New Zealand Post to Buy Out DHL of Express Couriers Limited & PDG

New Zealand Post Positions for the Future | New Zealand Post.

Press release by New Zealand Post dated 25 June stipulates that DHL Express and New Zealand Post have reached an agreement for the latter to buy out the 50% shareholding of DHL in Express Couriers Limited and PDG.

While the relationship based on ownership is resolved, the two parties will maintain a strong contractual relationship to s “support each other’s express delivery operations at a global level, through DHL Express; and domestically in New Zealand, through ECL; and in Australia via CPPL.”

Once again, we see the familiar reference to the decline in letter mail volume while parcels and courier services are growing “on the back of growth in e-tailing and e-trading.”

New Zeland Post’s response to that is to better align ECL with New Zealand Post to better match the products and services portfolio to the needs and wants of the market.

New Zealand Post Group CEO Brian Roche says “We can only achieve this if we have full ownership of ECL.” He also says that this acquisition is key in delivering the New Zealand Post strategy.

Yamato Aims to Expand Its End to End Logistics Services Network

Yamato Holdings, owner of Yamato Transport and approximately 50 other subsidiaries in 7 business divisions, posted its report to the Tokyo Stock Exchange on its business performance for the period ending March 2012.

In addition to its financial statements and updates on its consolidated subsidiaries, Yamato made it clear in its report its ambitions in the coming years and key focus areas in the immediate future.

It should be noted that simply expanding their international footprint is not what Yamato’s international business strategy is about.

Yamato launched Ta-Q-Bin in Malaysia in November 2011, and reports that the half-day delivery lead time for stationery in Shanghai has been well received.

Such local services to offer more convenience to the community is what Yamato does best. Wherever it goes, Yamato aims to burrow itself into the local market as a local player who has an established track record in being the No.1 service provider in Japan and someone who understands and wants to offer more convenience and contribute to enhanced quality of life for its customers.

In the report, Yamato lists the challenges they will be taking on in FY2013 (period ending on 31 March 2013) as follows:

1) To draw on its business success in Japan and established markets to further expand into the major markets in Asia while strengthening the network that connects its various overseas posts to more effectively support both consumers and businesses through its international network.

2) To further enhance features for Kuroneko Members, a free of charge membership service now with electronic money functions and other functionality, to align itself more closely to the local markets of its members to remove as many impediments for convenient shopping as possible to establish a more sophisticated home delivery service portfolio.

3) Ongoing productivity improvement in the collection and administration sections including a review of sorting operations and enhancing the network for higher productivity and quality in transportation and delivery networks to strengthen Yamato’s profitability and competitiveness.

4) To create new businesses by comprehensively drawing on its established management resources of information systems and logistics functions through the realization of value-added logistics and international end to end logistics management to offer more convenience to customers.

5) To further promote profitable and sustainable operations and enhanced corporate governance through aggressively pursuing environment conscious policies, safety policies and corporate social responsibility policies to make Yamato the most approachable, close, and loved business group in its community.

They truly are taking the “glocal” approach: to think global but act local.

Yamato Sees 9.5% Y-O-Y Ta-Q-Bin Growth in May 2012

平成２４年５月小口貨物取扱実績| ヤマトホールディングス.

Yamato announced on their web site on 5 June that in the month of May 2012, they shipped a total of 113,330,362 Ta-Q-Bin items, 109.6% higher than the same period last year, and the aggregate total for FY2013 (period ending in March 2013) is 220,177,338 items, 107.5% over the previous year.

The growth rate is slightly higher than the 5.3% seen in April 2012 over the same period the previous year.

For the Kuroneko Mail service, May saw 180,390,404 items,  101.1% over the same period the previous year, and aggregate total is 350,339,566 items, 97.8% of the previous year, reflecting the impact of the introduction of stricter lodgement rules introduced in September 2011, in response to their being accused of infringing on Postal Law with a client.

However, this shows a steady recovery from April’s figures which were 94.5% of the same period in the previous year.

UPS creates $99m investment vehicle to fuel growth in China | Post & Parcel

UPS creates $99m investment vehicle to fuel growth in China | Post & Parcel.

According to the article, “UPS became the first foreign non-financial company to issue a commercial paper transaction in China’s RMB traded in Hong Kong.”

It seems that raising funds this way has been routine for UPS since 1992 in the United States.

Raising operational cash flow through such activities does not seem to be a strength that posts in Asia have.

In some countries, their regulators do not allow them to issue such financial vehicles.

