETOE operation is effectively a New Zealand Post mail centre operating offshore and sending postal items to different countries around the world.  This is complementary to our existing offshore operations (Australia and Singapore) which focus primarily on encouraging large

e-commerce merchants to open store fronts in New Zealand and the commercial movements of e-commerce goods.  As part of my role, I assess markets that would be attractive to operate from, destinations shippers may want to access, recommend operating models specific to the market operation and conclude supplier contracts.  It’s very diverse and at times challenging, but that just makes it exciting!

What challenges is the company faced with that are unique to New Zealand? 

As with our postal colleagues around the globe, one of the biggest challenges New Zealand Post faces is declining mail volumes alongside an increasing cost to serve for e-commerce parcel items due to the geographic challenges our landscape presents.  New Zealand is a very long thin country with some very remote delivery points, which requires New Zealand Post to be flexible and adaptive to new technologies (such as the adoption of Paxster delivery vehicles) to assist us in reducing costs to ensure ongoing, sustainable activities.

New Zealand is a small country of 4.5 million people and isolated in terms of its location – this means we are far removed from our key markets and transit times can be lengthy (it takes about 36 hours to get from Auckland to London!).We are closely monitoring the implications of Goods &Services Tax changes which were implemented on 1 December 2019 and the impact this may have on both offshore purchasing, pleasingly this could have increased local purchasing also.

With such a small population base, the propensity for ongoing growth in parcel volumes (coupled with double digit decline in lettermail volumes) is challenged – and therefore, we need to look broader for new sources of business to ensure we maintain a sustainable business for New Zealanders.l

What are the company’s expansion plans?

New Zealand Post’s most recent office establishment was in Singapore.  This is a commercial operation and over the past 18 months has built a range of fulfilment options across South East Asia as well as a strong return management service.  Our ETOE in Singapore was the first to be established for New Zealand Post and this provided us with a blueprint for operations and ensured there was a robust technical operation available to launch in other markets.  The Singapore ETOE has been trading well, and we look forward to sharing more information about this in the near future.

Over the next 12 months, we are looking to productionise the four ETOEs we have in the USA, as well as explore other European and Asian locations.

We will also continue to review where we have physical presences offshore to ensure that we can continue to support the growth aspirations of New Zealand businesses as well as our growing base of international clients, ensuring that New Zealanders are well served with the best possible products from around the world.

What markets does NZ Post want to target and why? 

Our purpose can be summarised as seeking to:

• Help exporters reach the world in such a way that they can actively compete on the global stage;
• Help offshore merchants access New Zealand; and
• Give Kiwis (both those born here and those who have immigrated here) the best selection of goods possible.

As a country, NZ has four key trade lanes – United Kingdom, United States, Australia and Asia.  These are significant markets and are the traditional ones that New Zealand businesses reach out to when looking to launch overseas.

Through our New Zealand Post Singapore Commercial Operation and both the Singapore ETOE operation and UK ETOE operation with OCS, we see an opportunity to diversify and learn more about e-commerce flows from other parts of the world (to other parts of the world).  Also being very conscious of the ramifications of the Brexit changes which are possible for 2021, we recognise that trade between the UK and EU may change – hence the expansion plans into other European origin locations.  Brexit will provide both opportunities and challenges for the European markets (both for sending and receiving) and for New Zealand Post being a supplier to the industry, this provides us with opportunities to expand our network offerings to assist shippers to continue to seamlessly reach their destinations.

Destination markets for fulfilment are very much customer driven and we work hard to be as flexible and as adaptable as possible to those changing drivers to ensure that our market offers meet (or exceed) customer expectations.  Having a mix of postal / commercial / hybrid fulfilment options from each market ensures that customers do not need to move between suppliers to receive the services they need.Our biggest driver is to play a part in growing the market – and therefore diversifying our revenue portfolio.

Why now?

The international business within New Zealand Post has been delivering to a strategy of diversification and building capabilities closer to our core customer base for several years now, this is simply the next step.  A critical element to delivering on this strategy is ensuring the right enablers are in place to enable New Zealand Post capture volumes at source.  We already have offices in two locations (Australia and Singapore) which are in addition to the UK based ETOEs with OCS at London Heathrow and Coventry in the Midlands.  The launch of the OCS UK ETOE has been a natural extension of the work that is already underway in Oceania and given the maturity of the

e-commerce merchants in the UK, London was very quickly identified as a desirable operation due to the volume of business being traded and opportunities for the development of niche trading lanes.

