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DIVERSIFICATION INTO LOGISTICS
STRATEGIES FOR INCUMBENT POSTAL OPERATORS IN EUROPE
presented to the
College of Management of Technology
Chair Management of Network Industries
SWISS FEDERAL INSTITUTE OF TECHNOLOGY
Lausanne, Switzerland
presented by
Patrick MOLLET
Licentiatus Rerum Politicarum, University of Berne
Jury:
Matthias FINGER
Professor, Swiss Federal Institute of Technology
Thesis director
Christopher TUCCI
Jury president
Peter KLAUS
Professor, Fraunhofer Institute Nuremberg
Rapporteur
Michel KUNZ
Member of the Executive Management, Swiss Post
Rapporteur
Philippe WIESER
Rapporteur
Lausanne, EPFL
2008
Contents
Table of Contents
V
List of Tables
VII
List of Figures
IX
1 Summary
X
2 Research Question and Methodology
1
2.1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
2.2
Research Question . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
2.3
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
2.4
Sequencing of the PhD thesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
2.5
Structure of the PhD thesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
2.6
Expert Interviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
2.7
Relevance of Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
3 Competitive Analysis of the Postal Sector
3.1
3.2
20
Trends and Strategic Drivers in the Postal Sector . . . . . . . . . . . . . . . . . .
20
3.1.1
Regulatory and Institutional Developments . . . . . . . . . . . . . . . . .
21
3.1.2
Industry and Market Developments . . . . . . . . . . . . . . . . . . . . . .
24
3.1.3
New Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
3.1.4
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
Competitive Analysis of Postal Incumbents . . . . . . . . . . . . . . . . . . . . .
28
3.2.1
The Concept of Competitive Analysis . . . . . . . . . . . . . . . . . . . .
29
3.2.2
Current Strategies of Postal Incumbents . . . . . . . . . . . . . . . . . . .
30
3.2.3
Crucial Factors Shaping the Competition . . . . . . . . . . . . . . . . . .
34
3.2.4
The Competitive Landscape . . . . . . . . . . . . . . . . . . . . . . . . . .
40
I
Contents
3.2.5
Offensive Moves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46
3.2.6
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
4 The Concept of Diversification
4.1
4.2
4.3
54
Introduction to Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
4.1.1
Theoretical Foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
4.1.2
Diversification as a Focus of Academic Research . . . . . . . . . . . . . . .
58
4.1.3
Motives for Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
4.1.4
Competitive Advantage of Diversification . . . . . . . . . . . . . . . . . .
62
4.1.5
Risks and Costs of Diversification . . . . . . . . . . . . . . . . . . . . . . .
67
4.1.6
Impact of Diversification on Performance
. . . . . . . . . . . . . . . . . .
68
4.1.7
The Selection of the Target Industry . . . . . . . . . . . . . . . . . . . . .
72
4.1.8
Delimitation to Convergence . . . . . . . . . . . . . . . . . . . . . . . . . .
73
4.1.9
Implications for Research on Diversification in the Postal Industry . . . .
76
Diversification in the Postal Sector . . . . . . . . . . . . . . . . . . . . . . . . . .
77
4.2.1
Reasons for Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . .
79
4.2.2
Sources for Synergies and Related Diversification . . . . . . . . . . . . . .
82
4.2.3
Areas of Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
4.2.4
Level of Product Diversification of Different Postal Incumbents . . . . . .
95
4.2.5
International Diversification . . . . . . . . . . . . . . . . . . . . . . . . . .
99
4.2.6
Convergence in the Postal Industry . . . . . . . . . . . . . . . . . . . . . . 100
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
5 Logistics Industry Analysis
5.1
5.2
103
Logistics as an Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
5.1.1
History of the Logistics Industry in Europe . . . . . . . . . . . . . . . . . 104
5.1.2
TUL Logistics and Co-ordination Logistics . . . . . . . . . . . . . . . . . . 105
5.1.3
Logistics as Flow Management . . . . . . . . . . . . . . . . . . . . . . . . 106
5.1.4
Logistics as an “Order-to-Payment” Process . . . . . . . . . . . . . . . . . 109
5.1.5
Definition of the Relevant Market . . . . . . . . . . . . . . . . . . . . . . . 110
Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
5.2.1
Type of Logistics Provider: Standard services vs. contract logistics . . . . 112
5.2.2
Modal Split . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
II
Contents
5.3
5.4
5.5
5.2.3
Segmentation in the Study “Top 100” . . . . . . . . . . . . . . . . . . . . . 117
5.2.4
Segmentation of the Postal Market . . . . . . . . . . . . . . . . . . . . . . 119
Market Facts and Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
5.3.1
The Importance of Logistics in Europe . . . . . . . . . . . . . . . . . . . . 120
5.3.2
Market Size, Growth Rates and Profit Margins . . . . . . . . . . . . . . . 121
The Five Forces of the Logistics Industry
. . . . . . . . . . . . . . . . . . . . . . 123
5.4.1
Bargaining Power of Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . 124
5.4.2
Bargaining Power of Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . 125
5.4.3
Potential Entrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
5.4.4
Threat of Substitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
5.4.5
Rivalry amongst Competitors . . . . . . . . . . . . . . . . . . . . . . . . . 134
Trends and Strategic Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
6 Strategic Analyses for Diversification into Logistics
6.1
6.2
139
Critical Success Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
6.1.1
Objective and Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
6.1.2
Methodology: The Concept of Critical Success Factors . . . . . . . . . . . 140
6.1.3
General CSF for Diversification . . . . . . . . . . . . . . . . . . . . . . . . 144
6.1.4
CSF for Logistics Providers . . . . . . . . . . . . . . . . . . . . . . . . . . 152
6.1.5
Implications and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 155
SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
6.2.1
Objective and Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
6.2.2
The Application of SWOT to Diversification of Postal Incumbents into
Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
6.3
6.2.3
Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
6.2.4
Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
6.2.5
Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
6.2.6
Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
6.2.7
Implications and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 170
Strategic Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
6.3.1
Methodology: The Concept of Strategic Groups . . . . . . . . . . . . . . . 174
6.3.2
Validity in the Postal Sector and for the Research Question . . . . . . . . 178
6.3.3
Dimensions for Mapping Postal and Logistics Operators . . . . . . . . . . 179
III
Contents
6.3.4
Strategic Groups of Postal and Logistics Operators . . . . . . . . . . . . . 182
6.3.5
Assessment and Implications . . . . . . . . . . . . . . . . . . . . . . . . . 188
6.3.6
Strategic Groups of Diversified Postal Incumbents . . . . . . . . . . . . . 189
6.3.7
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
7 Strategies for Diversification into Logistics
198
7.1
Assessment of Diversification into Logistics . . . . . . . . . . . . . . . . . . . . . 203
7.2
Arenas, Differentiators and Economic Logic . . . . . . . . . . . . . . . . . . . . . 208
7.2.1
Strategy “National Hero” . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
7.2.2
Strategy “Selective Geographic Expansion” . . . . . . . . . . . . . . . . . . 212
7.2.3
Strategy “European Network” . . . . . . . . . . . . . . . . . . . . . . . . . 217
7.2.4
Strategy “International Player” . . . . . . . . . . . . . . . . . . . . . . . . 218
7.2.5
Strategy “Lead Logistics Providers” . . . . . . . . . . . . . . . . . . . . . . 219
7.2.6
Strategy “Postal Logistics Network” . . . . . . . . . . . . . . . . . . . . . . 220
7.2.7
Strategy “Exit/Divestment” . . . . . . . . . . . . . . . . . . . . . . . . . . 221
7.3
Summary of Diversification Strategies . . . . . . . . . . . . . . . . . . . . . . . . 222
7.4
Modes of Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
7.5
Brand Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
7.6
Ownership Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
7.6.1
Effects on Strategic Decisions and Diversification Strategies . . . . . . . . 237
7.6.2
Influence of Different Types of Shareholders on Diversification . . . . . . . 241
7.6.3
Implications for Diversifying Postal Incumbents . . . . . . . . . . . . . . . 243
7.7
Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
7.8
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
8 Conclusions and Outlook
8.1
248
Main Findings and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
8.1.1
Summary of Methodology and Main Findings . . . . . . . . . . . . . . . . 248
8.1.2
Personal Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
8.2
Retrospect and Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
8.3
Possible Criticism and Limitation of Frameworks . . . . . . . . . . . . . . . . . . 255
8.4
Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
IV
Contents
9 Annex
258
9.1
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
9.2
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
9.3
Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276
9.4
Expert Interviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
9.4.1
Interview #1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
9.4.2
Interview #2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
9.4.3
Interview #3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
9.4.4
Interview #4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
9.4.5
Interview #5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
9.4.6
Interview #6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
9.4.7
Interview #7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
9.4.8
Interview #8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
9.4.9
Interview #9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
9.4.10 Interview #10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
9.4.11 Interview #11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350
9.4.12 Interview #12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360
9.4.13 Interview #13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366
9.5
Curriculum Vitae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371
V
List of Tables
2.1
Structure of PhD thesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
2.2
List of interviewed experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
3.1
Challenges for incumbent postal operators . . . . . . . . . . . . . . . . . . . . . .
31
3.2
Letter post market sizes and incumbent shares . . . . . . . . . . . . . . . . . . .
39
3.3
Examples of alliances and networks in the postal sector . . . . . . . . . . . . . . .
45
3.4
Examples of strategic moves by postal incumbents . . . . . . . . . . . . . . . . .
47
4.1
Parcels and express services sharing the letter mail network . . . . . . . . . . . .
83
4.2
Economics of diversification in the postal sector . . . . . . . . . . . . . . . . . . .
85
4.3
Diversification areas of European postal incumbents . . . . . . . . . . . . . . . .
89
4.4
Synergy potential for various diversification areas . . . . . . . . . . . . . . . . . .
95
4.5
Revenue distribution of European postal incumbents (in %) . . . . . . . . . . . .
97
4.6
Profit distribution of European postal incumbents (in %) . . . . . . . . . . . . . .
98
4.7
Generic types of market convergence . . . . . . . . . . . . . . . . . . . . . . . . . 100
5.1
Strategies of logistics operators . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
5.2
Growth of various logistics segments . . . . . . . . . . . . . . . . . . . . . . . . . 122
5.3
Top logistics operators in Germany . . . . . . . . . . . . . . . . . . . . . . . . . . 123
6.1
Summary of CSF for diversification and for logistics providers . . . . . . . . . . . 155
6.2
SWOT analysis for postal incumbents diversifying into logistics . . . . . . . . . . 160
6.4
Incumbents’ strengths as RBV resources . . . . . . . . . . . . . . . . . . . . . . . 171
6.5
Dimensions and parameter values for mapping strategic groups . . . . . . . . . . 179
6.6
Strategic segmentation by mission statements of logistics provider . . . . . . . . . 189
6.7
Dimensions for mapping diversified postal incumbents . . . . . . . . . . . . . . . 191
6.8
Revenue distribution of European postal incumbents (in %) . . . . . . . . . . . . 195
7.1
Significant logistics regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
VI
List of Tables
7.2
Summary of diversification strategies . . . . . . . . . . . . . . . . . . . . . . . . . 222
7.3
Options for branding a postal incumbents logistics business . . . . . . . . . . . . 234
7.4
Types of ownership and examples . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
VII
List of Figures
2.1
Comprehensive value metrics framework . . . . . . . . . . . . . . . . . . . . . . .
4
3.1
The extended value chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
3.2
The new competitive model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46
4.1
Product-market strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
4.2
Theoretical framework of “diversification-performance linkage” . . . . . . . . . . .
69
4.3
Simple model of relationship between diversification and performance . . . . . . .
70
4.4
Generic types of market convergence . . . . . . . . . . . . . . . . . . . . . . . . .
75
4.5
Activities prior to the traditional postal value chain . . . . . . . . . . . . . . . . .
84
4.6
The strategic location of the postal services market . . . . . . . . . . . . . . . . .
87
5.1
Push vs. pull principle in logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
5.2
SCM as chain-linking of „order-to-payment“ processes . . . . . . . . . . . . . . . . 109
5.3
Modal split in goods transport in the EU 15 in tkm . . . . . . . . . . . . . . . . . 115
5.4
Modal split in goods transport in the EU 15 in % . . . . . . . . . . . . . . . . . . 116
5.5
European contract logistics profit margins . . . . . . . . . . . . . . . . . . . . . . 124
6.1
Industry CSF versus firm-specific CSF . . . . . . . . . . . . . . . . . . . . . . . . 142
6.2
SWOT-analysis in a strategic framework . . . . . . . . . . . . . . . . . . . . . . . 157
6.3
Typology of postal operators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
6.4
Diversification of postal operators . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
6.5
Positioning of European parcel and express service providers . . . . . . . . . . . . 185
6.6
Strategies of leading European logistics providers . . . . . . . . . . . . . . . . . . 186
6.7
Strategic groups of third party logistics providers . . . . . . . . . . . . . . . . . . 187
6.8
Logistics providers in a competence perspective . . . . . . . . . . . . . . . . . . . 188
6.9
Strategic groups of postal incumbents offering logistics services . . . . . . . . . . 192
6.10 Strategic groups of postal incumbents offering logistics services (2) . . . . . . . . 196
VIII
List of Figures
7.1
Putting strategy in its place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
7.2
Motives for M&A activities for logistics providers . . . . . . . . . . . . . . . . . . 224
7.3
Importance of brand recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
7.4
Recommendation of logistics provider . . . . . . . . . . . . . . . . . . . . . . . . . 231
7.5
Measures to increase brand recognition . . . . . . . . . . . . . . . . . . . . . . . . 232
IX
1 Summary
Postal incumbents in Europe have encountered during the last decade fundamental changes in
their industry environment, which now threaten their very business model: governments decided
to liberalise first the parcel market, then gradually the letter market so as to introduce competition. Substitution by electronic means led at the same time to a decline in mail volume.
As a consequence, incumbent operators are losing market share in a declining market, whereas
new revenue streams would be needed. International and product diversification have become
important strategic moves, which can be found among all players. This dissertation therefore
examines these diversification strategies with the focus on diversification of postal incumbents
into the logistics business.
The methodology consists in the application of theoretical concepts to the research question
and subsequent confrontation of the findings with expert interviews and the current economic
reality. After a competitive analysis of postal incumbents and after a logistics industry analysis,
the dissertation carries out strategic analyses for diversifying postal incumbents: it starts out
with critical success factors and assesses the attractiveness of the logistics industry, the costs of
entry and possible synergies for postal incumbents. The results show that the logistics industry is
sufficiently attractive, that the costs of entry are sufficiently low and postal incumbents can profit
from relatedness with their historic business to succeed in the business. Relatedness can be found
when sharing infrastructure and technology (product relatedness), in network management skills
(managerial relatedness) as well as in marketing and sales (customer relatedness). Information
technology, network and supply chain management skills, customer and market know-how, area
coverage and density, as well as brand/trust are specific critical success factors and therefore
relevant for postal incumbents to successfully enter the logistics industry.
Within the framework of a SWOT analysis, the following dimensions were tested whether
they form strengths or weaknesses for postal incumbents in the logistics industry: products and
services, infrastructure, organisation and structure, human resources, and financial performance.
X
1 Summary
Most strengths are valuable resources, but not rare and also imitable or substitutable (resourcebased view). Postal incumbents should focus on the quality of their products and services,
customer confidence and loyalty, as well as on opportunities for economies of scale in order to
outperform traditional logistics operators. As far as strategic groups are concerned, European
postal incumbents can be grouped by how their logistics business is positioned and by the share of
their logistics turnover compared with total turnover. Both mappings show that German DPWN
is the only global player that also operates its logistics businesses completely independently from
the core business. Another strategic group includes mainly Nordic postal incumbents that operate on a regional level through an independent logistics business unit, generating a substantial
part of their turnover from logistics. Smaller, nationally operating incumbents often add logistics around their core services (mainly letters) whereby the turnover from logistics accounts for
a smaller portion of total company turnover.