But with some IPOs on the horizon, and as privatization of posts start to actually mean that instead of having only one shareholder, their government, they will have opportunities to look into such vehicles, too.

For now, it may be out of their scope, but after spending more than $1 billion in infrastructure development, what will this additional $99 million mean for UPS and its impact on the overall market?

UPS has always been known to invest quite heavily in IT even before it was fashionable to do so.

The new UPS Asia Pacific Region President, Brendan Canavan said: “This CNH initiative will give UPS more flexibility in payment, collection and future investments in China, ultimately enabling our clients’ businesses to respond more effectively to expanding trade lanes with international markets.”

Source: Post&Parcel/UPS

Postal Technology International – June 2012

Postal Technology International – June 2012.

Great thought provoking articles contributed by former CEO of New Zealand Post, Elmar Toime and Chief Technology Officer of Austria Post, Walter Trezek about “Rethinking the USO (Universal Service Obligation” (by Elmar Toime) and a journey exploring the digital transformation of posts (Walter Trezek).

I have personally admired the dynamic leadership of Elmar Toime and Walter has always been a visionary with a wry sense of humor (and a British accent).

Such publications as Postal Technology makes one wonder where the Asian Posts  showcase and share their ideas, best practices, and challenges. The list of other prominent contributors are very European and while the article on USO in Africa was an interesting one, the only thing that was mildly Asian was an article on a new sorting machine for TNT Hong Kong.

Let’s hope that in the near future, more Asian contributors participate in this and other Industry media.

High-Tech Direct Door-To-Door Services Going Increasingly Global

DHL launches door-to-door Asia to Europe delivery service | Post & Parcel.

According to the above article in Post & Parcel, posted on 15 June 2012, “The service is currently offered out of Hong Kong, Shanghai and Singapore to more than 50 countries across Europe, the Middle East and North Africa, with new gateways to be added soon.”

I guess this implies that Intra-Asia door-to-door shipments are already in place?

At first glance, I fail to see the significance of this service and why it is news-worthy.

The article says, “The service includes customs clearance, a single billing facility and end-to-end online track and trace capabilities.

Diallo, the CEO of DHL Freight, explained: “A web-based application enables easy booking and shipment preparation and provides end-to-end shipment preparation and provides end-to-end shipment transparency down to piece level.”

Is it newsworthy because the FREIGHT division is offering this??? Does this mean cannibalization of traffic by DHL Freight of DHL Express?

The features explained here are standard Express features… right?

Years ago I visited a UPS managed 3PL facility in Singapore for a high-tech firm whose global shipments were done out of that facility. The shipment profile was B2B due to the nature of the goods – computer parts.

But ever since Dell paved the way for direct to user shipments, more and more consumers are purchasing directly from the manufacturers.

When I migrated from an iPhone 3 to 4S several months ago, the mobile phone service provider was really pushing me to get an iPad as well at no cost for three months, and then have the price of the hardware included in my monthly subscription to the 3G + WiFi service for a minimum contract period of 2 years. (Great attempt to lock my business in for two years.)

The sales assistant went to great lengths to explain to me the benefits of buying from the mobile phone company vs. the electronics store a few hundred meters down the road. But when I asked about if they had any advantages over the Apple online store, she squirmed.

Even with the iPhone, if it is not a network problem, the mobile phone company promptly tells customers to go to an Apple Service Centre, which has much fewer locations and longer queues.

When I had a problem with my pocket Wi-Fi device, they sent me a replacement device on loan via Yamato. The delivery guy waited at my front door while I examined the contents of the shipment and then handed over the unit in need of repair. He packed it in the same padded envelope the replacement unit came in, and stuck a pre-printed label on it and took it away.

Theoretically, if I purchase something directly from a manufacturer and need repairs or an exchange (when I was working for a camera company, we exchanged the first 10,000 units that were brought back with mechanical problems immediately; no questions asked), I would expect this kind of service be it cross-border or within Japan.

The article does not explain if such services would be a part of DHL’s Door-to-More initiative, but I wouldn’t be surprised if the shipper and consumers both request it.

Of course such returns and exchanges management is a whole different can of worms when it comes to 3PL or 4PL, but definitely a requirement and less of an option for serious players in the direct from manufacturer to consumer business.

Let’s see if the next announcement is a bit more exciting.

Digital MailBoxes – To Do or Not To Do

According to the article posted on Post & Parcel,”Donahoe rules out USPS digital mailbox, but ID services on radar” | Post & Parcel,  Mr. Paul Vogel, former CMO, has been appointed to be the head of the New Digital Solutions Team at USPS. But in his keynote speech for PostalVision 2020, USPS PMG Mr. Patrick Donahoe announced that USPS will NOT offer digital mailboxes.

