The week that was: 5 February 2011
Obama to aid USPS, bpost launches new strategy, and TNT in profit warning… Welcome to ‘the week that was’ – your weekly round-up of all the big headlines from the post and parcel industry.
Post&Parcel revealed this week that President Obama is set to present a special Valentine’s Day gift to the US Postal Service this year, in the form of assistance in his latest Budget. The struggling USPS needs to address financial problems that saw it posting an $8.5bn loss last year, with commentators predicting a $6.5bn loss this year – and possible insolvency. But on Wednesday morning, the chairman of the Postal Regulatory Commission revealed that she had been told by White House officials that some assistance will come in the President’s Budget for the 2012 fiscal year, which is due to be announced later this month. “I did have a meeting with representatives of the OMB in the White House,” Ruth Goldway said at the Commission’s latest open meeting, “who indicated to me… that there will be something in the President’s Budget on February 14 that deals with major financial concerns in the Postal Service.” Goldway said she had shared the information with the USPS chief, postmaster general Pat Donahoe, but said neither of them were party to specific information on the contents of the forthcoming Budget. Officials at the OMB (Office of Management and Budget) at the White House had not returned a Post&Parcel request for comment on the matter. The potential assistance for the USPS comes in a Budget that is expected to see substantial cuts in domestic spending, with Obama stating in his State of the Nation address last week that he will freeze annual domestic spending for the next five years to reduce the federal deficit by more than $400bn over the next decade.
Belgian operator bpost is to restructure its sorting and distribution operations over the next five years. The move forms a part of the company’s ‘2011-2015′ strategic plan, put into place as a result of falling mail volumes. Five current sorting centres (Antwerp, Brussels, Charleroi, Ghent and Liege) will be transformed into Industrial Mail Centres (IMCs). Operations at the IMCs will be expanded considerably. The five IMCs will ensure the regional sorting addresses are put in order of the rounds of the postal workers. Regular mail will thus be ready for delivery, as soon as the deliverer leaves the IMC. In a conservative forecast, bpost said that addressed mail volumes are likely to drop 20% by 2015, with costs rising around the EUR 200m mark. This is likely to have a negative impact of EUR 600m upon the business, bpost confirmed. Under the plan, postal workers – who currently sort mail at more than 400 distribution centres – will only be responsible for sorting parcels, registered mail and pensions. Besides the national and regional sorting of the letters, Brussels will also act as a single parcel sorting centre, with more than 1,400 employees. Currently, 679 are based there. The company will also boost employee numbers at the other centres. The cost of the optimisation plan is EUR 200m, which includes the cost of establishing the new MCs. The restructuring will be implemented gradually over several years, largely finished by 2015, but fully completed by 2017. The number of bpost employees will be reduced through natural attrition.
TNT warned this week that bad weather in Europe, plus a period of industrial action, has affected its Q4 2010 operating profit figures by around EUR 45m. For its Mail arm, TNT said that the estimated cost of employee strikes and December’s adverse weather stood at EUR 10m. In its Express division, TNT’s Liege hub was shut for two days; with the estimated negative impact on Express divisional EBIT standing at EUR 15m. In Brazil, additional integration-related cost the Express arm EUR 20m. TNT said its Express division “does not foresee a negative effect on the previously guided 2011 EBIT range of EUR 420-440m – excluding the allocation of around EUR 20m of central head office costs”. Full-year results for 2010 will be published by TNT on February 21. On 2 December 2010, TNT announced its proposal to separate its Mail and Express businesses. The internal legal and organisational separation is on track with completion of the announced restructurings on 1 January 2011. During the separation announcement, it was confirmed that Peter Bakker will leave TNT after the demerger.
And finally…
World Mail & Express Americas kicks off on Monday – with the event taking place in Mexico City. Check back at Post&Parcel throughout next week to read-up on the key messages coming out of the conference.
