Author: Archive

Royal Mail raises prices for B2B and commercial (UK)

Posted by | Jan 31, 2008 | |

Financial constraints on printers will increase in 2008 as Royal Mail has announced price hikes for its business-to-business mailing.

However, according to postal price comparison website Post-Switch, the price increases are more likely to affect upstream mailing providers such as TNT and DHL.

From 7 April, Royal Mail will be increasing its Mailsort tariff rates. Mailsort two is going up by 1.5p per unit and Mailsort three is up 0.8p.

Commercial mail prices will also increase, with a first class mailer costing 36p, up from 34p, and the second class price increasing from 24p to 27p.

Jonathan DeCarteret, Senior Postal Analyst at Post-Switch, said: “What we are witnessing here is an attempt by Royal Mail to reduce the margin between its retail rates and the downstream access rates it charges competitors to access the final mile.

“Mail operators wishing to maintain a price advantage over Royal Mail are going to have to reduce their profits.”

Although a number of private operators have entered the UK postal market since it was opened up to full competition in February 2006, Royal Mail continues to dominate final mile delivery. Only 12 pct of the UK direct mail volume has switched from Royal Mail to downstream access, according to Post-Switch.

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Malta: CEPT reforms discussed

Posted by | Jan 31, 2008 | |

Competitiveness and Communications Minister Censu Galea yesterday inaugurated a crucial Task Force meeting of the CEPT (European Conference of Postal and Telecommunications Administrations) which is currently discussing reforms within this organisation.

The CEPT is a body of policy-makers and regulators comprising 48 members from almost the entire geographical area of Europe. The scope of this meeting is to provide a platform for CEPT members, observers and other interested parties to discuss initiatives aimed at developing a strategic plan for the development of this organisation. Two other Task Force meetings were held in Berlin and Copenhagen.

The task force will then present its findings on how CEPT can remain relevant and successful by maintaining its strengths, by meeting the external challenges and by overcoming the weaknesses identified.

Among the strengths to be maintained are the quality of CEPT’s technical work, including the preparation of European common positions for the International Telecommunications Union (ITU) and the Universal Postal Union (UPU), and its work on the mandate of the European Union. This strength is based on the excellent technical expertise of the members and on CEPT’s methods of organising international cooperation of its broad membership from the whole European Region.

The meeting was chaired by Anthony Debono, who is the current president of the CEPT. Mr Debono will then present the final conclusions of this task force at the next CEPT general assembly scheduled for 5 and 6 June in Malta.

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EU bans postal monopolies from 2011

Posted by | Jan 31, 2008 | |

National monopolies for mail delivery in the European Union will be dismantled by 2011, with postal companies free to operate in any of the EU’s 27 countries – meaning the Royal Mail could face threats by European competitors on British soil.

Nine new EU countries plus Greece and Luxembourg will get the option of an additional two years to prepare for a full opening of the delivery of letters under 50 grams (1.75 ounces) – the last category where national postal companies face no rivals.

The plan was approved by the European Parliament last Thursday 31st January.

A universal public service ensuring every European gets at least one delivery and collection a day, five days a week will still be guaranteed and can be subsidized by governments if it loses money.

Postal services in the European Union handle an estimated 135 billion items a year, with an estimated turnover of 88 billion Euros (GBP 65billion) – around 1 per cent of the union’s gross domestic product. The sector employs more than 5 million people.

Full liberalization should lead to cheaper and more reliable mail deliveries, according to EU officials.

It could also force the Royal Mail to scramble to remain competitive against European services moving to Britain – and raises the possibility of a Royal Mail service operating on the continent.

An organization representing customers and competitors of the public postal operators across the EU called on the national regulators to prevent national monopolies from unfair tactics.