This is a striking contrast to the announcement earlier this year by Australia Post for their Digital MailBox program.

Canada Post also has a digital mailbox service, and is experimenting to offer such features as secure document storage up to seven years free of charge.

A quick online search reveals that Singapore Post, Swiss Post, Swedish Post, Norwegian Post, Austria Post, and a host of other postal operators are competing with private sector service providers (of which Mr. Donahoe says there are plenty in his market) as well as telecom companies for this service.

If my memory services me right, the whole idea behind the digital mailbox in Sweden was a free email address on the Swedish Post domain for anyone 15 years old and older for life that is linked to their physical address. I recall thinking this is a whole new interpretation of “universal service obligation fulfillment” and has me thinking to this day what the postal USO could and should mean in this day and age of everything digital and mobile.

Mr. Donahoe says something in the order that there are plenty of other digital solutions that have not even been thought of yet that USPS will be looking into, but monetizing them is the real challenge as consumers (as usual) expect digital services to be free.

In terms of ID services, Hongkong Post was the first entity in Hong Kong to be recognized as a digital certification provider in the market. The e-government initiative in Hong Kong has been ongoing for some time now. There are other governments who are investing in e-government processes, but in some cases, posts are not their preferred service partner. This, I suspect, can be attributed in part to the visions the heads and CEOs of postal companies have when lobbying their governments.

FedEx Express extends cut-off time for Taiwan deliveries | Post & Parcel

FedEx Express extends cut-off time for Taiwan deliveries | Post & Parcel.

Interesting move by Taiwan FedEx pertaining to FedEx Express and FedEx International Economy for items ex-TW.

 

Extending the CET has a significant impact for business customers and possibly e-commerce merchants.

 

Reflecting on Cross-Border E-Commerce in EC vs. China-Japan

Border Bother: How the EU should grow its e-commerce trade | Post & Parcel.

This is an interesting article by GFS Director Stephan Ferguson posted on 11 June 2012 on Post & Parcel,  and his pointing out that the IT discussion is missing from the EC study on what EC is doing right and wrong about cross border e-commerce. This has prompted me to reflect his points on Sino-Japanese cross-border e-commerce elements.

Also interesting in Ferguson’s article were figures quoted like 10% of B2C parcels cross borders (within Europe)  and that each contain goods valued around EUR40 ~ EUR100.

I am keenly waiting for the 2011 survey results from Japan’s Ministry of Economy Trade and Industry on Cross Border E-Commerce, an annual survey they have been conducting since 1998.

The 2010 survey report is readily available online, but last year’s survey results are yet to be published.

While the EC seems to have an Online and Postal Services Unit as well as a Commissioner who is responsible for the Digital Agenda, Japan’s METI has very clear policy objectives to promote cross-border e-commerce ex-Japan.

The 2010 report cites that they see four policy objectives to this end:

1. Responding to the bad reputation our merchants are being labelled with thanks to the Great East Japan Earthquake and the nuclear power plant accident;

2. Enhancing awareness of Japanese e-commerce site abroad;

3. Establishing an appropriate trading environment for cross-border e-commerce based on sound understanding of their purchasing behaviors; and

4. Resolving structural impediments to cross-border e-commerce.

Their immediate future actions for the above are:

With a budget to establish infrastructure of 430 million yen (5.4 million dollars) and  subsidies to better utilize IT etc. for intellecutalizing economies in the Asian region,

a) Creation of an information dissemination site to assist cross-border e-merchants to accurately provide information to consumers abroad;

b) Research on effective marketing methods for cross-border e-commerce; and

c) Establishing cross-border e-commerce related policies and directives through such actions as bilateral discussions with Asian countries.

The 2010 survey indicates that the number of cross-border e-commerce users in China has increased by 15% over the previous year, and total trade value between Japan and China was 96.8 billion yen or 1.2 billion US dollars. METI estimates this to increase to a maximum of approximately 15.8 billion US dollars by 2020.

China has already surpassed the US in value and volume of cross-border e-commerce ex-Japan, and approximately 50% of the 807 Chinese respondents who have never used cross-border e-commerce  said they would like to use cross-border e-commerce if they get the chance. This figure is much higher than the 7.7% for Japan (n=1,622) and 7.3% for the US (n=1,334). And when added with the 8.7% who said they would definitely like to use cross-border e-commerce, that is 58.7% of non-shoppers who have the desire to use cross-border e-commerce.