As a result of the analyses, the following set of generic strategies for European postal incumbents aiming at a diversification into logistics can be formulated: “National Hero”, “Selective
Geographic Expansion”, “European Network”, “International Player”, as well as “Lead Logistics
Provider”. Logistics business is indeed a promising area of diversification for postal incumbents:
the logistics industry is however highly competitive, with very low margins and has not revealed
lucrative niches, which could be quickly covered by postal incumbents. Although the market is
growing steadily, there are not that many innovation or significant dynamics that would trigger
convergence or create new business opportunities for new entrants.
Keywords: Strategy, diversification, postal sector, logistics
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1 Summary
Résumé
Les opérateurs postaux historiques en Europe ont rencontré durant cette dernière décennie un
changement fondamental dans leur secteur industriel qui menace à présent leur propre modèle
économique : les gouvernements ont décidé de libéraliser tout d’abord le marché des colis, puis
progressivement le marché de la lettre postale afin de les ouvrir à la compétition. La substitution
par les moyens électroniques entraîne par la même occasion le déclin du volume global du marché
de la lettre. En conséquence, les opérateurs historiques perdent des parts de marché dans un
marché en déclin, tandis que de nouvelles sources de revenus seront nécessaires. La diversification
internationale et la diversification des produits sont devenus des voies stratégiques importantes
pour tous les acteurs. Cette dissertation examine donc ces stratégies de diversification et focalise
sur la diversification des opérateurs historiques dans le métier de la logistique.
La méthodologie consiste dans l’application des concepts théoriques à propos de la question
de la recherche et suivant la confrontation des découvertes avec les entretiens d’experts et la
réalité économique actuelle. Après une analyse compétitive des opérateurs historiques et du
secteur de la logistique, la dissertation effectue des analyses stratégiques concernant les opérateurs historiques en diversification : elle débute par les facteurs critiques de succès et évalue les
attraits du marché logistique et les coûts d’entrée et les synergies possibles pour les opérateurs
historiques. Les résultats montrent que le marché logistique est suffisamment attractif, que les
coûts d’entrée sont suffisamment bas et que les opérateurs historiques peuvent profiter de leur
expérience passée pour réussir sur ce marché. Des liens peuvent être trouvés grâce à l’utilisation
commune de l’infrastructure et de la technologie, des compétences de management de réseau
aussi bien que du marketing et des ventes. Les technologies de l’information et la communication, la compétence de gestion du réseau et de la chaîne de distribution, la connaissance du
client et savoir-faire du marché, la couverture de la zone et la densité élevée, aussi bien qu’une
bonne confiance dans la marque sont des facteurs de succès spécifiques et donc appropriés pour
les opérateurs historiques pour entrer avec succès dans le secteur de la logistique.
Dans le cadre d’une analyse SWOT, les dimensions suivantes sont examinées pour savoir si
elles forment les forces ou les faiblesses pour les opérateurs historiques dans le secteur de la logistique : produits et services, infrastructure, organisation et structure, ressources humaines, et
performance financière. La plupart des forces identifiées sont des ressources d’une grande valeur,
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1 Summary
mais souvent facilement imitable ou substituable. Les opérateurs historiques doivent donc se
focaliser sur la qualité de leurs produits et services, sur la confiance et la fidélité du client, aussi
bien que sur les opportunités d’économie d’échelle afin de surpasser les opérateurs logistiques
traditionnels. Autant que les groupes stratégiques sont concernés, les opérateurs historiques européens peuvent être groupés suivant la façon dont leur business logistique est positionné et par
le partage de leur chiffre d’affaire logistique en comparaison avec le chiffre d’affaire total. Les
deux configurations montrent que la Poste allemande est le seul acteur mondial qui fonctionne
de façon totalement indépendamment avec son business logistique par rapport à ses affaires principales. Un autre groupe stratégique inclut principalement les opérateurs historiques Nordiques
qui fonctionnent au niveau régional à travers une unité logistique indépendante, générant une
partie substantielle à leur chiffre d’affaire de la logistique. Les opérateurs historiques plus petits
proposent souvent des services logistiques en plus de leurs services principaux par lesquels le
chiffre d’affaire provenant des comptes logistiques représente une petite proportion de la totalité
du chiffre d’affaire de la compagnie.
Suite aux analyses, les stratégies génériques suivantes peuvent être formulées pour les aspirations opérateurs historiques européens qui veulent diversifier dans la logistique : “Héros
nationale”, “Expansion géographique sélective”, “Réseau européen”, “Acteur international”, aussi
bien que “Lead Logistics Provider”. En conclusion, on peut constater que le marché de la logistique est en effet un secteur prometteur de diversification pour les opérateurs historiques
: l’industrie de la logistique est cependant hautement compétitive, avec des marges basses et
la dissertation n’a à peine révélé de niche lucrative qui pouvait être rapidement couvert par
des opérateurs historiques. Bien que le marché grandi de façon stable, il n’y ait pas autant
d’innovation ou de dynamiques significatives qui pourrait déclencher la convergence et créer de
nouvelles opportunités de business pour les nouveaux participants.
Keywords: Strategie, diversification, secteur postal, logistique
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1 Summary
Zusammenfassung
Staatliche Postunternehmen in Europa mussten in den letzten Jahrzehnten mit fundamentalen Veränderungen in ihrem Sektor kämpfen, die heutzutage ihr Geschäftsmodell bedrohen:
Die Regierungen haben entschieden, zuerst die Paketmärkte und nun schrittweise auch die
Briefmärkte zu liberalisieren und für den Wettbewerb zu öffnen. Gleichzeitig sorgte die Substitution durch elektronische Kommunikationsmittel für einen Rückgang im gesamten Briefvolumen.
Als Konsequenz verlieren die staatlichen Postanbieter Marktanteile in einem schrumpfenden
Markt und brauchen nun neue Einkünfte, um die Kosten decken zu können. Internationale
Diversifizierung sowie Produktdiversifizierung sind zu wichtigen strategischen Initiativen aller
Postunternehmen geworden. Diese Dissertation untersucht deshalb diese Diversifizierungsstrategien und legt den Fokus auf die Diversifizierung der Postunternehmen in die Logistik.
Die Methodik der Dissertation besteht aus dem Anwenden von theoretischen Konzepten auf
die Forschungsfrage und der anschliessenden Konfrontation von Experten mit den Resultaten
sowie dem Vergleich der Resultate mit dem aktuellen Post- und Logistikmarkt. Nach der Wettbewerbsanalyse Europäischer Postunternehmen und der Branchenanalyse des Logistikmarkts
werden strategische Analysen für diversifizierende Postunternehmen durchgeführt: Wir beginnen mit kritischen Erfolgsfaktoren und beurteilen die Attraktivität des Logistikmarkts, die Eintrittskosten sowie mögliche Synergien für staatliche Postunternehmen. Die Resultate zeigen,
dass der Logistikmarkt ausreichend attraktiv ist, die Eintrittskosten ausreichend tief sind und die
Postunternehmen von Verbundeffekten zu ihrem historischen Geschäft profitieren können, um im
Logistikmarkt erfolgreich zu sein. Diese Verbundeffekte ergeben sich aufgrund der gemeinsamen
Nutzung von Infrastruktur und Technologie und in den Bereichen Netzmanagement-Knowhow
sowie Marketing und Verkauf. Informationstechnologie, Supply Chain Management-Knowhow,
Kunden- und Markt-Kenntnisse, flächendeckende Erschliessung und hohe Dichte sowie ein hohes
Vertrauen in die Marke sind spezifische Erfolgsfaktoren für Postunternehmen, welche im Logistikmarkt erfolgreich sein wollen.
Im Rahmen der SWOT-Analyse wird getestet, welche der folgenden Dimensionen Stärken oder
Schwächen für ein Postunternehmen im Logistikmarkt sind: Produkt-/Dienstleistungsportfolio,
Infrastruktur, Organisation/Struktur, Personal, Finanzen. Die meisten der identifizierten Stärken
sind wertvolle Ressourcen, aber nicht selten und leicht imitierbar oder substituierbar. Staatliche
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1 Summary
Postunternehmen sollten sich deshalb auf die Qualität ihrer Produkte und Dienstleistungen, auf
das Vertrauen der Kunden und ihre Loyalität sowie auf mögliche Skaleneffekte konzentrieren,
um wettbewerbsfähiger zu werden als traditionelle Logistikanbieter. Weiter werden die Postunternehmen strategischen Gruppen zugeordnet, einerseits nach dem Kriterium, wie sie ihr Logistikgeschäft positionieren, andererseits wie viel Prozent vom Gesamtumsatz das Logistikgeschäft
verantwortet. Beide Gruppierungen zeigen, dass die Deutsche Post der einzige globale Anbieter ist, der sein Logistikgeschäft vollständig losgelöst vom Kerngeschäft betreibt. Eine weitere
Gruppe umfasst vor allem nordische Postunternehmen, die regional mit einem ziemlich unabhängigen Logistikgeschäft tätig sind und damit einen substantiellen Umsatzanteil generieren.
Kleinere, national tätige Postunternehmen erweitern oft ihr Kerngeschäft mit ausgesuchten Logistikleistungen, womit das Logistikgeschäft auch nur einen kleinen Teil des Umsatzes ausmacht.
Als Resultat dieser Analysen können wir folgende generischen Strategien für staatliche Postunternehmen formulieren, welche in die Logistik diversifizieren wollen: „Nationaler Held“, „gezielte
geographische Expansion“, „Europäisches Netzwerk“, „Internationaler Anbieter“ sowie „Lead Logistics Provider“. Als Fazit können wir festhalten, dass das Logistikgeschäft durchaus ein viel versprechendes Feld für eine Diversifizierung darstellt: Der Logistikmarkt ist jedoch hart umkämpft,
verspricht nur tiefe Margen und weist kaum lukrative Nischen auf, welche rasch von einem Postunternehmen besetzt werden könnten. Der Markt wächst zwar kontinuierlich, aber es gibt zuwenig
Innovationen oder signifikante Veränderungen, welche eine Konvergenz mit dem Postgeschäft zur
Folge hätten oder attraktive Geschäftsmöglichkeiten für neue Anbieter eröffnen würden.
Keywords: Strategie, Diversifizierung, Postsektor, Logistik
XV
In this chapter, first an outline of the background of this thesis is presented and a description
given of current developments in the postal sector. Secondly, we take a look at the considerations,
which led the author to the subject of examining the diversification of incumbent postal operators
into logistics and researching the corresponding strategies. Thirdly, the methodology used is
explained while, fourthly, special emphasis is laid on the expert interview as the most important
source of information. Fifthly, the relevance for research is outlined.
2.1 Background
The entire postal market is undergoing remarkable changes worldwide, characterised by new
actors and dynamics. The trigger is the continuing decline in mail volume as well as the liberalisation of the postal sector forcing incumbent postal operators to substitute these losses with
a new revenue mix through the development of new business areas, especially in the field of international services and logistics. The European postal market is hereby particularly interesting
since it is a politically confined entity and the European Union pursues a market opening by
weight while e.g. the United States liberalise their market by opening by processes (worksharing
& rebates). This leads to economic and political particularities that can and must be analysed
separately wherefore the focus of this dissertation is laid on the European postal market. In Europe, one can observe a clear market consolidation, with the largest European postal operators
positioning themselves in converging mail, express, and logistics industries throughout Europe
and sometimes beyond. They see the need to create vertically integrated delivery systems linking global transportation to logistics and home delivery and therefore assembling a portfolio of
acquired companies, covering the different elements of a full service logistics value chain.
Diversification into logistics is thereby of special interest: The German and the Dutch postal
incumbents moved into the logistics sector early and promoted this strategy as a successful way
out of the graveyard spiral (Crew/Kleindorfer, 2005) of declining volumes and increasing competition in the mail business. This one-stop-shopping approach seemed to convince both customers
1
and shareholders (respectively analysts) and as a result diversification gained importance in virtually every incumbent’s strategy and the logistics sector seemed to be one of the obvious target
industries. With two large and successful players at the forefront of this movement, smaller
incumbents began to see their future no longer as a just a postal operator but also as a logistics operator. However, diversification into logistics remained somehow a buzzword and neither
postal experts nor business consultants could so far provide conclusive advice on the “right strategy”. Some incumbents started acquiring national transportation companies in order to extend
their portfolio but soon realised that synergies are hard to achieve and that the logistics industry
per se is less lucrative than expected.
2.2 Research Question
As explained above, diversification strategies and especially diversification into logistics are major topics among postal operators and consultants alike. Most available studies focus on the
development of the sector, the strategic drivers and therefore the challenges posed to postal
incumbents. Diversification into logistics is almost universally described as both a challenge to
as well as a necessary answer to these drivers. There is however a significant lack of academic
analysis, which could be used by postal managers as a basis for and guidance of their strategy
development process. Only a few theoretical contributions try to answer the question of where
these tendencies will lead to and which strategy will ultimately be most successful. This academic void goes in line with the general paucity of business research within the postal sector. De
Proost/D’Incà (2003/2004) ask whether postal services must necessarily diversify into logistics in
order to ensure a steady flow of parcels through their system and point out the huge integration
and brand building tasks for incumbents. Conway (2000: 2) accuses the large incumbents of
“setting off a flurry of acquisitions and alliances”. Other authors do not question the necessity
but rather the extent of this diversification (e.g. Dörrenbacher, 2004; Halberg/Moller-Hansen,
2000).
The main resulting and most interesting question from a managerial point of view, which
underlies this dissertation, is therefore: What type of strategies should a European incumbent
postal operator apply in order to successfully diversify into logistics? The research objective
of this dissertation is therefore to identify and define a series of strategies, which a European
historical and state-run postal operator (incumbent) can apply today in order to successfully
2
diversify into logistics. This research question can be broken down into the following areas where
this thesis will provide a substantial contribution both to academic research and especially to
managerial guidelines:
• Assessing the logistics industry as a diversification area for European postal
incumbents
• Carrying out strategic analyses for diversifying incumbents
• Elaborating strategies for diversification into logistics
One may ask the question whether or why a separate strategy for postal incumbents in the
logistics market is needed. Others would even challenge the term diversification and call this
strategic development, a natural portfolio extension without actually entering into a new industry. The dissertation must therefore also deal with diversification as a theoretical concept and
apply it to the postal sector in general and specifically to these new logistics services. If this
portfolio extension is in fact a diversification, a specific diversification strategy for postal incumbents is justified. Elaborating and formulating such strategies however opens up a whole new set
of research questions: Why are postal incumbents better logistics providers? What are the core
competencies of postal operators, which will differentiate them from traditional logistics providers
and create competitive advantage? Are there already strategic groups of diversified postal incumbents where differences in competitive behaviour and financial performance can be observed?
Answering these questions requires in-depth knowledge of a broad spectrum of disciplines,
namely business administration, marketing, and law. It therefore encompasses the research
question not only from the perspective of a single discipline but aims at a comprehensive academic
analysis, regardless of which discipline is required.
2.3 Methodology
Before outlining the methodology, it is important to distinguish between 1) strategy analysis
and 2) strategic analysis. The analysis of a strategy aims at an assessment of a firm’s existing
strategy, while strategic analysis supplies answers to current challenges and provides the basis
for strategy formulation. As a consequence of the research question, this second approach will
be our focus. It is nevertheless useful to also introduce a framework for strategy analysis, since
3
an assessment of established logistics strategies will also be part of this dissertation.
Strategies concern the very core of a firm and are therefore both very important but also
very individual. The quest of every business is to create value, either by production or by commerce, to uphold profitability and in the end to make money: “The fundamental role of strategy
analysis is in identifying and understanding the fundamental drivers of profitability (and hence
shareholder value) (Grant, 2002: 62)”. Grant therefore proposes the following comprehensive
value metrics framework for the analysis of a firm’s strategy as shown in figure 2.1.
