December 2013

Summary and Point of View from Kent Smith, Research Director, Ursa Major Associates for PostalVision 2020

The International Postal Corporation, based in Brussels, Belgium, is a cooperative association of 23 member postal operators. It publishes an annual review of the global industry, focusing on 39 global postal operators and major integrators. While most industry observers will want to review the report in detail, some of the headlines may be worth thinking about while the industry takes a break for the holiday season.

In the U.S., the End of the Year Headlines for the USPS Remain Bleak

Once again, promised legislation was delayed. The shape of the legislation still is not clear. While the Postal Service reported some positive operating revenue news to end FY2013, the overall financial situation remains uncertain. Congress gets a lump of coal from Santa.

Global Postal Industry Revenue Keeps Growing…Outside of North America

Overall, postal operator revenue grew 2.7% in 2012, with a consolidated EBIT margin of 4.4%. According to the IPC, the growth varies between regions, operators and business areas. Individual market conditions and strategies matter – a lot. Not all operators shared equally in 2012 growth that reached €422.2 billion, up from €415 billion in 2011. Most of the growth is coming from BRIC (Brazil, Russia, India, and China) with growing economies and a less mature postal sector. Europe remains reasonably stable, but for North America, another lump of coal.

Growth Comes Despite Continuing Decline in the Letter Mail Business

Mail now accounts for less than half of the revenue of most postal operators, while Parcels and Express, Financial Services, and Logistics and Freight saw significant growth. Santa did visit the U.S., which did see the Postal Service grow its package services business.

Posts are Focused on Diversification, New Product Development, and Acquisitions

There were 129 acquisitions and 50 divestments completed by 27 operators since 2009. There were 42 acquisitions in 2012 alone, primarily in the logistics, parcels, information services, and even in mail segments. Santa does not deliver these kinds of presents in the U.S.

Publicly Trades Shares

Several postal operators now have publicly traded shares. Between January 2010 and September 2013, most postal operators outperformed the Euro Stoxx 50, some by a large margin. Funny, someone told Santa that in the U.S., the industry was doomed to unprofitability and underperformance. So Santa is delivering (probably through the posts) elsewhere in the world, but not here.

By Kent Smith

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