International Postal Update — April 2009



A proposal to bring in outside investors to shore up Royal Mail threatens Labour government. In late February, Business Secretary Peter Mandelson revealed that Royal Mail’s total pension deficit would be revalued to between £8 billion and £9 billion, so Prime Minister Gordon Brown has begun pushing a bill to seek investors to buy roughly 30 percent of Royal Mail while promising to maintain universal service, jobs, and government control of the company. TNT reportedly has expressed interest. Unions are organizing protests and claiming that the sell-off is a prelude to privatization.

Brown’s government must stand for election by June 2010, and the Prime Minister faces a revolt within his own ranks. Some 150 Labour MPs have come out against the bill. The government, already strapped for funds because of the recession, argues that there is no alternative. “We can’t afford to pay double our pension contributions or pass them on to the customers as that will drive volumes down,” said a government spokesman. The pension plan covers 450,000 workers.

Meanwhile, several members of parliament have called for the creation of a government-backed “people’s postal bank.” Royal Mail has offered savings accounts, insurance, personal loans, and credit cards since 2003. Proponents of this expanded postal bank envision a “universal banking obligation,” which would guarantee all Britons access to accounts. At a time when the regulatory framework for British banks has come under intense scrutiny, it is unclear how oversight for such a venture would function, and how requirements for such areas as capital and liquidity requirements would apply.


Privatization of Japan’s postal services continues but remains murky. Under Japan’s 2007 privatization plan, four companies were set up under the ultimate control of Japan Post Holdings Co. But as the original Japan Post’s assets have been reallocated among the four new entities — and in some cases sold off to private groups — some officials including Internal Affairs and Communication Minister Kunio Hatoyama have claimed that the deals have been anything but fair and transparent. A government postal privatization panel says that although the four companies — Japan Post Bank, Japan Post Insurance Co., Japan Post Network Co. and Japan Post Service Co. — have engaged in practices that may unduly benefit private parties, the existing setup should continue, albeit with stronger controls. Japan Post Bank and Japan Post Insurance are seeking an end to government-imposed restrictions on deposit limits and insurance benefits.


Deutsche Post World Net becomes Deutsche Post DHL. Hoping to reassure investors after a decline in its stock price, Deutsche Post revealed a restructuring plan on March 11. “Strategy 2015” is targeted at defending Deutsche Post’s “strong position on the German mail market and raising profitability at DHL,” the company said. Executives plan to fuse the company’s freight forwarding, supply chain logistics, and express delivery businesses under the DHL brand. CEO Frank Appel says the company may cut work hours for its employees in Germany as the business environment deteriorates. Deutsche Post employs 500,000 workers and continues to enjoy exemption from the VAT as it attempts to fight off competitors and maintain its core business, mail delivery in its home market.


Dutch mail giant TNT NV concludes expensive labor agreements. Europe’s second-largest mail operation says its new union contracts with domestic workers will save the company some 125 million euros ($158 million) every year. Workers at TNT will face lower incomes over the next three years but will not face any “forced redundancies,” or layoffs. But TNT may need more savings because of increased competition in the Netherlands. The Dutch government in February ruled that the Netherlands’ domestic mail market will be opened for letters up to 50 grams as of April 1, ending TNT’s monopoly.

International Postal Update