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TitleMedia Reference Guide
TagsFed Ex Mail Switzerland South America
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Page 1


� In Belgium, around 10m people live on a surface of less than 30,000 square
kilometres, which amounts to approx. 350 inhabitants per square kilometre.
In Europe, this density of population is second only to the Netherlands.

� Around 97% of Belgian people live in towns and cities. The largest urban
areas are Brussels, Antwerp, Liège and Ghent. This makes Belgium’s postal
market attractive for potential newcomers.

� Belgium’s Gross Domestic Product of 32.400 ¤ per capita is above average
in the EU-15 (29.300 ¤).

� The service sector generates around 75% of the Gross Domestic Product;
approx. 87% of the goods and services produced are exported.

� Belgium’s central geographical situation makes it a highly suitable location
for logistics companies. Its seaports (Antwerp above all) and the Brussels
airport are logistics hubs with European and intercontinental connections.

� This is reflected by the high density of companies, especially in the courier
and forwarding business.

� The express and logistics markets and their players are characterised by a
high degree of interdependence with the Netherlands and Luxembourg.

Postal Market

� Belgium’s postal market has a volume of around 3bn addressed mail items.
Including unaddressed mail and parcels total mail volume is at around 7.8bn
consignments. Total turnover of the post and its competitors is over 3bn ¤.

� With a market share of almost 100% De Post/La Poste is absolutely market-
dominating in the addressed mail sector. In this sector there is almost no
competition apart from a few small local companies. TNT’s announcement to
engage itself more in this sector in its neighbour country has been withdrawn
and postponed to the period after 2010.

� The government’s subsidies to La Poste, its exemption from VAT and uncertainty
about future regulations are considered to be the main market entry barriers
for competitors.

� The situation in the bulk mail sector is totally different. La Poste’s main
competitor, Belgique Diffusion, is the market leader, by far. The company also
gained a respectable market share in the delivery of newspapers.

� After outbound cross-border mail has been liberalised in 2003 vivid competi-
tion emerged in this market. Besides De Post/La Poste the largest companies
in this area are subsidiaries of big global players like DHL, DPD, Swiss Post
International and Spring (a joint venture of TNT and Royal Mail).

� De Post/La Poste and the government fear for the funding of the universal
service after the complete deregulation of the postal market. Therefore the
abolishment of the reserved area is not expected before January 1 2011.


Page 2


Belgian Post ( De Post/La Poste or bpost

� La Poste sees the market liberalisation as a threat to its existence. CEO
Johnny Thijs expects revenues to decrease between 25% and 50% and points
at allegedly unfair conditions of competition due to the universal service

� The Belgian post was indeed struggling in the past few years. In 2002 and
2003 the company had to face losses of over 40m ¤ in both years. The post
also failed to meet the performance standards and customer satisfaction was
below average while the sick leave was above average.

� By now La Poste has completed a restructuring programme and is profitable
again. The loss-generating branch network has partially been replaced by
private run postal agencies. The sorting process was modernised and delivery

� In this context the post launched an investment programme worth 250m ¤
at the end of 2006 - it’s biggest so far. Among other things, four new sorting
centres were established.

� In mid 2010 La Poste announced a rebranding. From September 2010 on
the CI will be gradually adjusted to the new brand name bpost.

� The Belgian post depends on its letter business to a large extent. Over 80%
of its turnover is generated in this sector. La Poste receives compensation
payments from the government for the early delivery of newspapers (for
reduced prices).

� At the beginning of 2006 Belgium’s government sold shares of La Poste worth
300m¤ (50% minus one share) to a consortium of Post Danmark and British
investment fund CVC Capital Partners (Post Invest Europe Sarl). In connection
with the merger of Posten Schweden and Post Danmark the Danish post
divested itself of its stake in La Poste and sold it to CVC. Therefore the Belgian
State and the investment fund are the only shareholders of La Poste.

Express Market

� The post is only one of several well positioned service providers in the market
for parcel and express consignments. Besides large integrators like UPS,
FedEx and DHL, TNT, DPD and GLS are also active on Belgium’s express

� Additionally there are a lot of small and medium sized companies active in the
express market. Their business is triggered by the vicinity of the international
air cargo hubs Brussels and Amsterdam.

� Turnover is estimated to be around 950m ¤ and showed a dynamic growth
over the past few years. Competition on the market increased in the course
of this development despite a comparably high degree of consolidation.


Page 9


The Biggest CEP and Logistics Companies

Company Mail Express Forwarding Logistics Courier

4PX International Ex-

l w w

ATL Logistics Hong

l l l

Cathay Pacific l

China Post (Hong

l l l

China Resources w l

China Shipping (H. K.) l l

China Travel Service

l l l

Cosco (Hong Kong) l w

DHL Express Hong

l w

DHL Global Forwarding
(Hong Kong) Ltd.


Eastern Worldwide l l

Fast Express Limited l

FedEX Hong Kong l l w

Hongkong Post l l w

Hutchison Whampoa l l

Kerry Logistics w l l

Maersk Logistics l l

Modern Terminals l

Orient Overseas Con-
tainer Line

l l

Schenker Hong Kong w l l

Sinotrans Hong Kong l l w

Taikoo Maritime l l

TNT Hong Kong l l l w

UPS Hong Kong l l l


Page 10


Postal Market Regulation

Definition of Post

Letters, books, catalogues, newspapers, periodicals and similar consignments,

Reserved Area / Monopoly

According to the third EU postal directive the reserved area has to be abolished
by December 31 2010.

