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FedEx + DHL Isn't Necessarily Bad for UPS

Posted by | Feb 4, 2008 | |

Rumors have been flying that DHL’s United States operations are up for sale. With the recent announcement that Deutsche Post’s DHL business unit lost 600 million Euros (USD 879 million) last year, the company is seeking strategic alternatives.

The leading candidate to purchase DHL is thought to be FedEx. While some may think that a FedEx acquisition of DHL could spell trouble for UPS, the new FedEx/DHL could actually provide some much-needed relief for both of these transportation companies.

Airborne no more

DHL hasn’t been a player in the American express delivery business for very long (that is, if it ever really was one). Deutsche Post’s DHL Worldwide Express purchased express carrier Airborne Inc. for USD 1.12 billion in 2003. Airborne Express was the low-cost carrier in the express shipping marketplace, often undercutting FedEx and UPS prices without the service guarantees that the bigger shippers provide.

DHL decided to rebrand the Airborne operations using the DHL name while keeping the low-price shipping position. DHL also scrapped the previous Airborne logo and colors, moving to bright yellow trucks and uniforms that couldn’t be missed even in one of those blinding snowstorms hitting the West Coast lately.

Considering that Deutsche Post paid USD 1.12 billion for an investment in the U.S. express shipping marketplace, last year’s loss of USD 879 million is significant, and it wouldn’t be surprising if they were looking to offload the U.S. DHL operations ASAP. But what does this say for the marketplace if the “low-price carrier” can’t compete in an economy that continues to echo “recession?” Wouldn’t you think that consumers would be looking to cut costs wherever possible in this economic climate?

The price is right

The answer may lie in the fourth-quarter earnings report that UPS delivered last week. Beyond the losses that it took because of pension write-offs, UPS stated that revenue per piece was up 2.3pct on “firm” pricing. UPS’ 2007 increase in list rates was 4.9pct (not including the additional increases in individual surcharge amounts), so growth in discounts given to corporate and individual customers must have made up the difference between increase in base shipping rates and realized revenue per package (assuming that weight per package stayed the same).

As background, to keep up in a competitive transportation marketplace, UPS, FedEx, and DHL give special incentive pricing programs to key clients. Actually, everyone seems to qualify as a “key” client today, and customers can gain discounts for simple tasks like using FedEx Ship Manager or by belonging to an organization such as the American Institute of Chemical Engineers.

So, even though UPS raised base rates by 4.9pct in 2007, they gave clients increased discounts such that the average actual rate increases only came out to 2.3pct. UPS and FedEx price competition means trouble for DHL since low-price is DHL’s key claim to fame. Combine this with a recent USPS advertising campaign touting no surcharges and low rates, and it’s easy to see how DHL could run into serious issues.

Yellow and blue make green

If FedEx does buy DHL’s U.S. operations, it wouldn’t be to boost its express or ground network. After all, those gaudy bright yellow trucks and planes aren’t necessarily an asset to anyone. No, FedEx’s potential purchase of DHL would be an easy way to stave off price pressures in a competitive shipping marketplace. In effect, FedEx would be taking one for the team: getting rid of the public competitor who fought on price alone.

That’s not to say that FedEx is going to buy DHL, or that the government would OK such a move. But if the yellow DHL trucks were to move on, that could mean green for both FedEx and those brown guys at UPS.

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Emirates Post records net profit of Dhs 190m for 2007

Posted by | Feb 4, 2008 | |

Announcing the financial results, H.E. Sultan Saeed Al Mansouri, Minister for Public Sector Development and Chairman of Emirates Post Holding Group, said the net profit of Dhs 190,258,653 (USD 51.74 million approx.) reflected Emirates Post Holding Group’s continuing pursuit of business diversification and excellence in delivery of services.

Mr. Abdulla Al Daboos, President of Emirates Post Holding Group, said the establishment of the holding company under Federal Law No. 14, 2007 issued by HH Sheikh Khalifa bin Zayed approved, has set the foundation for evolving into a major business entity under the Ministry of Public Sector Development. Emirates Post, the postal corporation, has thus become one of the subsidiaries of the holding group.

He said the highest ever net profit of over Dhs190m was the result of a strategic plan that was driven by diversification, new alliances and acquisitions.