Whilst there is still strong growth in the domestic parcel & inbound postal markets, New Zealand Post needs to expand offshore operations to deliver on future aspirations. The time is right.

Tell me about your collaboration with OCS?

OCS and New Zealand Post have worked together for a while now.  This has predominantly been as a Customer/Supplier relationship, where New Zealand Post provided commercial import clearance and courier delivery options (through our CourierPost network). When the opportunity came up to launch into the UK market having OCS as our ETOE partner made operational and logical sense.

OCS have a very solid reputation earned through long term relationships with some of the UK’s most recognisable brands and the fact that we had seen that OCS would bring significant UK export volumes to the contract and offer complementary skills and expertise made them the natural choice for us. It also helped that OCS have proven to be a strong advocate of New Zealand Post and share our drive for growth and advancement in customer services and solutions.

What obstacles did you have to overcome when setting up the two mail processing centres?

Perhaps the most challenging aspect was establishing an export mail processing centre at Heathrow and Coventry remotely from the other side of the world!  When you consider all the elements that go into setting up a successful operation – technology, processing areas, stationery (mail bags / bag tags / envelopes) as well as sales plans, this meant a lot of odd-time phone calls, skype meetings and emails!

Expected hurdles such as technology (which never seems to go to plan) was perhaps the least of an issue as we had the ability to leverage off existing systems.  The OCS team were very quick to pick up on the operational requirements and the wider New Zealand Post team prepared detailed training guides as well as test plans which ensured that for go-live, all went relatively smoothly!

The UK is also a saturated market in terms of ETOE operations, and this had the potential to release a “same-same” market offer.  Service differentiation however will ensure the success of this relationship, alongside the excellent customer experience support that the OCS team will offer to customers. The trust we had in OCS was paramount to ensuring that this was a success.

How will this project allow New Zealand Post to achieve its goals?

The ETOE project we have completed with OCS has helped the international business of New Zealand Post expand our reach into Europe.  Working alongside OCS has enabled us to deliver on the implementation of a UK based operation at two prime sites much quicker than if we were to set up and establish completely on our own.  In turn, this then means we have the ability to look at other markets quicker.

We have high hopes for the success of the UK ETOE operation and are already seeing several different opportunities arise through this establishment.

What next for the collaboration?

Now that we are fully operational, we get to move into planning mode.  Initially, this will focus on how we can support OCS increase their postal export volumes, and we will start exploring niche lanes and products where we can fully capitalise on this fantastic operation. OCS are also a long-established global company – so you never know where another opportunity may arise.

 What does 2020 hold for New Zealand Post?

2020 has been an interesting year so far!  Our internal monitoring of our domestic courier operation continues to show we hold the lead for overnight delivery performance, and this will be an ongoing focus for our local New Zealand teams.  Mail volumes continue their declining trend, so ongoing reviews of how best to service customer needs in the face of increasing costs is an important element also.

On the international front, our Singapore and Australian offices will continue to expand their commercial offerings across SE Asia, Australia, New Zealand and the USA.

And the expansion of our ETOE programme will see the implementation of new revenue streams for the company.

We continue to watch the global trends closely as market dynamics change overnight, so scenario planning will be critical.

What would surprise people about your role?

The eclectic nature of my role is a constant surprise – even to myself at times.  In any given day, I may be talking to customers, suppliers, operational teams or developing strategies to deliver on our aspirational goals.  Being a part of a global supply chain build involves a lot of moving parts – and with different time zones involved, a working day may start very early, or end very late to ensure that I can connect with the key parts of our offshore operations.

But this also serves to make it an exciting, enjoyable and satisfying job – I feel very blessed to be working with the people I do and for an organisation such as New Zealand Post.

About Rachael Manson

Rachael is an experienced logistics and supply chain professional, having spent over 20 years working in the International Group of New Zealand Post.  She has strong experience across marketing, product development and business development supporting customers to deliver on their supply chain requirements and customer experiences.  Holding a Master of Management Studies (Marketing) and a Bachelor of Management Studies (Hons) from Waikato University, she is passionate about e-commerce and the important role that logistics partners play in ensuring the success of customers.