Universal Service Obligation

Letters: up to 2 kg

Parcels: up to 20 kg

Press: up to 2 kg

Registered Mail

Consignment of Valuables

Quality Targets for Universal Service Obligation

Delivery five days a week. In practice six days a week.

Delivery time targets are adjusted regularly:

1. Mail Consignments:

2006: D+1 88.0%; D+3 99.0%

2007: D+1 88.5%; D+3 99.0%

2008: D+1 89.0%; D+3 99.0%

2009: D+1 89.0%; D+3 99.0%

2. Recorded mail:

2006 2009: D+3 94.0%; D+5 99.0%

3. Bulk Mail Consignments:

2006 2009: D+3 94.0%; D+5 99.0%

4. Parcels:

2006: D+5 93.0%

2007: D+5 93.5%

2008: D+5 94.0%

2009: D+5 94.0%


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Brief Description

� FedEx is considered to be the creator of the overnight express service;
„FedExing“ is the synonym for express forwarding in the USA. FedEx is
characterised by the high motivation and commitment of its employees, which
was even the subject of a successful Hollywood film (“Cast Away” with Tom

� Based on the total number of aircrafts, FedEx operates the world’s largest air
fleet, with 664 airplanes.

� Initially, the company operated exclusively in the express sector. Through
acquisitions, however, it also grew into other business areas. The core
business is still express service within the USA. This is where the highest
turnover is generated. Through acquisitions FedEx has also - primarily in
the USA - gained a foothold in the market segments parcel, SCM, LTL and
hazardous goods. Through the acquisition of Kinko’s (now known as FedEx
Office), FedEx also entered into the printing and document business.

� Altogether FedEx generates about 70% of its total revenues in the USA. In the
business year 2009/2010 the domestic parcel business in the USA (FedEx
Ground) became the company’s main growth driver. The company’s total
turnover saw a decline, FedEx Ground was the only division to record growth
(+5.6%, 5.77bn¤). Even more important: with an operating result of 1.024m
US dollar the division has exceeded the 1bn dollar mark for the first time.

� The express division, with a turnover approximately three times higher,
recorded a 10% profit increase compared to 2009/2010 (turnover: 16.7bn
¤, EBIT: 874.5 m ¤).

� But in Europe FedEx has difficulties. An initial market entry was abandoned
in the late 70s following extremely high losses. For the following 2 decades,
the integrator offered almost exclusively import and export services from and
into the USA. Domestic services in Europe – if offered at all – were provided
through co-operations.

� But since a few years FedEx expanded its presence and businesses in Europe.
Among other things the company established the Cologne/Bonn Airport as its
new main hub in Europe in 2010. However, the company’s core business are
still international services.

� In 1999 already, the company launched a joint venture with DTW, one of the
largest Chinese express operators (FedEx-DTW International Priority). At the
beginning of 2007 FedEx acquired DTW’s stake and is since then the sole
owner of the company.

� It is also worth noting that a number of innovations in the express business
originated from FedEx and were later adapted by rival companies (for example,
online tracking & tracing).

� In the year-long dispute whether its employees should fall under the jurisdiction
of the National Labor Relations Act, FedEx prevailed. Despite massive attempts
and lobbying efforts of competitor UPS the final decision was in favour of
FedEx. Since 2007 UPS tried to ensure that FedEx also has to operate under


Page 18


the NLA legislation. While the Railway Labor Act, under which FedEx operates,
greatly limits employees’ rights to strike amongst other things, the NLA makes
it easier for staff to unionise.

What the market looks for

� The company is characterised by ambitious goals. For example, FedEx is
constantly striving for a turnover growth as well as an operating margin of 10%
annually. The main points of focus for growth can be seen in the international
business, in E-commerce, in new services and in co-operations.

� The very strong brand, the technological leadership, the strong presence in
Asia, the huge financial strength and the company’s own huge aircraft fleet
are seen as strengths of FedEx.

� In economically weak times, the large air fleet, which is not working entirely
at full capacity, can become a financial burden. This became evident during
the economic crisis of the last years which had a huge impact on FedEx.
Volumes plunged especially in FedEx’s core business and many customers
chose slower but less expensive parcel services. FedEx’s freight operations
were in the red for two years in a row.

� The fact that, up until now, FedEx’s activities outside the USA have been
solely in the express business, may have equally negative consequences in
the future to the altogether weak European presence compared with rival
companies. The company currently holds a market share of about 2% on the
European CEP market. Furthermore, in contrast to other huge competitors
FedEx lacks a parcel service outside the USA.

� Additionally, FedEx must deal with declining turnover and profits at Kinko’s
(renamed to FedEx Office in 2008). FedEx had to write off 70% of the
purchase price of around 1.9bn ¤ since the acquisition in 2004.

� FedEx’s opportunities for growth are found primarily outside the USA, above
all in the Asian market, where FedEx already has a strong position in the
express market – which is indeed very highly competitive – and is regarded as
the second-largest operator in the region.

� FedEx must focus on reducing its dependence on the US market and getting
the long-flagging Kinko business under control.

� FedEx is still involved in the long-running legal dispute about the status of
FedEx Ground’s drivers, dragging on since 2005. The company has to deal with
the accusation that it has declared its drivers as independent subcontractors
for tax reasons only. A note from the integrator to the SEC confirms that FedEx
has to deal with some 50 class-action suits, various individual procedures
and about 40 tax cases in this regard.

� At the end of 2010 FedEx achieved an important partial victory. A Federal
Judge dismissed 20 of 28 class action suits. The court declared that the
controls and regulations set up by FedEx applied only to results, for example
the timely and safe delivery of consignments. In the opinion of the court the
fact that the subcontractors may hire temporary workers and reserve drivers,


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