Mr. Al Daboos revealed that the postal network continued to expand during 2007, and a large number of new services were added to the Emirates Post portfolio. Overall, mail and parcel volumes rose by 10 pct. Overall mail volumes in 2007 stood at 258,808,231, against 233,767,518 in 2006, with a daily average of 715,545 pieces per day.

Commenting on expansion plans, Mr. Al Daboos said over Dhs. 277 million (USD 75.4 million) has been allocated for construction projects in 2008. Among the projects already nearing completion is a new purpose-built postal operations hub at Ramoul.

The Board also approved Emirates Post Holding Group plan to launch postal business centres across the UAE and GCC in the next phase, in partnership with leading business groups.

A new addressing systems being developed in association with other departments was also approved. The Board also reviewed plans for the IPO. It also approved new employee rules for holding group.

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High speed French mail train gathers pace

Posted by | Feb 4, 2008 | |

Mail and other goods could soon find their way on to the high speed rail network in France.

Fret DV is a venture aimed at establishing a high speed rail freight operation in France. The company was formed in 2006 between SNCF and La Poste, the French postal service. Already, trains operate between Paris, Mâcon and Cavaillon and Fret DV is now considering expanding operations to take in Rennes and Bordeaux. Other possible destinations include Toulouse, Strasbourg, and Lille.

The high speed service could benefit rival postal operators as the final phase of mail deregulation draws closer. The UK withdrew its mail train but reinstated part of its rail operations in more recent years. Increased road fuel costs have begun to make high speed trains a viable way to transport mail and goods.

Fret GV could be moving 150,oo tonnes of high vale freight by 2009, ahead of the final phase of postal liberalisation although for now, lorries still provide the cheapest way to transport goods.

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ProLogis signs new leases with DHL in Europe

Posted by | Feb 4, 2008 | |

ProLogis announced today that it has signed new lease agreements for more than 858,000 square feet (79,700 square meters) of distribution space in Europe with DHL Exel Supply Chain, a leading global provider of third-party logistics services and subsidiary of the Deutsche Post World Net group.

“DHL is ProLogis’ largest global customer, and we are pleased to be further expanding our relationship with the company in Europe,” said Gary E. Anderson, president for ProLogis in Europe. “At the end of 2007, ProLogis had agreements in place for more than 7.8 million square feet (725,000 square meters) of space with DHL in 10 European countries. We believe today’s announcement is a strong indication of the depth of our customer relationships and unmatched ability to serve their unique supply chain requirements.”

Among the new transactions include:

— 420,000 square feet (39,000 square meters) leased in a facility under
construction at ProLogis Park Tarancon near Madrid, Spain.

— 247,500 square feet (23,000 square meters) leased in a new,
915,000-square-foot (85,000-square-meter) industrial park ProLogis is
developing near the city of Jonkoping, a major distribution hub in
Sweden.

— 190,500 square feet (17,700 square meters) leased at ProLogis Park
Venlo III, a new 484,000-square-foot (45,000-square-meter) industrial
park located in the city of Venlo, less than five kilometers from the
German border.

ProLogis is currently one of the largest providers of distribution space in Europe with more than 101 million square feet owned, managed or under development, as of September 30, 2007.

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UNITED STATES: Domain Name in the Works for Post Office

Posted by | Feb 4, 2008 | |

A new “dot-post” Internet address in the works aims to set apart the electronic services increasingly offered by postal agencies around the world.

Backers say restricting the “.post” domain name to postal agencies or groups that provide postal services would instill trust in Web sites using such names. By contrast, popular suffixes such as “.com” and “.org” are assigned on a first-come, first-served basis.

The Internet’s key oversight agency, the Internet Corporation for Assigned Names and Numbers, is trying to work out contract terms for the suffix with the U.N. Universal Postal Union. Approval could come as early as mid-February and implementation several months later.

“Dot-post is an extension of the innovation currently happening in the postal agencies,” said Paul Donohoe, the postal union””s eBusiness manager. “They are investigating services that are looking for alternative ways to add value to communications.”

Services unveiled or proposed around the world include electronic postmarks, online billing and payments and hybrid mail — when a digital document gets printed by the postal service and delivered as paper, or when physical mail gets scanned into an electronic document for delivery.