Figure 2.1: Comprehensive value metrics framework (Grant, 2002: 62)
A good strategy will positively influence the specific value drivers, therefore result in improved
financial results, and eventually in higher shareholder value. The analysis of these drivers, indicators and value is usually carried out for one firm at a time, because it requires comprehensive
access to all databases and an in-depth knowledge, something an external analyst, not to mention
a doctoral student, will never have. Assessing strategies from an external viewpoint must confine
itself to putting the perceived strategies into context, to the analysis of publicly available data
and to comparing different strategies.
For obvious reasons, there is no such thing as “the right strategy”, especially not by looking
into the future, maybe not even with the benefit of hindsight. Strategy as a term has furthermore
gained increased importance in management literature and education; often to such an extent
that it has degenerated to a pure buzzword that is used for each and every initiative across all
business units and levels of hierarchy. The concept has therefore become difficult to confine and
an academic must be aware of the danger of losing himself in more and more detail and the
aspects of the strategy in focus. Vice versa, one should include a broad range of viewpoints in
order to guarantee that all relevant elements of the strategy will be included. As a consequence,
the procedure must be very methodological in order to stay focused on the research question.
4
The never-ending variety of strategic concepts and analyses both in academia as well as in the
field of consulting presents hurdles to this apparently obvious postulation.
It is furthermore not the aim to verify or, respectively, falsify a hypothesis. Possible hypotheses could be based either on the success or the failure of diversification into logistics. This in
turn would require a testing of the hypotheses and therefore a quantitative analysis in order to
really verify or falsify them. Europe, however, consists of only 46 sovereign states whereby only
27 are members of the European Union (EU). Most studies, especially the quantitative ones,
cover only EU countries (e.g. IPC, 2001-2006; NERA, 2004; NERA, 2005; Ecorys, 2005; BCG,
2006). The individual incumbent postal operators in Europe do therefore not constitute an entity that would represent an adequate amount of information to deduce quantitative tests that
would meet statistical requirements. Verifying hypotheses by means of quantitative methods is
furthermore always based on historical data, at best data from observations or measurement of
a current state. Diversification into logistics is a phenomenon, which is too recent to be able
to find comparison data from the past. The IPC (2003) study respectively the papers of King
(2001), Strikwerda/Rijinders (2004), and Dörrenbächer (2004) are the first of their kind. When
examining the value of strategies, one must anticipate future-oriented goals and objectives as
well as future market developments, which simply cannot be measured. It is difficult enough
to observe and assess these variables for qualitative use. Because most incumbents are also at
the stage of experimenting with different strategies, the whole industry is not stable enough to
establish a set of data on which quantitative analyses could be carried out. It may be a bit early
to evaluate how these incumbents are doing in terms of financial performance and successful
diversification.
As a consequence, the author pursues an explorative and qualitative approach enabling a
fundamental understanding both of the market situation and the ambitions of the incumbents.
This in-depth knowledge is more important to elaborate diversification strategies than trying to
quantify market or firm characteristics in order to test hypotheses. The empirical part of the
thesis will therefore consist of following elements:
1. Literature analysis
2. Secondary sources (studies, annual reports, Internet)
3. Expert interviews
5
As far as the methodological procedure is concerned, there are a great variety of different
frameworks available both from academia as well as from consultants. As mentioned above, each
of them has its advantages and drawbacks. The systematics of this dissertation is based on the
frameworks of Grant (2002) and Kühn/Grünig (2002) who all - in essence - propose a four-tier
structure:
1. Analysis of the industry environment and intra-industry analysis
2. Analysis of the firm
3. Analysis of competitive advantage
4. Formulating (corporate and business) strategies
The underlying idea is to first look at the industry ("where to compete?"), then at the firm
("who competes?") and then at possible competitive advantages ("how to compete?"), either in
terms of cost or differentiation advantage. After the process of formulating the corporate and
business strategies, Kühn/Grünig further add the phases of implementing as well as of assessing
the strategies and their implementation. These activities are however firm specific and go too
far to be included in this dissertation.
2.4 Sequencing of the PhD thesis
The research will start with a competitive analysis of European postal incumbents to identify
their current strategy, future goals, assumptions, and capabilities (How do they compete today?).
This also includes an in-depth analysis of trends and strategic drivers in the postal sector in
order to fully comprehend the incumbents’ current environment and to assess their competitive
behaviour. In phase 2, diversification as a theoretical concept is presented and applied to the
postal sector (Where do they diversify into?). This is followed, in phase 3, by an analysis of
the European logistics industry as the diversification area in focus. As a result, the relevant
market, its size, development, and main forces are outlined (Which industry will the postal
operators be in?). The conclusions of these phases as a consolidated intermediate result will be
presented to experts with industry know-how in order to obtain feedback and discuss promising
diversification strategies. The results drawn from this preliminary work and the expert panel will
provide valuable insight about possible successful strategies and included in the phases, which
6
follow. In phase 4, several strategic analyses will then be carried out: They will point out critical
success factors for diversification as well as for logistics operators and identify strengths and
weaknesses of incumbent postal operators and how these strengths can be deployed to create
competitive advantage. The last step, phase 5, will result in the design of strategies, which can
be applied by postal operators willing to diversify into logistics (How should they compete in
the future?). The concluding phase 6 will produce recommendations both for postal managers
as well as academics and consultants.
Phase 1: Competitive Analysis of European Postal Incumbents
This phase will analyse how incumbent postal operators compete in the European postal market today by carrying out a competitive analysis. It starts with a comprehensive analysis of
trends and strategic drivers in the postal sector in order to fully describe the environment where
diversification into logistics – the object of interest – takes place. This examination further includes the reaction of the incumbents to these specific industry challenges. Based on the analysis
of the environment, the author will make use of the Porter framework for competitive analyses.
The objective of a competitive analysis is to develop a strategy profile of a firm, which provides
information about the likely success of the current strategy and probable response to the industry dynamics as well as to the strategic moves of its competitors. Porter lists four diagnostic
components: future goals, current strategy, assumptions, and capabilities (strengths and weaknesses) (Porter, 2000b: 48). For obvious reasons, the current strategy and the company (what
the competitor is doing and can do) can be analysed more easily than its future goals and the
assumptions held about itself and the industry. These latter factors are much harder to observe,
although they explain what is really driving the company and determine how a competitor will
behave in the future. The information required will be collected through published data (e.g.,
studies, websites, and annual reports), as well as from interviews with representatives of the
postal and logistics service providers and observers (field data). This data collection will provide
answers to the four basic components of the competitor analysis, namely current strategy, future
goals, assumptions, and capabilities. The starting point is to identify the competitor’s current
strategy by giving emphasis to the competitors’ actions and decisions, especially investments
in logistics infrastructure or mergers, acquisitions, and alliances by incumbent postal operators.
Equally important are the competitor’s objectives on all management levels from the business
unit to the corporate parent. These two components are heavily influenced by the competitor’s
7
perceptions and assumptions of the industry and of the business in general. As all this depends
on the available resources, it is crucial to evaluate the seriousness of the potential challenge by
analysing the competitor’s capabilities. The consolidation of these dimensions will lead to the
characterisation of the strategies of all significant competitors. This phase will therefore provide sound statements as to how postal incumbents react to trends and strategic drivers in the
industry, how competitively they act and what strategic shifts should be expected.
Phase 2: Diversification in the Postal Sector
Diversification as a major strategic move and the respective area of interest is the focus of the
second phase: Firstly, diversification as a theoretical concept is studied. After looking at the history of diversification, the different types of diversification are outlined: We distinguish between
product vs. international diversification, related vs. unrelated diversification and strategic vs.
operational relatedness. The author then analyses the motives and objectives of diversification
as well as the competitive advantage created through diversification. Equally important are the
risks and costs of diversification as well as its effect on performance. Additionally, the resourcebased view (RBV) as an underlying approach is introduced and the concept of convergence and
its delimitation to diversification will be explained.
Secondly, the concept of diversification is applied to postal incumbents and diversification in
the postal industry explained: This includes on the one hand the need for diversification and on
the other the strategic goals of diversifying incumbents. The focus hereby is laid both on historic
diversification as well as current strategic diversification by identifying the areas of and sources
for diversification in the postal sector.
Phase 3: Industry Analysis of the European Logistics Market
This phase will start with defining the industry and markets where diversification of incumbents takes place. Because both the European postal and logistics markets are in flux and
important convergences between these two markets can be observed, it is vitally important to
define relevant market segments. The market and its development will then be quantified for
reasons of comparison and assessment. The author will conduct a structural industry analysis following the theoretical framework of Michael Porter’s industry and competitive analysis
(Porter, 2000b) in order to obtain an overview of the market being considered and to identify
8
key structural features: The state of competition in an industry depends upon five basic competitive forces, namely rivalry among current competitors, potential entrants, the bargaining power
of suppliers, bargaining power of buyers, and the threat of substitution. These forces have to
be distinguished from the many short-term factors (e.g., fluctuations in the economy, material
shortage) with only tactical significance, while the analysis of the industry structure focuses on
the forces shaping the arena in which competition takes place.
Phase 4: Strategic Analyses
At the end of the three preceeding phases, we will have detailed information about the competitive behaviour of European postal incumbents, diversification in the postal sector, as well
as about the market for outsourced logistics services. Phase 4 will then analyse how and where
postal incumbents are able to create competitive advantage. The goal is to identify those specific factors among the postal incumbents on the one hand and within logistics market on the
other hand that determine the incumbents’ future ability to survive and prosper as logistics operators. There are of course countless frameworks, concepts, and methodologies concerned with
how to measure and assess the competitiveness of firms, how to elaborate industry success factors
etc. Kühn/Grünig (2002: 107) list the most common methods used in management, comprising (inter alia) of structural analyses, strategic groups, five forces, success factor identification,
sub-segment analysis, portfolio analysis (BCG, General Electric or McKinsey), resource analysis,
SWOT analysis, benchmarking, scenario analysis, value chain analysis.
Based on an in-depth study of the literature, the author decided to use the following three
concepts for his analysis of diversifying postal incumbents: 1) Critical success factors, 2) SWOT
analysis, and 3) strategic groups. The analysis of critical success factors will provide general
success factors for the strategic move of diversification as well as market-specific success factors
for logistics providers. The SWOT analysis will elaborate the strengths and weaknesses of postal
incumbents in their role as logistics operators and the respective opportunities and threats defined by the industry. The strengths will then be assessed as to whether they create competitive
advantage for the incumbents or not, following the approach of the resource-based view. Any
successful strategy must focus on the exploitation of these resources in order to overcome competitors. The question is then, which postal incumbents can capitalise on and take advantage of
9
these factors. Based upon these considerations, the strategic groups across the postal incumbents
are defined in order to identify the current situation regarding diversification into logistics.
Phase 5: Formulation of Diversification Strategies
Having analysed the competitive behaviour of postal incumbents, diversification in the postal
sector, and the structure of the logistics industry on the one hand and having carried out strategic
analyses of competitive advantage, this concluding phase elaborates on the generic types of
strategies and how European postal incumbents can diversify into logistics. More precisely,
the results will establish statements about which strategies are successful for which type of
postal operator in order to enter and prosper in the European market for logistics services. The
formulation of these strategies shall thereby be as concise as possible and the considerations shall
go into as much detail as possible. However, the dissertation will face certain limitations and
will confine itself to providing generic strategy types. The effort to formulate a precise strategy
for each postal incumbent would go beyond the scope of what a dissertation can provide.
Phase 6: Recommendations
To sum up and provide an outlook, the author will then issue recommendations that address
themselves to the following target groups: 1) Academics (see also section 2.6), 2) postal management, and 3) consultants. Academics receive conclusions from the application of theoretical
concepts and frameworks to a specific industry as well as information about the value and limitation of these tools. Managers from postal incumbents will benefit from recommendations on
necessary changes in strategy and on the development of new competences for diversification into
logistics. Last but not least, consultants receive recommendations on how they can apply this
dissertation’s findings to specific questions from postal clients.
2.5 Structure of the PhD thesis
The structure proposed by Grant (2002) and Kühn/Grünig (2002), which was outlined in the
last section, underlies the organisation of the chapters of this thesis:
10
Table 2.1: Structure of PhD thesis
Chapter 1
Chapter 2
Summary
Research Question and Methodology
Chapter 3
Competitive Analysis of the Postal Sector
Chapter 4
Chapter 5
The Concept of Diversification
Logistics Industry Analysis
Chapter 6
Chapter 7
Strategic Analyses of Diversification into
Logistics
Strategies for Diversification into Logistics
Chapter 8
Recommendations
Research question, thesis structure and relevance for research
Analysis of literature and secondary
sources
Concept and Definition
Analysis of literature and secondary
sources
Analysis of expert interviews, literature
and secondary sources
Analysis of expert interviews, literature
and secondary sources
Discussion of findings and recommendations for management and research
2.6 Expert Interviews
As said in the previous section, the expert interviews are the very foundation of this dissertation, and together with the analysis of secondary sources such as literature, annual reports and
websites, form the empirical part of this dissertation. These interviews were be conducted after
the structural analysis of the postal and the logistics industry and after the elaboration of diversification as a concept and its application to the postal sector. Due to this preliminary work,
the author already possessed a broad knowledge of both the players and the target industry as
well as a basic understanding of diversification, so that interviews can be held on a sufficiently
high level. At the same time, the strategic analyses and the elaboration of strategies had not
yet started and conclusions from the interviews could be incorporated into the phases following.
Because the interviews encompass a broad range of topics concerning the research question, the
answers and results will not be presented in a concentrated form in a separate chapter; rather,
they have relevance for and form the empirical basis of all phases.
Expert interviews are a well-established way to receive information about research objects,
which can either not be measured or where the researcher has no direct access to (see Kahaner,
1997). Hofmann et al. (1995) distinguish three methods of eliciting knowledge from experts:
1) Analysis of the tasks that experts usually perform, 2) various types of interviews, and 3)
11
contrived tasks which reveal an expert’s reasoning processes without necessarily asking about
these processes. Since the tasks done by experts was not the focus of this PhD project but
their industry know-how was, the form of oral interviews was chosen as follows: Interviewing
people with an extensive industry expertise enables researchers though to get inside and in-depth
knowledge as well as to further inquire and dig deeper due to the personal interaction. Because of
this, the author has chosen this empirical method as it guarantees the necessary access to current
industry trends and the players’ strategies and ambitions. The design of the questionnaire and
the conduct of the interview are however challenging and determine the success of this method
for information gathering. The danger of expert interviews lies in an inherent tautology and
circular reasoning: The interviewees draw their expertise from intensive industry observation, be
it in their field of work or be it in their research interest. When questioned, e.g., about trends and
success factors, they tend to deduce their answers from their observation of successful players;
they then extrapolate and generalise these observations in order to apply to a wider set of firms.
Logically speaking, their theses can be deduced from arguments, which in turn are deduced and
reasoned from the same theses. In order to counteract the danger of tautology and circular
reasoning, the researcher must carefully chose his interview partners so that they represent as
broad a background as possible and then assess and use the statements carefully and diligently.
After having carried out the competitive analysis of postal incumbents and the logistics industry analysis, the author developed a wish list of potential interview partners. This list consisted
of names from four domains, namely 1) postal incumbents, 2) logistics providers, 3) academia,
and 4) consulting firms. The two supervising professors, Prof. Matthias Finger and Prof. Peter
Klaus, then provided valuable contacts to representatives of most firms on the list. Where no
direct contact was established, the author contacted the firm/person directly via e-mail and telephone. Most prospective interview partners agreed to support the author with their expertise;
though some firm representatives refused to reveal information about the current strategy and
future goals of their firm. Since the statements in the interview reflect the personal opinions
of the interviewees and not necessarily the opinion of their employer, all interviews were made
anonymous and only provided with a number (see Annex). Furthermore, no direct citations are
used, but only cross references to the specific interview.