METI survey indicates the US sells more to China than Japan does, but China has surpassed US as Japan’s largest cross-border e-commerce customer. The trade deficit between Japan and US is evident in cross-border e-commerce as well.

Now that the Japanese Yen and Chinese RMB are being traded directly, transactions between the two nations will probably become smoother and less costly, which may help bring down the relative price of Japanese goods to Chinese consumers.

Perceived barriers for purchase by Japanese consumers shopping cross-border (n=1,622) are:

1. Language (46.3%)

2. Lack of trust in quality of the goods (40.9%)

3. Lack of trust in the merchants (37.1%)

4. Anxiety over transaction security (32.1%)

5. Anxiety over customer inquiries and after-sale complaints handling by the merchant (27.5%)

The same for American consumers (n=1,334) are:

1. Shipping costs are too high (34.8%)

2. Language (31.7%)

3. Lack of trust in the merchants (31.5%)

4. Lack of trust in the quality of the goods (30.5%)

5. Lack of trust in the authenticity of the goods (fakes) (27.9%)

For the Chinese consumers (n=807), they are:

1. Language (61.7%)

2. Shipping costs are too high (45.1%)

3. Duties and Taxes are too high (39.5%)

4. Anxiety over customer inquiries and after-sale complaints handling by the merchant (37.7%)

5. Price of goods are too high (32.6%)

While Ferguson seems to believe that IT is key to solving many of the challenges identified in the EC study to promote cross-border e-commerce, it looks like the same can be said for Sino-Japanese cross-border e-commerce while the complex Chinese duty system and relative purchasing power of Chinese consumers + the strong yen have to also be considered.

Rakuten and Seven Eleven Japan Launch Own Delivery Services

According to Nikkei BP Online, Japan’s No.1 online shopping portal, Rakuten, and No.1 retailer, Seven Eleven Japan both announced that they will launch their own home delivery services.

Both Rakuten and Seven Eleven have been relying on Yamato Transport for such services to date.

As the market leader, Yamato currently enjoys a 42.2% market share of under 30kg shipments carried by truck, according to data published by the Ministry of Land and Transportation of Japan.

Seven Eleven previously charged 200 yen for delivery of lunch boxes, etc. from their shops for purchases exceeding 1,000 yen. From 7 May 2012, they changed that to free delivery for purchase over 500 yen and a delivery charge of 120 yen for purchases under 500 yen.

Delivery is being done by the shop manager and staff at the local Seven Eleven Convenience Stores. The aim is to create a stickier relationship between the shop staff and customers so that the staff can cross sell other items in the store.

Rakuten will commence its services for delivery of fresh produce purchased on Rakuten Mart first in the 23 wards within Tokyo. By the end of 2013, they plan to expand their branded delivery network to the entire Kanto region. (Tokyo and its neighboring prefectures)

Instead of enhancing their relationship with Yamato, Rakuten has decided to align with local small delivery agents who will wear Rakuten uniforms and caps. Rakuten’s Director was quoted as saying that there are even plans to “Rakuten-ize” their delivery trucks.

Cost management is probably a key element, but Rakuten claims that their top priority is to increase brand exposure.

Rakuten Mart is playing in the online supermarket space which may offer high volumes but low margins. By consolidating not just Rakuten Mart shipments, but also other purchases made on the Rakuten portals, the company hopes to increase its logistics efficiency.

Failed delivery attempts are the biggest profit drain for home delivery companies. In one discussion, I was told that an express delivery company’s cost for delivery increases by a factor of four in a country as small as Singapore.

But Rakuten says that consumers who order groceries online are very specific about dates and times for the deliveries to occur and they are very likely to be home for them. As such, they feel confident that failed delivery attempts would be minimal.

At the time of the publishing of the article, Yamato is quoted as saying they “are not in a position to comment” on these announcements/initiatives.

But if your largest customer announces that they will become your competitor, that must be a pretty bitter pill to swallow…

I heard once that already, Coca-Cola in the US has a contract with the State Department to avail their logistics network in the case of national emergency since their logistics network is expansive. But they do they already offer their logistics network to third parties akin to the way amazon offers server capacity as cloud services? Can this be the beginning of a cloud service boom in logistics?

Is this a diversification of players in the market in response to the current concentration which may later be concentrated again? (For example, can you foresee Rakuten selling their logistics services arm to someone like UPS, for example?) Or is this the new reality for posts and couriers – their largest customers becoming their competitors.