If the suffix is approved, the U.N. postal agency would assign domain names under it to individual national agencies, which could then distribute sub-domains to contractors and other service providers.

The U.N. agency also could assign names directly to mail-related industries, such as direct marketing and stamp collecting.

The postal union proposed “.post” in March 2004. ICANN gave it a tentative OK that October, but Donohoe said final approval has been delayed partly because of the structure of the U.N. agency — one requiring unique contract terms.

ICANN has said it may start a new round of applications later this year.

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Emirates Post And Emirates Nationals Development Programme Partner To Boost Emiratisation In Mail Sector

Posted by | Feb 4, 2008 | |

Emirates Post Holding Group and Emirates Nationals Development Programme (ENDP) have signed a Memorandum of Understanding (MoU) to boost Emiratisation in the mail sector through a series of measures, including a three-month ‘Postal Diploma’ programme, to be conducted by the Emirates Post Training & Development Centre, Dubai.

The new initiative was unveiled at a press conference addressed by H.E. Sultan Bin Saeed Al Mansouri, Minister for Public Sector Development & Chairman of Emirates Post Holding Group, H.E. Ahmed Humaid Al Tayer, Chairman of ENDP, and Mr. Abdulla Al Daboos, President of Emirates Post Holding Group. The joint initiative is in response to the directive of HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President & Prime Minister of UAE and Ruler of Dubai, on creating new opportunities for Emirati youth in various fields, especially in the private sector.

The MoU seeks to establish a framework for expanding cooperation between Emirates Post Holding Group and ENDP in providing training to Emarati youth in mail-related areas in order to boost Emiratisation. The Postal Diploma project has been designed to raise UAE nationals’ skills and professional capabilities for taking up positions in Emirates Post Holding Group and private sector companies engaged in mail activities.

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Tusk looks to weaken the unions as postal strike looms

Posted by | Feb 3, 2008 | |

Postal workers could strike at any moment to demand wage increases, while the government is drastically seeking a way to diminish the role of trade unions. Five days ago trade unions of Polish Post (PP) submitted its demands to the general director seeking a wage increase of z³.800 gross on average with today named as the deadline for a reply.

Recently, Prime Minister Donald Tusk admitted that the act on trade unions has plenty of flaws, such as the “extreme multitude” of trade unions, which is diminishing the role of unions’ headquarters. A turning point was the strike of miners in the Budryk mine, but the number of strikes in 2007 was high regardless. In total there were 1,736 strikes last year, while in 2006 there were only 27 of them. A road to legal compromise might be difficult, as according to unofficial information the government wants among others to force trade unions to finance themselves with their own contributions or to ban them from having their offices in places of work. “This is an attack on democracy. Work of the trade unions is beneficial to everyone,” said Alfred Bujara, head of commercial sector trade unions. Others added that all governments wanted to change the law, but none of them succeeded, however the largest of them will also present some changes to the existing law.

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India Post fights to retain marketshare in small savings

Posted by | Feb 2, 2008 | |

minimum of seven lakh small accounts during the April-October 2007 period to commercial banks.

This has been primarily due to the postal department’s inability to offer market-related interest rates and the withdrawal of 10pct bonus on monthly income scheme (MIS).
This declining trend is, however, expected to change now.

The government has reintroduced the bonus on MIS from December 2007, albeit at a lower 5pct rate, and is going to make the five-year postal term deposits and senior citizen savings scheme eligible for tax rebate under Section 80C of the Income Tax Act from April 2008.

Small post office savings schemes include MIS (at 8pct interest rate), term deposits and recurring deposits (7.5pct interest), senior citizen savings scheme (9pct interest) and savings bank account (3.5pct interest).

Till November 2007, the fall in number of accounts is significant, especially in MIS and senior citizen savings scheme. MIS collection received the first blow in February 2006 when the government withdrew the 10pct bonus on maturity.

The postal term deposits and senior citizen savings had also failed to compete with commercial banks during the period under review as banks were offering significantly higher interest rate on deposits. For instance, the State Bank of India (SBI) was offering a 9.5pct annual rate for 4-5 years deposits while the postal term deposits offer just about 7.5pct per annum.

According to latest available statistics as of October 2007, the number of live savings accounts with the postal department’s West Bengal circle stood at 1.78 crore. This is compared to 1.85 crore live accounts as of March 31, 2007.

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