Dr. George Kerschbaumer joined Deutsche Post AG in May 2005 as Executive Vice President
Corporate Development. His responsibilities include Corporate Strategy, Group MandA, Global
12
Table 2.2: List of interviewed experts
Domain
Postal operator
Organisation
DPWN
Postal operator
Postal operator
TNT
UPS
Name
Dr.
George Kerschbaumer
Dr. Peter van Laarhoven
Frank Sportolari
Postal operator
Swiss Post
Michel Kunz
Postal operator
Post Denmark
Finn Hansen
Logistics operator
Logistics operator
Academia
DHL
Kühne+Nagel
University of St. Gallen
Consultant
Consultant
Capgemini
Arthur D. Little
Hartmut Reinhard
Martin Willhaus
Prof. Dr. Wolfgang Stölzle
Dr. Martin Raab
Dr. Stefan Odenthal
Consultant
Accenture
Brian Moran
Consultant
Ecorys
Others
Siemens
Dr. Nick van der Lijn
Patrick de Bas
Georg Diller
Function
Director Corporate Development
Director Group Strategy
Vice President European
Strategy
Head of mail and logistics business
Head of mail and logistics business
Director Strategy
Vice President
Director Institute of Logistics
Vice President
Global Head of Strategy
and Organization
Managing
Director
Postal Industry Group
Director
Consultant
Director of Material
Management Systems of
Sorting Solutions
Brand Leadership as well as the co-ordination of the FIRST CHOICE program. Before joining
Deutsche Post, he worked for ten years with management consultants Mc Kinsey and Co. where
he was elected a partner in 2000 and was responsible for the European Sales Practice and part
of the global marketing leadership team. He studied Business Administration and International
Relations in London, Reutlingen, Bologna and Vienna, where he earned a doctorate.
Dr. Peter van Laarhoven is Group Director Strategy for TNT, a global provider of mail and
express services. As such, he heads a small group that functions as a think-tank and project management office for corporate strategic and development projects. From 2004 to 2006, he headed a
commission that advised the Dutch Ministry of Transportation on innovation in logistics. Before
joining TNT, Peter van Laarhoven was full professor of International and Distribution Logistics
at Eindhoven University of Technology from 1996 to 2000. During that period, he was also lo-
13
gistics counsellor to KLM Cargo and from 1997 to 2001 he was a member of the advisory board
of the Dutch Ministry of Transportation. He is author of approximately thirty papers published
in international scientific journals and has written two books. In earlier stages of his career,
Peter was a researcher and a consultant for Philips for nine years and subsequently worked for
the management consultancy McKinsey, where he was involved in international strategic issues
in the area of distribution logistics for 5 years. He has a master’s degree in applied mathematics
from Delft University and a doctoral degree in econometrics from Erasmus University Rotterdam.
Frank Sportolari completed his study of economics in Chicago in 1980 and moved to Munich,
Germany to take a logistics job with the US Government. In 1986 he became an employee of UPS
Germany, initially working in the IS department. Joining the FandA group, Frank Sportolari
had numerous assignments throughout Germany including as controller for the Cologne Airport
Hub as well as controller assignments at UPS Spain, UPS Italy and the UPS regional office in
Belgium. He was instrumental in the setting up of the European consolidated accounting site in
Dublin, Ireland; one of the first such centres located in Ireland in 1995. In 2001, Frank Sportolari
went into general management as director for UPS Italy and in 2004 was promoted to the newly
created position of VP of European Strategy.
Michel Kunz graduated as Dipl. El. Ing. ETH (electrical engineer) from the Swiss Federal
Institute of Technology in Zurich and has a MBA from the Graduate School of Business Administration in Zurich. His professional background included ABB (development engineer) and Ascom
(head of procurement, head of Electronic Production profit centre) before he joined Swiss Post
where he worked as Head of Systems Development at PostFinance, Head of IT at Swiss Post, and
Head of PostParcel, before he was named as Head of the group units PostLogistics/PostMail.
Michel Kunz is member of the Executive Management of Swiss Post.
Finn Hansen obtained a MA in Geography and History from the University of Copenhagen.
He started his career in 1987 as Managing Clerk and Computer Consultant at The General
Post Office. After 1993, as Manager of Technology, he was responsible for elaborating the ‘development plan of Logistics’ as well as the draft for the sequencing project and automation of
the pre-handling equipment for letter production, OCR-solution for parcels as well as automation of unaddressed mails (advertisements). As Executive Consultant in the Post Danmark
Development unit he acted as Deputy Project Manager for the technical implementation of the
14
sequencing project. In 2000, Finn Hansen was assigned Production Manager in Post Danmark’s
Communications and Management unit where he was responsible for the management, operation
and development of the postal centres and Post Danmark Transports. Since 2003, he is Deputy
Executive and heads the Letter Production and Transports of Post Danmark.
Hartmut Reinhard studied Business Administration at the University of Cologne with focus
on auditing and taxes. After working in these fields his last appointment was at Coopers and
Lybrand, he joined in 1991 Nedlloyd Districenters as the Head of Accounting, Controlling and IT.
In 1998, he wa named as the Head of Controlling at Nedlloyd Unitrans, later Danzas. The move
to corporate headquarters of DPWN took place in 2001 when he was named Head of Controlling
in the logistics division and later Head of Strategy and Controlling in the letter division. In
2005, he worked as Director Strategy for the logistics division, before he became Director Global
Controlling in April 2007.
Martin Willhaus studied Business Administration at Deutsche Aussenhandels- und VerkehrsAkademie in Bremen and became Assistant of the Executive Board of Andreas Christ Int. Spedition, Heilbronn, in 1979. In 1983, he moved to Panalpina where he was named Head of Marketing
and Sales and in 1987 Regional Director Southern Africa. He joined Kühne and Nagel as Corporate Vice President for Marketing and Product Development in 1989 and acts since 2000 as
the Director of the Kühne-Stiftung. He is a member of the supervisory board of the Hamburg
School of Logistics and a member of the advisory board of the Forum-SCM at the Swiss Federal
Institute of Technology in Zurich and a member of the advisory board of GS1 (former Swiss
Logistics Society).
Prof. Dr. Wolfgang Stölzle holds the chair for logistics management at the University of St.
Gallen and is Director of the Executive MBA in logistics management. In 1994, he received
a PhD from the Faculty of Law and Economics of the Technische Universität Darmstadt and
received the Stinnes logistics award for his dissertation. In 1999, after his postdoctoral lecture
qualification, he was named Professor for Business Administration at the Technische Universität
München. Prof. Dr. Stölze moved to the Gerhard-Mercator-Universität Duisburg, where he
occupied the chair for Business Administration with a focus on Logistics and Traffic Operations.
In 2002, he was additionally named Director of the Centre for Logistics and Traffic, before he
responded to a call of the University of St. Gallen in 2004.
15
Dr. Martin Raab has more than 14 years of experience as a consultant as well as in leading
management positions in the logistics industry. He started his career in 1991 with McKinsey
and Company where he advised firms in the transportation and logistics industry on strategic,
organisational and functional topics. In 1997, he moved to the Deutsche Post as Head of Corporate Development and was responsible for the strategic assessment of over 20 acquisitions such
as DHL, Danzas, and AEI, as well as the post-merger management process. He also accounted
for the strategic planning of the going public of DPWN. In 2000, he became Director for all the
e-business activitities of DPWN, before he moved in 2002 to Capgemini as Vice President and
Head of the sector “Logistics and Transportation”. Martin Raab received a PhD in Economics
from the University of Mannheim and a Master of Science from the London School of Economics.
Dr. Stefan Odenthal received a PhD in Business Science from the University of Göttingen
and worked in various functions for Siemens and Stinnes. He then moved to the international
consulting firm Arthur D. Little, where he as was named partner and member of both the
Executive Management and the Board of Directors of Arthur D. Little Schweiz. As a member
of the global executive management, he was responsible for the business unit “Strategy and
Organisation” and was co-editor of the firm’s journal “Prism”. Dr. Stephan Odenthal acts as
Associate Lecturer at various universities including the University of St. Gallen.
Brian Moran is Managing Director of Accenture’s Postal Industry. He works with Accenture’s
postal clients throughout the world on projects ranging from back office solutions to supply chain
strategy. He is responsible for Strategy, Research, Marketing, Alliances and Thought Leadership
within the industry. In addition he fills roles such as Quality Assurance, Program Management
and Strategy Development at various clients throughout the world. With 17 years of consulting
experience his areas of expertise includes large program management, business case development,
logistics operations, process design and material handling.
Nick van der Lijn holds a Ph.D. in economics and an MA in econometrics. After his Ph. D.,
Nick van der Lijn has held a position as assistant professor at the Tilburg University, department
of social economics, faculty of economics. After living for several years in Ukraine and for more
than a year in Russia, he joined ECORYS. At ECORYS, Nick van der Lijn currently holds the
position of Director Macro and Sector Policies, after having been Director of the unit Competition
and Regulation for several years. As Director of the unit Competition and Regulation, Nick has
16
led numerous projects related to the postal market, including the EC-study on the development
of competition in the European postal market and a study for Postcomm on competition in the
UK postal market.
Patrick de Bas holds a MA in law. After his study, he joined the unit Competition and
Regulation of ECORYS, where he participated is various studies in the field of competition and
regulation, like the evaluation of the Dutch Competition Act, the evaluation of the Dutch Gas
Act and Electricity Act and numerous studies on development of competition and on market
failure. Regarding studies in the postal sector, Patrick de Bas has participated in the EC-study
on the development of competition in the European postal market and a study for Postcomm
on competition in the UK mail market. In addition, he was project leader of a project for the
Dutch Ministry of Economic Affairs on the level playing field in the German, Dutch and UK
postal market.
Georg Diller studied communication engineering at the University of Nürnberg where he graduated in 1979. He then joined Siemens, first in the area of production management and control,
since 2003 in the area of logistics system planning and implementation with expertise in warehousing, postal operators, CEP, and Third Party Logistics. Today, he works for Siemens Industrial
Solutions in the department of “Infrastructure and Logistics”.
These experts represent a wide variety of both relevant players and industry observers. As far
as representatives from postal and logistics providers are concerned, the hierarchical level of the
interview partners was especially noteworthy. However, they accepted the interview often with
the reservation that their statements not be used directly as citations because do not necessarily
reflect the official opinion of their firm. Due to this concession, many interesting statements are
therefore used indeed as valuable insights when carrying out the strategic analyses, but not as
direct citations in the respective chapter.
The author forwent interviewing logistics customers since they are often not active market
observers, but just compare specific offerings on an individual basis. Furthermore, they would
most probably not differentiate between logistics operators and diversified postal incumbents as
long as the required quality is provided at an affordable price. The customer view regarding
17
e.g. image and trust will however be included into the considerations on brand strategies in
chapter 7.5.
The results from the strategic analyses (phase 4) were further presented as a consolidated
intermediate result to an expert panel at the annual conference of the Global Postal Research
and Education Network (GPREN). The panellists were: Dr. Peter van Laarhoven (Director
Group Strategy TNT), Pascal Balance (Director Strategy UPS EMEA), and Dr. Martin Raab
(Vice President Capgemini). This panel was organised by the author himself to present his
research to a wider audience and to obtain feedback both from the panellists and the audience.
2.7 Relevance of Research
The traditional postal market in terms of mail distribution has largely been covered by scientific
research. The quantity of studies available has grown remarkably in the last decade, due mainly
to the progress in the liberalisation process, and innumerable researchers from various fields of
expertise that have tried to explain the characteristics of the postal market. The main focus of
these studies, however, dealt mainly with the economic and political aspects, for example, by
treating the universal service obligation, describing the effects on national economies, or giving
recommendations to governments and regulation authorities. With the emergence of highly
automated sorting centres and the optimisation of mail distribution, the postal sector has also
become part of the field of interest of mathematicians and technicians. From a managerial point
of view, there is basically a lot of research material available on logistics for enterprises, about
supply chain management, about outsourcing and others. However, as a competitive market
had not existed in the past, business economists were reluctant to give the postal sector much
attention. As a consequence, there is little research available in the areas of market analysis,
benchmarks, strategies, and marketing for providers of logistics services. These questions have
only become interesting in the last few years when the monopolies were reduced and the market
for services in the courier, express and parcel business (CEP) has opened for private operators.
This dissertation is therefore one of the first academic contributions to an extensive competitive analysis of the postal industry in Europe and the assessment of the incumbents’ logistics
strategies. The thesis should answer fundamental and urgent questions about diversification as
18
a central strategic move. It therefore provides a solid underpinning for strategic discussions and
decisions on a top management level of the European postal operators. The research further aims
at raising the awareness of managerial topics in this industry and to pave the way for follow-up
researche in the field of competitive analyses of the postal sector.
The research is also relevant for other network industries as diversification is an essential challenge to all state-run operators that provide network services. The introduction of competition
through market liberalisation leads to a decrease of the incumbent’s market share, normally with
a parallel obligation of upholding the universal service. Entering other industries and markets,
both in terms of product and geographic scope, is an important strategy to open up new revenue
streams. The knowledge gained is therefore generalisable, and the conclusions from this dissertation should inspire and support similar studies in the field of transformation of network industries
such as telecommunications, electricity, public transport, water, air transport and audiovisual.
The dissertation contributes furthermore to strategy theory, since it applies established frameworks to the fairly under-researched but nevertheless dynamic postal sector. It thereby identifies
advantages and shortcomings of these concepts when it comes to their application in practice.
In particular, the author discovered the limits of analytical diversification frameworks if they
cannot rely on financial data and should nonetheless provide qualitative statements for the future strategic alignments of firms. The PhD project therefore opens the ground for additional
research in the field of strategy theory in general and diversification strategies in particular.
19
3.1 Trends and Strategic Drivers in the Postal Sector
The goal of this chapter is to provide the basis for understanding the subsequent analyses and
considerations by presenting the characteristics of the postal sector. We first outline trends
and strategic drivers and then incumbents’ responses to these. The chapter is based on numerous studies including those conducted by academics (e.g. Dietl, 2002; Finger, 2005), postal
unions (e.g. UPU, 2002-2005 and IPC, 2001-2006), specialised consultants (e.g. Ecorys, 2005,
Nera, 2004-2005; WIK, 2004-2006; King, 2001), and investment banks (e.g. JPMorgan, 2005).
The insights from these systematic analyses were supplemented by current articles in journals,
magazines, and newsletters and backed up by interviews with industry experts.
There is broad consensus that the postal sector worldwide has entered a period of fundamental
and unprecedented change. “The environment of the postal industry continues to be dominated
by globalization, liberalization, competition, technological change, outsourcing and other change
drivers” (UPU, 2002: 25). From a competitive point of view, the key drivers that have influenced
and keep influencing the industry are regulatory and institutional developments, the rapidly
changing shape of the industry and its markets as well as new technologies. “Unleashed by the
pincer movement of technical innovation and market liberalisation, the 1990s have seen dramatic
reorganisation taking place at many large postal operators worldwide. These efforts mainly
aiming at diversification and internationalisation of the business were strongly spurred on by
stagnation in the demand of the incumbent domestic mail and parcel segments, as well as by
increasing competition” (Dörrenbächer, 2004: 1).
In most countries, historically, the postal organisations were run directly by the government.
Its main function was serving the public by enabling trade and providing access to communications media. Due to the importance of postal services for the development of society and
20
economy, the monopoly was unchallenged for a long time. These postal providers consequently
felt no need for a strong customer focus and most innovations were simply driven by new technology, not by customer needs. Cost factors were neglected, too, because the postal operator
was considered a service provider and was therefore financed (or at least subsidised) by the government or more precisely by the lucrative telecommunication services. In the 1960s and 1970s,
the first private operators emerged (UPU, 2005: 5), which saw the emergence of a potentially
new market by providing higher quality than the incumbent organisations. Their entry area was
primarily international mail due to its inconsistent quality; this enabled them later to also enter
domestic markets. The emergence of new information technologies also created new competition
because it enabled operators to differentiate themselves on a technological level. As we will see
later, most private operators focused on cherry picking (and still do), only serving the most
lucrative customer segments or geographic areas. Today we can observe an increased complexity
of the sector, provoked mainly by three major strategic drivers: 1) Regulatory and institutional
developments, 2) industry and market developments, and 3) new technologies.
