In contrast to Europe, where TNTis already seeing rapid growth as ittakes advantage of European Unionledliberalisation in mail markets, opportunitiesin Asia for its mail divisonremain limited.
Though TNT’s express parcels networkin the region is expanding rapidly,and though it has an ambition to getinto addressed mail in the region too,in practice monopolies by nationalpost offices limit its mail forays to theunaddressed business mail market anddirect marketing services.
For example, the company hasstarted a direct marketing service inShanghai, which it is also rolling out toother parts of China. Potentially, thiscould reach 400 million households. AsHarry Koorstra, TNT board memberfor the mail division explains, TNT’sapproach, which targets blocks of 400houses, is much more accurate thanthat of Shanghai Post, which targetszip code blocks of 40,000 to 100,000houses.
‘To use mail as a marketing channel,it is very important to be able to targetthe right group of recipients,’ Koorstra says. ‘By using blocks of 400 houses and by gathering marketing data on these households, we can offer specific consumer profiles which can be used in a segmented unaddressed approach, or for addressed mail.’
The company is also carrying out amarket survey to see if similar operationsmight be possible in India, butotherwise its Asian mail activities aremainly its participation in Spring, thejoint venture with Royal Mail of theUK and Singapore Post, which feedscross-boder business mail into nationalpost office delivery systems.
In Europe, with postal markets liberalisedfor anything above 50 grams,and some countries even allowing lastmile delivery, the market is very muchmore developed. TNT’s European MailNetwork now has delivery services inseven European countries apart fromthe Netherlands and reckons to reach70 million households.
That makes it the growth engineof the mail division, with 24.4 percentrevenue growth year on year forthe first three quarters of 2006. Withrevenues predicted to be €750m thisyear, Koorstra says the target is €1.7bnby 2012.
The key markets for this service arecurrently the UK, Belgium, Germany,Austria and Italy, with some activity also in the Czech Republic and Slovenia.Customers are businesses, for whomTNT prints, organises, and pre-sortsmarketing mailshots or transactionrelatedmail such as bank statements.In the UK these are injected intothe national postal networks for thefinal mile delivery, but in the rest ofEurope, TNT is increasingly doing itsown delivery.
There is growth in this market, eventhough overall European mail volumesare declining as email and electronicbilling cut into its core market. TNT’sDutch mail volumes saw a 13 percentdecline from 2000 to the third quarterof 2006, for example, an annual declineof 2.1 percent, and in the past two yearsthe decline has been even steeper, atan average of 3.5 percent.
But Koorstra says TNT is able togrow by capturing market share fromless efficient national post offices.’Boston Consultants calculate that theinefficiencies of European post officesamount to 13-14 billion a year,’ hesays. With email or the internet replacingmost urgent communications, thegrowth area is in business deliverieswith a 48 hour or even 72 hour timewindow.
‘What the customer wants to knowis not that the mail will be deliveredtomorrow, but that it will be deliverednext Wednesday, or every Wednesdayin the week,’ says Koorstra. TNT reckonsto be able to offer this service atas much as 30 percent below the costof a regular national post office. ‘Whatwe are doing is taking efficiency savingsand passing them on to the customer,’ Koorstra says. ‘That is why the European Mail Network business is seeing such growth.’
– Peter Conway