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Postal services: Commission welcomes the adoption of the EU Postal Directive

Posted by | Jan 31, 2008 | |

The European Parliament adopted the new Postal Directive last Thursday 31st January, giving its final political approval to EU postal reform. The vote confirms the broad political consensus on the way forward for opening EU postal markets to full competition. The Commission will assist Member States in implementing the new Directive and will take an active role in monitoring closely market developments to make sure that EU citizens and businesses obtain the benefits from high quality postal services foreseen by the Directive.
The Commission had adopted its proposal only 15 month ago. The text voted today by the European Parliament reflects the overall political agreement between the institutions and maintains the key elements of the Commission’s initial proposal, in particular: the accomplishment of the internal market of Community postal services via the abolition of the reserved area in all Member States; the confirmation of the scope and standard of universal service; reinforcement of consumers’ rights and upgrading of the role of national regulatory authorities; the offering of a list of measures Member States may take to safeguard and finance, where necessary, the universal service.

The final date for achieving full market opening is 31 December 2010, with the possibility for some Member States to postpone full market opening by two more years as a maximum and the inclusion of a temporary reciprocity clause applying to those Member States that make use of the latter transitional period. The new Directive is the final step in a long reform process that has already seen large areas of EU postal markets opened to competition, with very positive results.

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EU’s Postal Directive changes the requirements of national postal services

Posted by | Jan 31, 2008 | |

The postal directive approved on 31 January by the EU Parliament will open postal operations within the EU to full competition. The directive will become effective from the beginning of 2011, and in 2013 in some transitional-period countries. The new postal directive will guarantee nationwide mail delivery on five days of the week in the future. The tariffs of letter mail sent by consumers will also be uniform regardless of the locale.

Restrictions to competition were removed from Finnish legislation in the early 1990’s. Itella has been among the postal companies who have supported the EU-wide opening of the postal market.

According to Itella, the new directive now accepted may change the principles that have been held important in Finland concerning uniform services provided throughout the entire country. It has been the requirement of the Finnish Parliament to secure the provision of uniform postal services throughout Finland without separate funding systems.

In the new directive, a competing post company cannot be required to deliver mail five days per week, which has until now been required by law in Finland. In the future, such obligation can only apply to a company responsible for a general service obligation, i.e. Itella in Finland. Only a company operating in the largest cities, delivering letters from large sender companies, e.g. every other day, can price the delivery cheaper than the current rate. This means that the funding base for providing basic postal services may become significantly narrower.

It is possible that the directive will lead to regional segregation of prices, with mail sent to the largest cities being cheaper than that sent elsewhere. This has already happened in Sweden and in some other countries.

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Postal services liberalisation: MEPs back market opening by 2011

Posted by | Jan 31, 2008 | |

The European Parliament confirms that remaining postal service monopolies should expire by 2011 – or 2013 for some Member States. In a second reading deal with Council, the European Parliament sticks to the compromise already endorsed by the Council on the opening up of EU postal services to competition.

In its common position, the Council had incorporated all major elements of the European Parliament’s position at first reading. The European Parliament approved the common position without amendments.

Among the key points was the date for market opening: by 2011, two years later than the Commission had proposed, with the possibility for Member States which joined the EU after 2004 or with a difficult topography, such as Greece to postpone market opening by a further two years to 2013. The following Member States may postpone implementation until the end of 2012: Cyprus, Czech Republic, Greece, Hungary, Latvia, Lithuania, Luxembourg, Malta, Poland, Romania and Slovakia. For Luxembourg, the Council agreed with the European Parliament first-reading position which said that Member States that acceded to the EU after the entry into force of Directive 2002/39/EC or Member States with a small population and limited geographical size could postpone to 2013.

MEPs also agree with Council on the principle of reciprocity: in order to avoid market distortion and unfair competition, those Member States having opened their markets should be able to refuse authorisation to operators still protected by a national monopoly in another Member State.

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Saia, Inc from 31 January 2008

Posted by | Jan 31, 2008 | |

SAIA reports downside EPS. SAIA reported 4Q:07 EPS of USD 0.05 vs our USD 0.28 estimate and Cons USD 0.26. SAIA also benefited by USD 0.01/share from a lower tax rate. They were negatively impacted by about USD 0.04 related to “an employment matter” and benefited by an estimated USD 0.04 from net fuel impact. Rev, EBIT, and EPS changed y-o-y +11.2%, -68.9%, and -90.7% vs our expectations of +11.3, -21.8%, and -37.3%, respectively.