3.1.1 Regulatory and Institutional Developments
Political changes were (and continue to be) the major environmental pressure point in the past
decades. While globalisation and market forces play a critical role in the evolving postal sector,
institutional policies of liberalisation have been the most significant driver of change. As long
as the incumbent providers operated within an unchallenged monopoly, the existence of a single
market operator, the lack of competition and the little need for innovation did not create a
need for a regulatory framework. Due to their universal service obligation, however, incumbent
providers started struggling with staying competitive compared to the increasing number of
private and specialised operators. This development made necessary a new model and caused
the emergence of postal regulation to control the sector’s liberalisation.
More precisely, the European Union (EU) has been at the forefront of this liberalisation and
subsequent re-regulation of the postal sector, and its influence extends far beyond Europe. Most
authors start their analysis in 1992, when the European Commission published the Green Book.
From a political point of view, this Green Book, which in essence defined the future construction
of the postal sector and market in Europe, formed the foundation for all subsequent develop-
21
ments in this industry. The Postal Directive 97/67/EC was the defining document at the legal
level by specifying a minimal Universal Service, limiting letter monopolies to 350 grams and
implementing independent national regulators. With Directive 2002/39/EC, a further cut in the
letter monopoly to 100 grams was made by January 2003. Both Directives aim at a gradual
and controlled market opening of the postal sector throughout the EU. The market competition
facilitated in this way should result in lower cost of resources used to deliver services, lower
market prices, higher quality of services and thus an increase in overall value created (see Strikwerda/Rijnders, 2004; NERA, 2005; Ecorys, 2005). As an intermediary step, letters weighing
over 50 grams were opened to competition in 2006. Postal incumbents, however, still benefit
from a monopoly for letters weighing less then 50 grams, which accounts for the largest part
of the letter business. European Union countries finally (status quo November 2007) agreed to
open their postal markets to full competition from 2011 on, with 11 countries given a further two
years to comply (Cyprus, the Czech Republic, Hungary, Greece, Latvia, Lithuania, Luxembourg,
Malta, Poland, Romania and Slovakia). Those states were also supported by unions, which see
liberalisation as a threat for thousands of jobs across the continent. The decision is a setback
for the European Commission, the EU’s executive arm, which had envisaged the Full Market
Opening (FMO) for 2009 (see Reuters, 2007, and CEP-Research 2007a). In Finland, Estonia,
Sweden, and the UK there is no longer any monopoly protection or a reserved service area.
The consequences of sector liberalisation are multifaceted: Various private postal operators
(so called Competing Postal Operators, CPO) are now offering multiple services, especially for
parcels but also for business letters (B2X). Some examples: 19 private postal operators already
compete with the incumbent Royal Mail in the UK for lucrative business customers (see the
study from Mercer Management Consulting, 2007). In Germany, more than 2’000 operators
received a postal licence and today account for 9% of the German letter market. However, most
of them only have a local reach and focus on cherry picking in dense areas. In the Netherlands,
two national mail providers currently compete with TNT for the liberalised parts of the mail
market. The study further revealed that new competitors would increase their market share
in the lucrative national letter business from 5% today to 30% until 2015. Incumbents will
especially loose market share in the SME customer segment, which accounts for up to 60% of
the incumbents’ profits. Nevertheless, all incumbents have maintained dominance in the home
market but the focus has now switched from competition in national markets to competition
for the European market (see Strikwerda/Rijnders, 2004): This market opening enabled larger
22
incumbents to move into other domestic mail markets and to compete there with the incumbent
operator. The Dutch incumbent TNT was one of the early movers and managed to obtain
lucrative market share for example in the British and German mail markets. Also Swiss Post
International has established lucrative positions in various domestic markets abroad. The same
applies of course also to the parcel market which was opened a couple of years earlier: Besides
the large integrators FedEx and UPS, it is mainly the subsidiaries of incumbents that compete
across Europe in the home markets of other incumbents: DHL (subsidiary of DWPN), DPD
(subsidiary of French Post), and GLS (subsidiary of Royal Mail). A new trend can further
be observed, especially in Germany, where several logistics divisions of large companies have
opened their logistics operations to third-party customers. One of the most successful examples
is the Hermes Logistik Gruppe, a subsidiary of Otto Versand in Germany, which today offers a
full range of parcel and letter services in the X2C segment (private households as recipients) to
business customers. These players from adjacent industries form a very new group of competitors
whose importance will certainly increase in the future. In several countries, publishing houses
have already announced plans to establish alternative distribution organisations. They are no
longer satisfied by the incumbent’s services and/or prices and see a potential market in pooling
distribution among the players and eventually even by opening services to third-party customers.
The last decade showed a clear trend across Europe towards corporatisation and privatisation1 :
Most European governments started to incorporate their incumbent operator and an increasing
number plan to sell shares on the stock exchange to reduce the state-controlled part to a minimum. This separation from government aims at enabling solid corporate governance as well as
setting new financial and operational targets (see King, 2001). An additional goal is to raise capital for further investments as well as to give management the utmost flexibility and operational
freedom to act in the liberalised market. The ongoing corporatisation and the sale of shares to
investors has already led to (and will ultimately result in) a quest for financial performance as
incumbents are no longer controlled by government but also by both institutional and private
shareholders who require a maximisation of their investment. The company executives no longer
only have to provide a reliable public service but do have to bear in mind the financial demands
of shareholders. Satisfying these different requirements is a difficult task which raises many
problems, for example taking investment decisions necessary to hold up the required universal
service but which will not pay off the financial investment (or vice versa). As the privatisation
1
See chapter 7.6 for an in-depth analysis of ownership strategies
23
proceeds, the boundaries between public and private operators will become blurred as both serve
the same markets with comparable products and both are governed by the same managerial
principals. This will produce highly competitive strategic groups where the distinctive feature is
not national versus private ownership but the range of services and geographic reach.
3.1.2 Industry and Market Developments
The total EU letter market is estimated to have been about EUR 49 billion in 2000, EUR 52
billion in 2002 and circa EUR 57 billion in 2007 (see International Post Corporation, 2004: 18ff.;
Campbell, 2004: 133ff.; and Mercer Management Consulting, 2007). Depending on the segment
served, margins of approximately 14-20% were achieved. Within this market, the six largest
incumbents together have more than 75% market share. The total revenues earned in the EU
parcel and express markets are estimated at around EUR 36 billion (see Campbell, 2004: 26ff.,
and Mercer Management Consulting, 2007). In contrast to the letter market, this market is more
fragmented with many small and medium enterprises offering local CEP services and the five
largest operators accounting for approximately 52% market share.
When analysing the postal sector from a customer perspective, one can observe two trends:
One is the decline in mail volume, the other changing customer demands. The annual growth
rate in the sector in the last years was around 3.5%, but now a significant slowdown or even
decline is expected (see International Post Corporation, 2004: 18ff.; Campbell, 2004: 133ff.; and
Mercer Management Consulting, 2007). Post Denmark, for example faced a decrease of 4.2%
in letter volume in 2003, while La Poste in France recorded a decrease of 0.9% during the same
period. TNT expects addressed mail volumes to decline by a further 2.5% per year until 2010,
which will add up to a total decrease of 20% (NERA, 2005:2). The reason behind this general
decline in mail volume can be found in a change in customer demands. “Threats are ongoing,
and they take the form of obsolescence and reduced demand for letters through substitution”
(UPU, 2002: 26). The most quoted reason is e-substitution, the substitution of the letter as the
traditional way of written communication by electronic alternatives such as e-mail or Internet
applications. Although worries about future growth of letter volume are not new, e-substitution
has contributed substantially to the slowdown. These effects were analysed in several studies2
2
See, e.g., International Post Corporation (2004: 18ff.) or Campbell (2004: 133ff.)
24
and the decline in growth was measured: While the growth rate between 1995 and 2000 in
Western Europe was 2.6% per year, it was only 0.5% in the years 2002 and 2003. Astonishingly,
the impact of economic growth on the growth of mail volume is declining and a correlation can no
longer be established: According to IPC (International Post Corporation, 2003: 16), forecasting
mail volumes is nowadays extremely difficult as the traditional variables (gross national product,
personal consumption, and consumer prices indexes) for predicting longer-term trends are no
longer correlated with the performance of postal operators. Since 1998 letter post has grown at
only half of the rate of real GDP, a discrepancy that has widened sharply as letter volumes have
remained flat since 2000. On the other hand, IPC expects some growth in mail volume as an
effect of liberalisation due to new customer-specific products that stimulate demand. This does,
however, not suffice to counterbalance the general decrease of the mail market.
The demand does not only change in terms of total volume, but also in terms of customer
behaviour and expectations towards the postal operator: Customers, particularly business customers who accounted in 2001 for 82% of the mail (with 39% going to other business recipients
and 43% to households; UPU, 2002: 26), are becoming increasingly demanding. Although postal
customers represent a multitude of different customers with different needs and expectations,
they nowadays generally want faster, more reliable postal services, more choice of product (including more sophisticated products, such as tracking) and competitive prices. Due to cost and
efficiency pressures, large customers are willing to outsource complete logistics processes – but
only if the quality remains at the same level with a simultaneous decrease in cost. When it
comes to the renewal of long-term contracts, customers put pressure on the postal operator and
demand further cost savings.
Globalisation is another major pressure on postal operators. Customers are increasingly making production, location, marketing and sourcing decisions on an international level and are
looking for pan-European or international “end-to-end” services and solutions. "The trend in
demand is for postal and logistics services to be more standardised, available from a single buying point, across geographic areas and transport modes, for all consignment weights and types,
in a range of time-definite options" (International Post Corporation, 2004: 16). In particular
customers operating internationally look for postal operators, which can provide them seamless,
integrated, and global solutions (one-stop-shopping). Postal incumbents suddenly find large portions of their formerly protected domestic mail market merging into a single, global marketplace.
25
At the same time, postal offerings have become transparent and incumbents must ensure their
competitiveness with integrators, private operators, and internationally diversifying incumbents
from other countries.
Besides the developments within the postal sector, also industry boundaries have become
blurred and incumbents find themselves at the crossroads of three different markets: They are a
player in the highly competitive communication market, where their letter services compete with
other, mostly electronic, modes of communication. Most incumbents have also recognised the
advertising market as a lucrative segment and offer direct mail services, competing with other
advertising channels such as TV, radio, and newspaper. Lastly, parcel services are in competition
with other physical modes of distribution and therefore part of the wider transportation/logistics
market. All of these markets are important for economic development and welfare, but are much
more competitive than the original mail market. Incumbents are therefore forced to battle on
several fronts at the same time.
3.1.3 New Technologies
In the previous section, technology was highlighted as a driving force, changing customer demand and negatively affecting mail volume. However, new technologies also create opportunities
since they are an important source of innovation and a major growth driver enabling the postal
operator to develop high-performance services and products in response to a constantly changing
environment. Here one must point out the information and communication technologies (ICT3 ).
Thanks to the ICTs, historical postal operators have managed to simultaneously achieve several
goals, namely efficiency gains in the production process, speed and faster delivery times as well
as significant improvements in quality. These process innovations can be observed throughout
the whole value chain:
Collection: ICT help to integrate the operations of traditional postal outlets across all retail
channels such as stores, e-commerce, catalogue services, and mobile commerce. Furthermore,
experts predict an elimination of B2B (business to business) mail collection through concepts
3
See Finger/Alyanak/Rossel (2005) for further information on this topic
26
such as “hybrid mail”, a combination of digital and paper media, which has significant growth
potential.
Sorting: Sorting technology has the greatest potential for creating cost savings: Key technology
is optical character recognition (OCR) which increases speed and quality. OCR today can process
up to 36’000 pieces of mail per hour, achieves rates of recognition around 87% with costs as
low as $5 per 1’000 letters. Radio frequency identification (RFID) enables improved “track
and trace”, quality control, and improvements in redirecting and forwarding. Automated guided
vehicles (AGV) nowadays move mail around guided by laser, wall-mounted reflectors, and routing
software or by magnetic paths. The trend goes towards “intelligent mail pieces” with information
about type of service, mailer data, and recipient data on a single barcode through which the
sender can be informed about any changes, the postal operators can trace the mail, and the
receiver can track it down. Therefore, some postal operators have already begun to give discounts
for customers who use OCR friendly fonts and barcodes and WebStamps.
Transport and Delivery: This is the most expensive stage of the process, but there are only
limited opportunities for savings as many requirements are given by the universal service obligation. Software for transport simulation and real time load prediction helps optimising the mix
of transport modes (rail, road, air). Pick-up locations (such as train and gas stations) and large
boxes for parcel deliveries to households are other innovative concepts.
New technologies have also enabled product innovation, revolutionised bulk mail, and generated hybrid products (computerised mass mailings). Rather than simply transporting letters
and parcels from A to B, the ICTs do indeed offer significant new possibilities to add value to
such transport, and, by doing so, to help the historical postal operators become much smarter,
as well as more customer focused. Innovations in technology are also used by postal operators
to compensate for the negative effects of e-substitution by offering multiple web services such as
e-banking, mail-accounts, and virtual document services.
Overall, ICT increase the availability of information to customers and thus reduces the information stronghold that the enterprise holds over the business. As a result, customers are being
empowered and can somewhat take control of products and services. Consequently, this will
increase transparency in the markets and enable customer to make qualified decisions. One can
27
expect significant competition and innovation from this evolution, and only companies with the
necessary technical and organisational capability will gain.
3.1.4 Conclusions
This introductory presentation of trends and strategic drivers in the postal sector demonstrates
the underlying dynamics and the fundamental changes the sector is undergoing. Incumbent
postal operators today face massive challenges that threaten their traditional business model.
The driving factors such as institutional and regulatory developments, industry and market
developments, and new technologies have however not only a negative impact upon incumbents,
but create also new opportunities both for process and product innovation as well as for new
markets. The next chapter will therefore analyse the competitive landscape and the incumbents’
possible new strategies.
3.2 Competitive Analysis of Postal Incumbents
The preceding chapter provided an introduction to the postal sector and identified regulatory
and institutional developments, industry and market developments, as well as new technologies
as some of the main strategic drivers for ongoing changes in the postal sector. Now we examine
how incumbent players have adapted their strategies to the changing industry environment and
analyse their competitive behaviour in the market. In this chapter we review the competitive
intelligence gathered about European incumbent postal operators. “Competitive intelligence is a
systematic program for gathering and analyzing information about your competitors’ activities
and general business trends to further your own company’s goals" (Kahaner, 1997: 16).
28
3.2.1 The Concept of Competitive Analysis
The objective of competitive analysis4 is to develop a strategy profile of an organisation, one
that provides information about the likely success of the current strategy and probable responses
to the strategic moves of competitors, as well as to changes within the industry. A firm doing
competitive analysis wants to anticipate changes in the marketplace as well as the possible actions
of competitors.
Porter (2000b: 48) lists four diagnostic components for developing a strategy profile within the
framework of a competitive analysis: Future goals, current strategy, assumptions, and capabilities
(strengths and weaknesses). A traditional analysis starts with the future goals, proceeds to the
assumptions that in combination lead to the current strategy, which can be double-checked with
the capabilities of competitors. The current strategy and the capabilities (what the competitor
is doing and can do) can usually be analysed more easily than an organisation’s future goals
and the assumptions it holds about itself and industry. These latter factors are more difficult
to observe, although they explain what is really driving the organisation and determine to a
large extent how a competitor will behave in the future. Putting the four components together
facilitates the design of competitor response profiles (Porter, 2004b: 67), which give answers to
expected offensive moves or the defensive capabilities of organisations. Offensive moves have to
be expected from organisations, which are dissatisfied with their current position and which have
future goals (stated or implied) making offensive moves necessary. Those moves have to be rated
according to their impact and seriousness, in other words their market consequences must be
evaluated. The defence capability predicts how the other market participants will react to the
offensive moves and how vulnerable they are.
