Tag: Europe

European Commission plots action over postal VAT

Posted by | Jul 27, 2007 | |

The European Commission is threatening to take the Government to the European Court of Justice unless it amends the law which allows Royal Mail to be exempt from paying VAT, in a move which could force a huge hike in postal rates.

The postal operator’s rivals have been pushing for a review for months, saying the exemption gives Royal Mail a significant price advantage.

The EC has formally requested that the UK, as well as Germany and Sweden, amends its legislation on the exemption.

The threat is part of EC plans to ensure fair competition between former monopolies and market entrants. The EC has described Royal Mail’s VAT exemption as ‘the single most important obstacle to achieving effective competition in this sector’.

The Commission also claims to have received a number of complaints that the different tax liabilities distort competition and that Royal Mail should be subject to the same tax regulations as its competitors.

Laszlo Kovacs, European Commissioner for Taxation and Customs, says: “The EC, as guardian of the EC Treaties, is obliged to ensure that EU rules are applied in a harmonised manner across the Community.”

A Royal Mail spokesman says: “Royal Mail remains opposed to the imposition of VAT on our postal charges. While the issue of VAT is a matter for the UK Government, we have said that an increase in stamp prices as a result of the imposition of VAT is the last thing we want for any of our customers, particularly charities and small business.”

Royal Mail also questioned the actions of the European Commission in pursuing its VAT exemption, when large parts of the EU will not have fully liberalised postal markets until 2009 at the earliest, under the latest EU timetable. The UK’s postal market was opened up to full competition in January 2006.

Postcomm recently urged the EC to change its VAT framework so that all postal operators can pay a reduced uniformed VAT rate to make the market ‘a level playing field’ for all operators. The independent postal service regulator welcomed UK Mail’s recent move to make it exempt from paying VAT on its downstream access.

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Industry backs rethink of zonal pricing

Posted by | Jul 27, 2007 | |

Celebrations over the rejection of Royal Mail’s zonal pricing plan were shortlived, with most people agreeing the scheme will be implemented eventually. But at least now it will not be rushed in

When Royal Mail first mooted the introduction of zonal pricing (PM July 14 2006) it was intended as a pre-emptive strike to prevent competitors from cherry-picking major business clients, by bringing in a pricing structure that offered major discounts for city deliveries.

Designed to charge more for delivering to outlying areas, it was part of the postal operator’s strategy to introduce cost-reflective pricing, affecting all mail sent through Mailsort 3 – the most popular service for direct mail – and magazine-delivery scheme Presstream.

But the benefits evaporated almost overnight when Royal Mail revealed that deliveries inside the M25 were also to incur a surcharge.

One of the main voices of discontent was the Periodical Publishers Association (PPA), which condemned Royal Mail’s zonal pricing plans, as “benefiting no one but Royal Mail and being hugely damaging to the magazine industry”.

Only last week the PPA was claiming that pressure from its members had led to Royal Mail revising its application.

Seven days on and the scheme is doomed, following Postcomm’s decision to force Royal Mail back to the drawing board once more.

A PPA spokeswoman comments: “It is in everyone’s interest that we have a healthy Royal Mail but the impact of these proposals would have led to a reduction in all mailing volumes, including those of magazines. We don’t dispute price-reflectivity but it is not easy to implement without competition in the market.”

Meanwhile WWAV Rapp Collins Group chief executive Marco Scognamiglio says: “While we believe that Royal Mail should have greater flexibility when dealing with business customers – to compete effectively with rival operat- ors and with other media channels – this zonal pricing proposal was clearly not the way forward.

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DHL in drug distribution deal

Posted by | Jul 27, 2007 | |

DHL Global Forwarding is to distribute albendazole, a drug used in the prevention of Lymphatic Filariasis also known as elephantiasis, for GlaxoSmithKline on a not for profit agreement basis.

As part of a commitment to eliminate LF, GSK has opened a GBP 1.5m manufacturing facility in Cape Town, South Africa to produce albendazole. GSK is partnering with DHL Global Forwarding to manage global distribution. The operation is based at its Cape Town distribution centre.

GSK has donated more than 600 million treatments free of charge to stop the transmission of this disease.

Over the past three and a half years, DHL Global Forwarding has worked with GSK to distribute albendazole to 36 countries.

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Shipping companies deliver good returns

Posted by | Jul 27, 2007 | |

Package shipping is big business. Global exchange, ecommerce and changes in supply chain management have all contributed to this boom. The number of packages delivered is absolutely, positively staggering.

United Parcel Service is the biggest and bluest of the bunch with a market capitalization of USD 78.7 billion, sales of USD 47.9 billion and an AAA credit rating. This company makes roughly 15 million deliveries every day with its more than 100,000 vehicles. It is the most profitable of its peer group with earnings that have averaged almost a 15 pct growth rate over the past three years and a return on equity of 26.6 pct.

FedEx is one of the world’s largest express-delivery firms with a market capitalization of almost USD 35 billion, sales of just over USD 36 billion, 53,000 drop-off locations. It does business in more than 200 countries. FedEx’s earnings have seen a growth rate of 28.6 pct over the past three years, accounting for a 15.2 pct return on equity in the last year.

With a market capitalization of USD 9.7 billion, Expeditors International of Washington generates USD USD 4.7 billion of revenue by playing middleman with no assets. This firm buys cargo space in bulk and then resells it to its customers needing shipping space. The company also provides customs brokerage and other related logistics services. Although technically called “consolidation” or “expediting”, EXPD also is involved in freight forwarding as circumstances dictate.

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