OR deterioration drives miss. SAIA’s OR deteriorated 410bp vs our expectation of 170bp of deterioration and 190bp in 3Q:07, resulting in EBIT down 69% y-o-y. The larger than expected deterioration was due to the weak pricing environment and several minor cost issues.

Yields ahead of expectations driven by fuel. SAIA’s yields (rev/cwt, gross of fuel) grew 6.1%, ahead of our 4.7% estimate which included a material increase in fuel surcharge. SAIA for the first time did not report yields net of fuel, but we estimate fuel surcharges accounted for almost 5pp of the gross yield growth and real pricing was likely flat to down considering 4% lower weight per shipment and a 4% increase in length of haul.

Tonnage below expectations. SAIA grew tonnage at 5.1% in 4Q:07, below our forecast of 6.5% and down from 8.9% in 3Q:07 as its acquisitions began to grandfather (the Connection closed 11/20/06). Tonnage declined 8% on a proforma basis in 4Q:07 and worsened throughout the qtr, but has improved to -4% in January.

Stock still has a lot of risk. SAIA is struggling with operating and cost issues as it continues to integrate two acquisitions made right into the downturn. We expect many of these issues to continue in the near term as competition in LTL pricing continues to increase in 2008 and we are sharply reducing our 08 and 09 EPS estimates. However, SAIA will likely benefit from potential capacity reduction by its competitors, especially in its core Southern region. For now BS is solid and mgmt has reduced C08 capex meaningfully.

INVESTMENT CONCLUSION: SAIA was up yesterday despite a materially weaker than expected report into the Fed interest rate cut and continued running for cover in the truck sector. SAIA was up 2.3% yesterday compared to our LTL Index excluding it up 3.3% and the S&P 500 down 0.5%. Year to date SAIA is up 2% compared to our LTL index excluding SAIA now up 17% and the S&P 500 down 8%.

We have reduced our C08 and C09 EPS estimates by 56% and 42%, respectively, from USD 1.45 and USD 1.55 to USD 0.63 and USD 0.90 (compared to prior Consensus USD 1.42 and USD 1.76). Based on our reduced forward estimates, SAIA is currently trading at 20.7x and 5.2x our forward year EPS and EV/EBITDA, respectively, compared to its average 1, 3 and 5 year averages of 10.4x, 11.5x and 12.0x, and 4.7x, 4.9x and 5.0x. SAIA’s balance sheet feels solid at this point ending the year with a debt ratio including off balance sheet leases of 48.8% compared to 51.6% at year end 2007. We now project SAIA will bottom with an EPS loss during 1Q:08; however we have little visibility to our estimates. SAIA remains rated Peer Perform.

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Home Delivery Network Limited helps deliver thousands of visitors to the Spring Fair

Posted by | Jan 31, 2008 | |

Home Delivery Network Limited (HDNL) will literally be ‘delivering’ visitors to the Spring Fair 2008. HDNL is sponsoring the Circle Line shuttle bus service which will offer the show’s 73,000 visitors a quick and easy way of getting around the Spring Fair’s twenty halls.

At the event, the HDNL team will be launching new services including 24 and standard 48 hour services, which will be available to retailers for products under 25kg of all volumes, shapes and sizes. For the first time HDNL has also lowered minimum parcel volumes to offer their award winning service to smaller retailers.

This year the continued roll out of the latest supply chain technology, including state of the art Hand Held Terminals will enable retailers to offer ‘real time’ delivery information to their customers, online customer support and online proof of delivery.

HDNL Chairman Walter Blackwood said “Over the last year we have been meeting with retailers to compile a ‘wish list’ of features they want from their carrier. This included ‘real time’ parcel visibility and lower minimum parcel volumes. 2008 is set to be an exciting year for HDNL as we implement these new services.”

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