The resulting profiles are normally used within a closely defined market and developed by a
competitor to analyse his rivals with whom he competes directly. European postal incumbents,
the organisations of our focus, compete in the same industry but do not compete in the same
(geographic) market, making direct application of the framework difficult. It would, furthermore,
go beyond the scope of this dissertation, to develop strategy profiles for each and every incumbent
in Europe. This chapter therefore focuses on applying Porter’s four components to the postal
4
This chapter bases on the paper “Competitive Analysis of Incumbent Postal Competitors in Europe” which was
presented by Finger/Mollet (2005) at the Academy of Management Annual Meeting 2005
29
sector in general and on drawing conclusions about commonly found competitive behaviour
patterns. This approach supports the comparison of different incumbents using common criteria
and from an objective viewpoint.
The chapter is organised as follows: Following the concept of competitive analysis which has
already been presented, current strategies and the competitive landscape are outlined, before
offensive moves and defensive capabilities of postal incumbents will be analysed.
3.2.2 Current Strategies of Postal Incumbents
The various trends and strategic drivers including regulation, market development and technology
(as outlined in chapter 3.1) today shape the industry environment in which postal incumbents
compete. On the basis of annual reports and expert interviews, we see the following trends as
providing challenges to the players in the industry:
King (2001, 14) also analysed challenges in the postal sector and names three areas, where
transformation is needed for postal incumbents in order to become more competitive:
1. Operational efficiency: Production automation, restructuring work practices, optimisation
planning, labour reduction and partnership, sub-contracting;
2. Commercial relations: Costing systems, pricing and product flexibility, account management, investment in CRM systems (consistent customer experience, sales and service integration, retention);
3. Culture: Imperative to change, customer focused organisation, measurements and empowerment, management information systems, integration mechanisms, labour relations.
For postal management, analysing trends and challenges are important; however, more vital
is defining strategic measures to be able to see the results of the responses to these challenges
and thereby to be able to adapt to the changing market environment. These industry dynamics
therefore lead to a variety of changes in competitive behaviour and to the formulation of new
30
Table 3.1: Challenges for incumbent postal operators (own analysis)
Challenge
Competition
Changing customer needs
Universal Service Obligation
Financing USO
Alliances and partnerships
Description and Consequences
New competing postal operators usually focus on “cherry picking”
niches in terms of dense population areas or lucrative segments and
are therefore able to provide cheaper and/or more customised solutions.
In turn, incumbents come from a monopolistic background, their processes are geared to bulk business and they face political restrictions
(see also “Financing USO”).
Customers have a variety of communication tools at their disposal and
rely less and less on written communication. Business customers demand customised solutions, making it necessary to adapt production
processes.
Incumbents remain obliged to provide a universal service that usually
includes the distribution of letters and parcels, five to six days a week
to every household of the country at affordable and equal prices.
As a result of providing the universal service, the incumbent’s fixed
costs remain comparatively high. At the same time, the decline in mail
volume and loss of market share through liberalisation cause revenues
to collapse. Although most incumbents nowadays still earn money,
their core business model is no longer stable. Adjustments in infrastructure or labour contracts are subject to government and/or union
approval. Lower prices to regain market share will only delay this vicious circle since liberalisation aims at transferring market share to
private competitors.
Incumbents have realised that competition no longer takes place within
national borders and that they must establish a secure position with
an international network.
postal strategies. NERA (2005: 7) distinguishes 1) vertical integration, 2) horizontal integration,
3) internationalisation, 4) cost efficiency, and 5) product strategies as the most important strategies. The Universal Postal Union identified the following main strategies (UPU, 2002b: 33ff.),
which reflect current objectives and directions among its members:
1. Efficiency improvement / Rises in productivity
2. Modernisation of retail outlets / Improving image / Opening new opportunities
3. Quality of service
4. Diversification
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5. Globalisation
6. Acquisitions
7. Alliances
Strategy (1) concerns the technological aspect of the posts’ logistics processes and strategies
(2) and (3) primarily address marketing and sales issues; these are very specific to individual
operators and can be analysed on a general basis only with difficulty. Strategies (4) and (5)
are equivalent to product and international diversification, while strategies (6) and (7) are less
an actual strategy, but actions to achieve strategic goals. Dörrenbächer (2003: 11ff.) examined
reorganisation in the logistics and transport sector and postulates the following three “reorganisation dimensions” for postal incumbents, which correspond with the areas proposed by NERA
and UPU: 1) Diversification, 2) internationalisation, and 3) integration. Diversification as the
main focus of this dissertation will be analysed at length in the following chapter. Here we will
go into the details of internationalisation as well as horizontal and vertical integration.
The general trend in all industries towards corporate internationalisation began in the 1950s,
both in quality and quantity. Incumbents continue to expand their international activities,
which “is mainly due to overall structural changes such as political liberalisation, the decrease
in transportation and communication costs as well as a growing homogenisation of products
and services across borders” (Dörrenbächer, 2004: 12). The postal business has always been
an international business with incumbents delivering mail to another country, but only to a
specified geographical point where another incumbent had to take over. This fact alone does
certainly not make an industry international. Upstream vertical integration, globalisation of
the economy and the subsequent internationalisation of the postal sector, however, extend the
incumbents business model from offering international mail to establishing a presence abroad
and starting international activities (see NERA, 2005). The internationalisation of services for
business customers, their need for one-stop shopping, or the increase in cross-border mail traffic
creates the necessity for firms to operate internationally where incumbents must grow with
their customers. The pressure on postal operators to use the newest technology is a further
aspect of internationalisation as the infrastructure should be at least pan-European to achieve
lowest average costs. Through international diversification, incumbents can optimise network
infrastructures, cost structures and therefore realise economies of scale.
32
King (2001: 8) first identified such international strategies in the 1990s, while after 2000 the
emergence of postal owned international groups (parcel, express, logistics) caused the emergence
of the first global strategies and created global offerings. The internationally active DPWN
and TNT especially, are developing new markets (e.g. China, India, Russia, Brazil) to close
wide gaps in their geographic coverage and to benefit from these fast growing, underdeveloped
markets. Tis caused the formation of partnerships between these larger groups and the smaller
postal companies, heralding a shift from the multi-lateral collegiate culture to a competitive
bilateral environment. Nowadays, one can observe significant competition in international mail,
which will eventually end in increased competition between incumbents in (and for) liberalised
domestic mail markets. To sum up, incumbent postal operators today compete on three different
levels (IPC, 2003): The national, the regional, and the international level. When talking about
the national level we mean competition in a country within its political borders while the regional
level includes all activities from adjacent countries to an area-wide pan-European business. We
expect to see the prospect of further changes as global integrators such as FedEx, UPS, and
DHL continue their activities in the trans-Atlantic trade offering guaranteed delivery time, and
door-to-door services for high value items.
Vertical and horizontal integration should not be confused with diversification, because integration is an issue of improving present business activities. It is best explained by analysing
the value chain: Vertical integration describes the strategy of a firm taking over (the function
of) its suppliers (backward vertical integration) or its distributors (forward vertical integration).
The result of this is that the organisation controls a larger part of the process from raw material
through to the end consumer, reduces transaction costs, reduces additional margins within the
value chain, and raises barriers to entry. The acquisition of additional business activities (mostly
in the form of smaller firms) within the value chain is referred to as horizontal integration. Horizontal integration enables an organisation to achieve economies of scale and scope as well as
improving market presence.
The traditional postal value chain is composed of mail collection, transportation, sorting, and
delivery. Depending on the design of the logistics process, several transportation and sorting
steps are necessary. However, a number of activities take place even before items are delivered
to the postal operator or collected from the customer: letters have to be written or mailings
designed, printed, enveloped, provided with an address, possibly pre-sorted etc. As far as parcels
33
and cargo are concerned, other activities take place prior to delivery via the postal operator: raw
material must arrive at the production plant, the production and operations take place and the
finished or semi finished goods must be prepared for delivery. Until recently, postal service only
started at the point where a letter or parcel was ready for delivery to the post office or for pickup
at the customer. The postal service ceased to be involved after the delivery of the item in the
letterbox or the front desk, although this delivery only marks the beginning of new set of tasks
at the recipient: Letters must be distributed in-house, semi finished goods have to be processed
to completion and so on. So postal operators realised that they can provide both added value to
their customers but also reduce their dependency on mail processing if they extend their value
chain vertically:
Figure 3.1: The extended value chain (NERA, 2005: 7)
Several incumbents already offer their customers mailroom management, thus the management
of outgoing as well as incoming letters and parcels. Other companies print mass mailings, invoices, and bank statements on the basis of address files and serial letters provided electronically
by the customer (also called “hybrid mail”). Parallel to this, incumbents try to make better use
of their day-to-day customer contacts and post offices: With the aim of becoming the “trusted
intermediary” with a variety of channels between various mailers and their processes and various
receivers (see King, 2001, and interview #11). A postal operator could therefore become a pivotal point for society and commerce by providing a kind of central exchange platform for goods
and services.
3.2.3 Crucial Factors Shaping the Competition
The previous section provided an overview of the main strategies and strategic initiatives of postal
incumbents, whereby internationalisation and integration were explained in some detail. These
strategies are commonly found across Europe and do not per se account for any differences among
34
incumbents. This section will now look at the crucial factors that drive and shape competition
and are distinguishing factors of the individual operators. Coming from a somehow similar
background as a state-run monopolist with a comparable product and service portfolio, there
may well be factors, in which incumbents vary considerably. The author suggests scrutiny of the
following four factors, which probably determine, perhaps significantly, how a postal operator is
able to react to the challenges identified above and how the competitive postal landscape of the
future will look:
1. Asymmetric Market Development
2. Type of Ownership
3. Size of Home Market
4. Degree of Diversification
Asymmetric Market Development
As with all other liberalising industries, market development is, at least in the beginning of
the process, relatively uneven and differs from country to country. This is especially true for
the countries in Southern and Eastern Europe as they are only just at the beginning of the
liberalisation process, while other letter markets like Sweden and UK are already completely
opened to competition.
Uneven market development was (and still is) influenced by the phenomenon of “asymmetric
liberalisation” (Strikwerda/Rijnders, 2004: 2). Most economic theories assume that the process
of liberalisation is symmetric and synchronous, therefore happening evenly across an entire economic area, and furthermore that the benefits are distributed evenly and, as a consequence, that
each economy has sufficient comparable advantages. Although Postal Directives are mandatory
for the EU member countries, they are implemented in a very heterogeneous manner at differing
speed, and most of the non-member countries are following in their own way and mostly only
partially and with substantial differences between each implementation. This market disequilibrium creates opportunities for early moving incumbents from protected markets to compete for
35
more open markets while the opposite is not possible. On the other hand, asymmetric market
development also puts pressure on incumbents with more liberalised home markets: with competition increasing and monopoly based profits diminishing fast, incumbents are forced to seek new
sources of income which can be found only in new markets, either through geographic expansion
or through diversification. So they generally try to enter other domestic yet liberalised postal
markets abroad. The state of liberalisation in the home market has therefore to be considered a
crucial factor for competitiveness or a liability in the opposite case.
One would still expect to find many incumbents with a highly protected home market (or
at least characterised as having a low level of competition) and with a corresponding secure,
steady cash flow to support the effort of going global and to aggressively enter new markets.
This type of incumbent should be able to act from a comfortable starting point as it does not
have to worry about its home market and has enough resources to act independently. However,
this trend can definitively not be observed in the European postal market. Rather, in countries
with a market, which has not yet or is only slightly liberalised, incumbents have not managed to
become full-scale, international operators. On the other hand, the highly liberalised market of
the Netherlands has produced TNT, a global player. Few examples can be named which match
this profile: Swiss Post has one of the most protected home markets, but is one of the major
international players for cross-border mail. The same applies to Austrian Post, which has not
yet been subject to much competition by other operators, and is now expanding into Eastern
European markets (e.g. Slovenia, Croatia and Slovakia). In most cases, however, incumbents
with more protected markets are not active in foreign markets. The reason could be that they still
earn good money from their monopoly-based business and presently feel no need for increased
competitive behaviour. Because competing postal operators are as yet unable to attack these
incumbents (or only in a few business sectors), they are not forced to engage into competition and
are skimming their home markets. One can observe, on the other hand, that more competition
in the home market provokes more competitive behaviour in target markets. Some level of
competition in the home market seems therefore to be a necessary precondition for an active
increase in competitiveness, e.g. by entering other domestic markets.
36
Type of Ownership
As already mentioned, many governments announced plans to corporatise and privatise their
postal organisations. However, so far only a few have taken the initiative to partly or fully
privatise the incumbent: at the time of writing, only the Dutch postal incumbent has been fully
privatised. The German government sold all its shares in the Deutsche Post AG to KfW, a
state-controlled bank group. CVC Capital Partners acquired 22% of the shares of Post Denmark
from the Danish State and an additional 3% of the shares were offered to the employees of
Post Denmark. The Belgian State and a consortium composed of Post Denmark and CVC
Capital Partners and De Post-La Poste closed a transaction to realise a strategic partnership
for the incumbent where the consortium acquired 50 % minus one share of the capital stock. In
Austria, the state-run Österreichische Industrie-Aktiengesellschaft (ÖIAG) as the legal owner of
the postal incumbent carried out an IPO, privatising 49% of the capital stock. Greece (planning
to sell 25% of Hellenic Post), Portugal (planning a 30% partial privatisation of CTT Correios),
Romania (selling 25%), Hungary, and also Slovakia are looking for partners. At the other end of
the spectrum, the British government has just denied having plans for the privatisation of Royal
Mail.
As an example, TNT and DPWN are both publicly listed on stock exchanges and their governments continue to reduce the share held by the state. At the same time, these two firms
are among the most competitive postal operators in the world, facing high competition in the
home market and acting very competitively in target markets. Letting incumbents into private
ownership seems to be a strategic move by which a government can increase the competitiveness
of their postal organisations. Let us look at possible explanations: the ongoing corporatisation
and the sale of shares to investors automatically leads to a stronger emphasis on financial performance because institutional and private shareholders require a maximisation of their investment.
The incumbent’s management no longer only has to provide a reliable public service but have
to bear in mind the financial demands of the shareholder. Furthermore, a firm listed on a stock
exchange has relatively easy access to capital to finance its investments. Privatisation also releases incumbents from the constraints of government ownership, e.g. in terms of adoption of the
most cost effective or profit maximising strategy. The political control and resistance can prevent
incumbents from investing in private companies or entering into alliances. Other restrictions are
the ability to raise money, the undertaking of investments or the reduction of staffing levels (see
37
NERA, 2004: 39). For many decades, Royal Mail was not permitted to buy shares of other firms.
Joint ventures and alliances were set to some arbitrary limit. It was only with the introduction
of the Postal Services Act in 2000 when the market was partly liberalised that these restrictions
were abolished.
Ownership, together with the broader strategic attitude of governments vis-à-vis their operators does therefore significantly influence the strategic capability of a historical operator. The
industry experts interviewed and market observers both have confirmed these statements.
Size of Home Market
The third factor is in direct correlation with asymmetric liberalisation: “. . . it can be argued that
incumbents with large home markets naturally exert a higher competitive pressure on incumbents
with smaller home markets.” (Strikwerda/Rijinders, 2004: 11). A large home market (such as
Germany or France) automatically means higher monopoly profits and therefore a better starting
point for an incumbent. Postal incumbents, and above all DPWN, are constantly and heavily
criticised for exploiting their high monopoly profits which they use to cross-subsidise diversification strategies and compete unfairly with private operators (see Oldenburg, 2004; interview
#6).
All European incumbents have maintained a dominant average share of 95% in their home
market (see Campbell, 2004: 94ff.). As such, the importance of the size of the home market
becomes obvious: in 2004, DPWN, for example, still held a comfortable 92.2% market share
(2003: 96%) in the German letter market, which generated the necessary cash flow to finance
their massive expansion plans. Table 3.2 gives an overview of the respective market size5 and
the incumbent’s share.
Incumbents in big markets also possess a larger and highly connected infrastructure, giving
them higher economies of scale. This asset enables them to enter new markets with a wider
revenue basis and to achieve the required cost-covering volumes earlier than would otherwise
be the case (see Manner-Romberg, 2003: 18). This also applies to entering postal markets
5
Number of letter-post items, domestic service, in 2003 (in millions)
38
Table 3.2: Letter post market sizes and incumbent shares (www.upu.int / Campbell, 2004: 94)
Country
Germany
Great Britain
Netherlands
Spain
Switzerland
Denmark
Slovenia
Market Size
20’840
20’749
5’384
5’248
2’917
1’153
674
Incumbent Share
96.0%
99.7%
95.0%
90.0%
100.0%
98.0%
98.0%
of a neighbouring country where the existing infrastructure can be used for these additional
operations. Incumbents with relatively small home markets will find it difficult to find such
economies of scale and scope.
Degree of Diversification
While internationalisation and horizontal or vertical integration are common strategic initiatives
among European postal incumbents, attitudes toward diversification are ambivalent. There is a
broad consensus that “the future competitive configuration of the European postal market cannot
be analyzed at the level of the mail business (Strikwerda/Rijnders, 2004: 8).” It is obviously not
attractive to reinvest free cash flow from the declining mail business in existing activities, as
this business will no longer provide a sound basis for a long-term strategy. Strategic moves
must therefore aim at reducing dependency upon the declining mail market by expanding into
higher-growth, higher-profitability, but more competitive business areas. Most responses to the
strategic drivers and changes in the competitive behaviour of the incumbents can be subsumed
under the mantle of diversification. It is therefore fair to conclude that diversification is a widely
accepted answer to the strategic drivers that challenge the postal industry.
Diversification is, besides internationalisation and integration, the main dimension, in which
incumbents can develop business: this fourth factor creates differences in competitiveness and
defines the competitive behaviour of an incumbent postal operator. Diversified incumbents
participate in multiple new and competitive markets and will adopt this competitive behaviour
as useful experience also for the mail market as it progresses towards liberalisation. They will
39
generally invest more time and money into market research and marketing communication, as
they have to enter or build up new markets. The next chapter will present the concept of
diversification and apply it to the postal sector.
3.2.4 The Competitive Landscape
Industry experts (e.g. King, 2001; Strikwerda/Rijnders, 2004; Manner-Romberg, 2005; Waller,
2002; plus the interviewed experts) agree, “there is a large group of internationally expanding,
pan-European companies to which DPWN, TGP, LaPoste, and Royal Mail belong. In another
large group (the defenders) are postal operators whose markets are too small or which themselves
are too small to survive” (Manner-Romberg, 2005: 11). This assessment for the second group
may be a bit harsh and too pessimistic, but it nevertheless reveals the fact that most incumbents
are still relatively uncompetitive, compared to the “Big Four” and especially compared to private
operators. The further development of the postal sector will most probably lead to diverging
scenarios, including different roles for the incumbent operator (Finger/Alyanak/Mollet, 2005:
10ff.):
1. Global Players where we look at operators that pursue an expansive growth strategy to
become globally integrated enterprises offering the full line of postal products and services
from A to Z;
2. Specialised Players where smaller postal operators have fully modernised their businesses
to meet in particular the technological challenges but who due to various reasons (political,
legal, geographic, demographic) have no ambitions to become global operators;
3. Defensive Players where postal operators have not yet formulated clear strategies to confront challenges or are, due to national constraints (especially domestic political reasons),
not able to do so.
4. National state-owned or developing country operators which are no longer dominant on
their domestic market with heavy competition from private foreign operators and a lack of
a clear regulatory framework.
40
Within the first three scenarios, Finger/Alyanak/Mollet assume the full liberalisation of the
postal market and the implementation of a sufficiently clear regulatory framework (e.g. definition
of universal service, postal regulator). The first scenario doubtlessly describes DPWN, TNT,
Royal Mail and LaPoste whose supremacy in the European postal market is beyond controversy
among experts. In addition to Manner-Romberg, the authors name two different scenarios for
the smaller incumbents (the defenders) by assuming that part of them will manage to reorganise
successfully, engage in strong cooperation, and can become profitable. The other part will have
to be subsidised as they are not ready to face new competition, they cannot compensate the
decline in their mail volume, and their markets are too small to operate profitably once their
monopoly is taken away. The fourth scenario can be applied to postal operators in developing
countries and is therefore not relevant within our scope of looking at European countries only.
Global Players
Global players, often referred to as the “Big Four”, are historical postal operators which have
been capable of taking advantage of liberalisation and have or are about to create a globally
integrated postal network which they either own or which to a large extent they control, and this
in all three market segments that are express, parcels, and increasingly also mail. This group is
characterised by massive expansion strategies, both geographically and in terms of product range.
Postal companies pursuing this strategy follow their multinational customers and related trade
flows and outsource their logistics. Due to the significance of this group, they merit a special
treatment. The strategy of the global integrator is to expand both their horizontal and vertical
coverage to capture the market for so-called third party logistics and to act as a one-stop-shop for
their industrial customers, whom they follow to additional markets away from their home base.
DPWN, TNT and LaPoste have all communicated their intention to lead the European postal
consolidation process and they have the cash flow to execute this strategy. Through consolidation
and takeovers these incumbents will continue to increase their market presence, as they already
have large networks generating enough cash flow to further increase their market share. The
concentration and consolidation of the market around two to four such global integrators will
also mean that the world will be serviced by a small number of relatively efficient postal operators
able to use economies of scale. This will enable them to provide price-efficient services to their
41
customers, as well as increase margins to secure a healthy return on the vast sums invested in
infrastructure.
These global players could all profit to a great extent from four crucial factors shaping competition in the postal sector: they all have a large home market which provides them with enough
cash flow for investments in foreign markets and acquisitions. As far as TNT is concerned, they
did not profit from a big home market, but they did take advantage early on of re-mailing profits
and later the benefits coming from an early-liberalised home market. All four incumbents used
asymmetric liberalisation as an instrument in the power play for markets by entering them at the
earliest possible point in time. If further differentiation should be done, we can describe DPWN
and TNT as more aggressive and pro-active and LaPoste and Royal Mail as more conservative.
Although the pace of reorganisation of the latter has been much more moderate, the general
direction with regard to internationalisation and diversification is the same.
Specialised Players
The existence of a highly competitive, dominant group of global players does not mean that a
handful of global operators will by themselves dominate the global market. There will remain
enough room for the other historical postal operators to position themselves well, in particular
if they have special advantages, be they geographical or commercial. Specialised players are
therefore former historical operators seeking out a commercial niche, most likely by combining it
with a geographic (e.g. regional) specialization. So far, we see such specialised players mainly in
Europe because of their relative efficiency and technical expertise (e.g. Danish Post, Swiss Post,
but also New Zealand Post).
Constrained by budgets and their privatisation status, they face a massive consolidation process
by the aggressive actors, which puts heavy pressure on them. They do not have the early-mover
advantages and are now realising the need for action. The relative success of these specialised
players will depend heavily upon financial and political constraints. By definition, such specialised players will not have the financial clout to expand on a large scale, simply because they
will not have a sufficiently large or lucrative home market, or because they have liberalised relatively late and were not able to take advantage of asymmetric competition. Others still may
42
have legal or political constraints, whereby they may lack the political support for privatisation
– one of the pre-conditions for raising money on the capital market – or simply be burdened by
costly public service obligations. Their success will depend on the following factors; namely to
have particularly high quality niche products, to successfully use ICT in their products, their
processes, to be able to resist and compete successfully with invading global integrators in their
home market and perhaps region, and to be able to expand their business into neighbouring
territories.
Defensive Players
Defensive players are small incumbents who for several reasons, have not managed to transform
themselves sufficiently rapidly and profoundly so as to take advantage of the liberalisation of
the postal market. In general, these defensive players mainly come from small markets and in
certain cases, though less frequently, from countries with minimal postal development. Overall,
we can identify the following constraints these defensive players are facing: 1) Legal constraints,
2) political factors, 3) limited size of their home market. Consequently, these defensive players
focus on their respective domestic markets and try to defend it as well and as long as possible
against intrusion by both the global and specialised players. Consequently, these organisations
are natural takeover targets and have to work out intelligent defence mechanisms to remain
independent as well as profitable.
Incumbents in small markets and other defensive players have to resort to alternative methods
to retain a stable market share and resist attack by specialised and global players attempting to
enter their market. Clearly, small players have to attempt to use the value chain more efficiently
and to wring out as much revenue from these value chains as possible. Most likely, however,
they will end up being integrated into one of the global networks or alliances: They “are either
considered to be targets for future take-overs or expected to form co-operations with other nonor weak-reorganisers” (Dörrenbächer, 2003: 43) and should team up with one of the larger players
and build alliances with global and regional players.
43
Alliances and Networks
Experts agree that an attempt by a smaller incumbent to go solo is a possible strategy but that
profitability will be at stake as incumbents taking this approach face heavy market threats as
soon as the monopolies fall. More promising would be to build alliances and networks. It may
very well be that a global player views the cost of entering a market as being too high and
decides to align with a smaller, defensive player. This will particularly be the case in markets
where traditional monopolies still persist and are unlikely to be removed anytime soon. But it
may also be worthwhile for a global player or specialised player to simply take a share in a small
player. Such a strategic partnership gives the small player access to the global or at least regional
network of the new partner company without having to build up this infrastructure on their own.
Table 3.3 lists a few existing alliances between European postal operators to demonstrate how
(especially smaller) incumbents organise themselves to build up powerful networks and profit
from economics of scale and scope.
The table exemplifies the need for defensive incumbents from smaller countries to partner with
partners operating internationally. A common alternative is the build-up of alliances between
smaller incumbents to achieve a sufficient reach and coverage. However, global players also
obviously benefit from partnering with national operators: the number of joint ventures and
alliances shows the trade-off; whether to enter a market on their own or to rely on the existing
network and the local know-how of the incumbent. One can currently observe a slowdown in
the entering into of partnerships and the postal sector seems to have reached a stage of relative
stability as far as express and parcels are concerned. The next wave of extensive partnering (but
also mergers and acquisitions) is expected to follow after full liberalisation of the letter markets.
Many experts have already speculated on the future configuration of the postal sector. In the
long term, NERA (2005) expects that, in any European countries, there will be an incumbent
with a large market share plus a number of competitors, of which the most significant ones are
owned or controlled by global players. Those international players, which do not own or control a
private operator, will either establish their own presence or – in less important countries – enter
into an alliance with the incumbent. Customers place higher priority on transit time, reliability
and high service standards than on the fastest-possible transport (CEP Research, 2006). The
thin line between parcels and express will therefore further blur, which will probably result in a
44
Table 3.3: Examples of alliances and networks in the postal sector (own analysis)
Post / Network
Baltic Express
CTT Correios (Portugal)
Garant Post
La Poste (France)
Norway Post
Pan Nordic Logistics (PNL)
Posten AB (Sweden)
Spring
Suomi Post (Finland)
Swiss Post
Partners and Objectives
Cooperation treaty allows Estonia Post, Latvia Post and Lithuania Post
to deliver parcels from door to door in the Baltic countries by using the
partners’ delivery network.
Cooperation treaty with DHL Portugal for international express
Joint venture between Air France, Chronopost (subsidiary of French
Post), Sodexi, and a bank. The Russian incumbent withdrew in 2004
from the joint venture.
With Fedex, Correos (Spain), Italian Post and Sweden Post (was
planned as a “south alliance” with Portugal and Greece, but could not
be implemented)
Several DPD franchisees belong to La Poste and another incumbent, so
DPD Iberica (with Spanish Post) and DPD Scandinavia (with Swedish
Post).
Cooperation treaty with TNT for international express
In 2000, Denmark Post, Sweden Post and Norway Post bundled their respective cross border parcels businesses into a joint venture “Pan Nordic
Logistics” (PNL). After the withdrawal of Sweden Post from the joint
venture, an express operator in Sweden was acquired and cooperation
agreements were entered into with Finland Post, Estonia Post, Latvia
Post and Lithuania Post.
PNL aims at keeping the Nordic countries in business and at becoming
itself the leading Nordic company in the express and parcels markets.
Franchise agreements with DPD (La Poste) in Sweden, Norway, Denmark, Finland, and Iceland
Cooperation with DPD in Poland and for the Baltic region
Pan Nordic Logistics (PNL)
Joint venture between TNT (51%), Royal Mail and Singapore Post
(24,5% each) for cross border mail and value added services
Cooperation treaty with Estonian Post for mail and logistics services
Joint venture with TNT for international express
Joint venture with GLS (subsidiary of Royal Mail) for international
parcels
45
new segmentation between air and road (BCG, 2004: 33). Parcel operators will compete with
express operators by “lower costs and price for similar time windows, while express companies will
use downtime capacity to attack the parcels business”. Rogerson (2006) assumes a convergence of
mail and express networks: Mail gets faster due to gains in efficiency and new technologies, while
express will get slower because the trend is away from air transport towards a ground network
in Europe. Global players will eventually take over all express and mail flows in the B2B and
B2C business, while incumbents will remain with the less lucrative C2C mail business. She calls
this the “new competitive model” where incumbents simply provide “home delivery services”:
Figure 3.2: The new competitive model (Rogerson, 2006: 16)
3.2.5 Offensive Moves
In this section, we focus on how the incumbents feel about their current position, moves they
might be expected to make, and their strengths. These considerations are based upon the
competitive analyses made earlier as well as on a review of articles in magazines and newsletters
during the period during which this dissertation was written.
Satisfaction with Current Position
Most experts (e.g. Manner-Romberg, 2003: 33f.) rate the competitive situation in the European
postal market, especially the mail market, as comparatively stable and do not expect major
offensive moves in the near future. NERA (2004: 52f.) describes the current strategy of about
46
half of the EU member states as “cautious expansion” along the dimensions of horizontal/vertical
integration and internationalisation. Examples are Swedish Post, Post Denmark, Estonia Post,
Latvia Post, Lithuania Post, Correos and Austria Post. Most of them have some interests or
operations abroad, but are generally quite satisfied with their current position. As a consequence,
these incumbents are not expected to undertake major offensive moves in the near future. They
are likely to pursue their strategies, focusing on niche markets (e.g. Austria Post in Eastern
Europe). Incumbents from smaller states (e.g. Belgium, Ireland and the Czech Republic) are
generally consolidating their existing position (see NERA, 2004: 52f.): they do not significantly
engage in pan-European competition, but are trying to maintain or slightly improve their position
in the home market. These incumbents focus strongly on the traditional mail business and offer
only postal-related value added services (horizontal integration) such as hybrid mail or mailroom
management.
Imminent M&A activities within the traditional mail market are not very likely, as the global
players have some integration work to do in other markets, especially the logistics market, before
they continue their course of acquisition. Furthermore, their strategies put the focus for growth
on emerging markets such as China, India, Russia, and Brazil. We can therefore assume that
they will concentrate their resources outside of Europe and slow down European activities. This
could, in return, create opportunities for smaller incumbents to realise quick wins on a smaller
scale.
Probable Moves
Before evaluating likely future moves, let us first look at some recent announcement of European
postal incumbents that may allows us to make some conclusions about upcoming moves:
Table 3.4: Examples of strategic moves
Date
Incumbent
September 2004 DPWN
November 2004 DHL / Correios de Portugal
December 2004
DPWN
January 2005
Swiss Post
by postal incumbents (own compilation)
Strategic Move
Acquisition of 38% of Spain’s Unipost
Cooperation treaty (international express)
Interest in acquiring Belgian Post
Acquisition of Porta a Porta in Italy
47
Date
February 2005
March 2005
Incumbent
TNT / La Poste
DPD (La Poste)
April 2005
May 2005
TNT / Norway Post
Finland Post
May 2005
June 2005
June 2005
GLS (Royal Mail)
Belgian Post
DPWN
October 2005
Post Denmark
November 2005
November 2005
Norway Post
TNT
November 2005
December 2005
December 2005
Norway Post
Austrian Post / TNT
Austrian Post
January 2006
Finland Post
February 2006
March 2006
Finland Post
Norway Post
March 2006
July 2006
Posten AB
Finland Post
July 2006
TNT
August 2006
August 2006
Norway Post
TNT
October 2006
Norway Post
Strategic Move
TPG and La Poste team up to bid for Belgian Post
Investment of 1 Bn EUR over three years for expansion
Cooperation treaty (international express)
Investmens in logistics and information logistics, cooperation treaty with Estonian Post
Investment of 26 Mio EUR for new locations
Cooperation treaty with GO! Express and Logistics
Announcement of acquisition plans in the US and
Asia
Post Denmark and CVC capital partners acquire
50% minus one share of Belgian Post
Acquisition of Finnish courier operator
Cooperation treaty with Hermes for German mail
market
Acquisition of cool logistics operator Frigoscandia
Cooperation treaty for Slovenian market
Cooperation treaty with trans-o-flex for logistics operations in Eastern Europe
Cooperation treaty with MultiFright for sea and air
import/export cargo transport to and from China
Acquisition of Swedish logistics operator Roadlink
Acquisition of Norwegian logistics operator Holmskau Transport
Acquisition of Swedish communication operator
Acquisition of Norwegian logistics operator Universal Spedisjon and Danish logistics operator Combifragt
Announcement of B2C parcel services in European
markets
Acquisition of Swedish logistics operator Blomquist
Sale of logistics division to investment firm Apollo
Management
Acquisition of Dutch logistics operator Scanex
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Date
October 2006
Incumbent
Austrian Post
November 2006
January 2007
TNT
Post Denmark
March 2007
March 2007
May 2007
June 2007
June 2007
Norway Post
Poste Italiane
Austrian Post
TNT
DPD (La Poste)
July 2007
Finland Post
Strategic Move
Acquisition of 75% of German logistics operator
trans-o-flex, announcement of further acquisitions
Sale of freight management division to Geodis
Acquisition of 51% of Danish logistics operator
Transportgruppen
Acquisition of Sweden’s Transflex Group
Diversification into mobile phone market
Further acquisitions in Central and Eastern Europe
Partnership with German publishing groups
Leader in B2B parcels, growth strategy for B2C
parcels
Acquisition of Swedish logistics operator PS Logistics
This rather impressive list of strategic moves demonstrates the dynamics of the European
postal sector. It nevertheless also reveals strategies that focus 1) on regional expansion and 2)
on diversification into logistics. As far as product or process innovations are concerned, moves
that would change the configuration of the postal sector have yet to be expected. Most innovations serve the purpose of achieving efficiency gains and innovations such as the introduction of
RFID and the further development of hybrid mail. Probable moves should therefore be expected
from M&A activities, either from 1) global players, 2) defensive players, and/or 3) private postal
operators. Moves from global players could include the take-over of a smaller incumbent (or
a major shareholding), if the respective governments will open up ownership. However, global
players such as DPWN face political resistance since both governments and management do not
want to sell their postal incumbent to such a dominant player. Past examples include Austrian
Post, but also the Danish incumbent where the government even preferred an institutional investor. DPWN announced in several press releases that no major acquisitions are planned and
that their focus now lays in the integration of its new subsidiaries and the realisation of synergies. TNT sold its freight management and contract logistics business units and now focuses on
international express as well as selected domestic mail markets. Royal Mail still has problems
with quality in its home market as well its recapitalisation so that government, the regulator and
citizens would probably not accept major internationalisation or attempts at acquisition at this
time. La Poste still benefits from a highly protected French mail market and has a working parcel
49
network with DPD and an efficient cooperation with FedEx for its express business. From these
four leading European incumbents therefore, no immediate major moves are to be expected.
A completely new competitive situation would emerge if two of the global players and/or the
integrators UPS and FedEx joined forces since this would create a new big player. Naming
possible candidates would be too speculative and also the experts interviewed would not give
their comments on this topic. Royal Mail (or at least its subsidiary GLS) would be an ideal
target for TNT, as the British incumbent still faces serious financial problems but could provide
the necessary parcels ground network which the Dutch incumbent lacks, since it is specialised
in (international) express. Die Welt (2005) speculates about UPS’ acquisition plans for TNT.
Officially, FedEx and UPS continue to emphasise again and again that they have no intention to
enter letter markets, as this would require high investment and probably heavy losses at the time
of market entry. News however accumulates that UPS plans acquisitions in the mail business
(e.g. Die Welt, 2005). More interesting might be a parcel provider strong in the B2B business,
as an addition to their strong presence in the US; so only TNT and to some extent GLS and
DPD come into question because they possess a European-wide network. FedEx already has an
alliance with La Poste’s DPD, whereas UPS as the global market leader currently has no such
link. Industry experts (DVZ, 2005b) assume however that GLS’ development would be ideal for
an acquisition by FedEx, which has only its own air network, but no ground transport capacities
in Europe. DPD is said to deny any approaches for cooperation because it wants to expand its
own international network. UPS, in turn, rather envisages an entry into the European freight
business and is looking at acquisitions in Europe (Financial Times Deutschland, 2006); the Swiss
logistics operator Panalpina is currently the most-named target.
In the medium term, such a strategy must therefore be considered as an offensive move. In the
long run, however, we cannot discount the possibility of a take-over of a medium-sized incumbent
by one of these two integrators. Such an incumbent must have a strong competitive position in
its home market, where market entry for the integrator would be too costly or where a simple
cooperation treaty is not possible.
Smaller incumbents also have plans for mergers and one of the Nordic incumbents could
play a key role in these developments. With the dedicated aim of becoming the leading postal
operator in the Scandinavian and Baltic regions but a comparatively small home market without
50
a monopoly, Swedish Posten AB has insufficient resources to achieve its goals on its own. One
can therefore expect Swedish Post to soon be looking for one or more strong partners. Whether
they can hold on to their independence or whether Posten AB will become a premium target
for takeovers itself is questionable, especially because the high quality and technology standard
of this incumbent are very interesting. Post Denmark lists in its “Strategy 2006” the following
objective: “Post Denmark is increasingly being exposed to competition from major international
players in the postal and logistical markets. The most effective response to this development is
to form an alliance with one of these players”. In June 2005, Post Denmark sold a 22% stake
to the British private-equity group CVC Capital Partners. In return, Post Denmark and CVC
have teamed up to acquire a share of up to 50 per cent minus 1 share in De Post-La Poste, the
Belgian national postal operator. The Scandinavian incumbents especially, it seems, will be at
the forefront of a new phase of mergers and acquisitions in the European postal market.
As far as take-overs of competing private operators are concerned, no strategic offensives are
imminent. The larger and independent operators are not up for sale and the smaller ones do
not suffice to unhinge the relative stable competitive market situation. Strategic relevance could
be achieved by future alliances in air transport: French Airposte (subsidiary of La Poste) for
example has an agreement with Poste Italiane. TNT has the leading air transport network,
closely followed by DPWN, FedEx and UPS. But as all the other European incumbents are too
small to maintain their own air transport capability, such alliances could become a new crucial
factor, determining the future layout of the market of the European postal sector.
Strength and Seriousness of Moves
Merger, acquisitions and alliances are by their very nature highly strategic and constitute therefore powerful moves that would destabilise today’s relative equilibrium between the global players,
the specialised and the defensive players. If we weigh the respective seriousness with the probability of it happening, the near future will see only a few major moves. Most probable is the
following scenario: The global players and a couple of smaller, yet competitive operators (e.g.
Norwegian, Swedish, Danish, Swiss, and Austrian Post) will continue their expansion strategy
and in the medium-to-long run start buying shares of (or even taking over) smaller, but promising incumbents. Such a move does not necessarily impact significantly the European market, as
51
it mainly affects the particular national market. However, if powerful business partnerships in
limited geographies are constructed via such acquisitions and alliances, the postal sector in Europe could receive a new face, since a new balance of power could be formed. Furthermore, each
incumbent teaming up with a larger operator is a lost potential partner for other incumbents.
As a consequence, the number of possible partners decreases and panic buying could set in. The
full consequences of the use of ICT in the postal industry are not yet visible. This certainly
continues to be a pervasive underlying driver of change in the postal sector. In the future, the
incumbent’s know-how and strength in information and communication technologies will become
a key factor when evaluating possible targets for acquisition.
Defensive Capability
Industry experts expect most European incumbents to concentrate their resources on skimming
their protected markets and preparing themselves for full liberalisation and to defend themselves
from a (hostile) takeover by a large operator. At the time of writing, the possibilities of smaller
incumbents being able to defend themselves against the moves mentioned above could be assessed positively. Due mainly to government ownership, the incumbents have a lot of influence
on how much competition is allowed, either in terms of the market entry of another operator
or an attempted share holding. BCG (2006: 24) recommends incumbents to ensure that the
regulator does not create a level playing field in their home market; this eventually results in
“competition between countries on regulation, which may cause a sequence of delays and would
impede deregulation in the near future”. With the focus opened to a point after a full market
opening, the defensive capabilities of smaller incumbents seem to be questionable. It will become
crucial if an incumbent is able to resist and compete successfully against invading global integrators and cherry-picking private operators; this ability will be decisive on the route of becoming
a “specialised player” rather then a “defensive player”. Their success will depend upon the following factors (Finger/Alyanak/Mollet, 2005: 20), namely to have particular high quality niche
products, to successfully use ICT in their products, their processes, and their own management,
and to be able to expand their business into neighbouring territories. In conclusion, one can
say that such specialised players can be expected to fulfil their role very well and that they will
probably be highly competitive in their respective markets, although clearly they will not be able
to compete on a global scale.
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3.2.6 Conclusion
In this chapter, we have identified and analysed regulatory and institutional developments, industry and market developments as well as new technologies as the main trends and strategic
drivers in the postal sector. We then highlighted common strategies of postal incumbents and
examined crucial factors shaping competition and the strategic landscape of the European postal
sector. The scenarios of global players, specialised players, defensive players, as well as networks
and alliances were presented and assessed. Based on these considerations, offensive moves and
the corresponding defensive capabilities of European postal incumbents were examined. To conclude, a postal incumbent which – after all the changes the sector has already undergone and
is likely to undergo in the future – thinks that it does not have to transform itself is probably
doomed. In other words, the transformation of a postal operator is unavoidable and in most
cases already substantially under way. Horizontal integration and internationalisation today are
already the main drivers of the postal industry. The future configuration of the postal sector
will however not happen on the level of mail businesses, so that both product and geographic
diversification will be the greatest challenge and therefore the most important strategic move of
postal incumbents in Europe.
53
The term “diversification” has gained importance in the last decades in both the economy and
in the literature, and “diversification into new products and industries is rather the rule than
the exception” (Farjoun, 1994). However, like many other management terms, diversification
has become a popular buzzword for managers, analysts, journalists and suchlike and there exist
many different definitions, depending on whether one comes from a financial or a managerial
background. Therefore, before using diversification as the central concept in this dissertation,
the theoretical foundations are provided and the concept of diversification is examined at in
greater detail. By way of introduction, diversification describes the tendency of firms looking
to make a variety of products and sell them in a variety of markets. In contrast, horizontal
integration is a strategy whereby a firm achieves growth by buying up or merging with another
firm in the same line of business. The characteristic “new product” respectively “new market”
serves as a distinguishing feature between these two concepts. Diversification must furthermore
be delimited from convergence between previously disjointed markets and can be viewed as the
erosion of boundaries.
First, the theoretical foundations of diversification and its history are outlined. We then
analyse motives and the motivation for choosing this strategy and, thirdly, the competitive
advantage, which should result from diversification. Fourthly, risks and costs of diversification
are presented, before we examine, the effects of diversification on financial performance. In
two excursuses, the resource-based view (RBV) as an underlying concept and convergence as a
contrary concept are introduced.
54
4.1 Introduction to Diversification
4.1.1 Theoretical Foundations
One of the first authors who tried to formulate a systematic approach for diversification and
to identify the first-order variables and their structural relations was Ansoff in 1958. For this
purpose, he defined diversification as “a particular kind of change in the product-market makeup
of a company” (Ansoff, 1958: 393). A product consists of physical (e.g. size, weight) and
performance (e.g. speed, range) characteristics and the market is equivalent to the mission the
product is intended to perform. The joint statement of a product line and the corresponding set
of missions is consequently the “product-market strategy” of a firm. Ansoff then deduced four
different product-market strategies as business growth alternatives:
Figure 4.1: Product-market strategies (Ansoff, 1958: 394)
If τi represents the product line and µj the set of missions, then the pair ρij : (τi , µj ) is a
product-market strategy. A firm carries out market penetration if it still pursues its original
product-market strategy but tries to increase its market share by increasing the volume of sales
to its existing customers or by trying to find new customers with the same needs. Market
development means the adaptation of the existing product line to new markets whereas product
development seeks new and different characteristics for the firm’s products in the existing market.
55
A well-run, successful firm normally pursues all three strategies in parallel in order to face
competition and to increase its market position. Diversification, as the fourth alternative, marks a
departure from the original product-market combination and requires new skills, new techniques,
and new facilities. It will therefore eventually lead to physical and organisational changes.
Ansoff therefore provided the basics for future research in diversification by establishing the
distinction between diversification in terms of the product portfolio and diversification in terms
of the served market. However, he used a very narrow definition where diversification must necessarily include both a product and some market development. Nowadays, authors usually divide
diversification as a strategic instrument into product diversification and international diversification (e.g. Farjoun, 1994; Hitt, Hoskisson and Kim, 1997; Brooks/Del Negro, 2002): Product
diversification describes the expansion into product markets that are new to a firm. This type
of diversification normally goes along with the sharing of distinctive firm capabilities or core
competences across business units (called “related diversification” 1 ). Sony is a good example of
related diversification within the entertainment sector, continuously adding new products such as
audio, video and communications. Cross-business synergies can arise from a variety of functional
resources (Tanriverdi/Venkatraman, 2005: 97): Product relatedness, manufacturing relatedness,
technological relatedness, R&D relatedness, marketing relatedness, advertising relatedness, managerial relatedness, human resource relatedness, and knowledge relatedness.
If the process of diversification is uncoupled from existing products, processes or resources,
academia speaks of an “unrelated diversification”. These unrelated diversifications often rely
largely on financial control and managerial competencies not directed specifically to the product
or the given market. It is therefore also associated with risk-pooling opportunities. One of
the most well known examples of an unrelated diversified company is General Electric (GE), a
company which unifies under its brand different businesses from jet engines to power generation,
financial services to plastics, and medical imaging to news and information.
Not surprisingly, related diversification is far more important in practice than its counterpart.
Especially in an early stage of product diversification, the focus is normally on highly related
markets to reduce the risk of a costly failure. At the same time, these firms build their diversification strategies on exploiting synergies because they normally cannot acquire the required
1
Chapter 6.1 will provide in-depth information on relatedness and sources for synergies.
56
process know-how fast enough in a completely new market. However, shifting similar resources to
other, more profitable industries can also be a strategic move in response to the unattractiveness
of the core-industry. If these unattractive features are found as well in adjacent industries, this
behaviour eventually leads to unrelated diversification (Farjoun, 1994). Both related and unrelated diversification in the product line often goes along with the adoption of a multidivisional
structure. This type of organisation allows the firm to build up specialised process know-how
and to focus on specific markets and customer needs. If a firm builds several products that
serve similar customer needs and/or are distributed in similar markets, the firm adopts a matrix
organisation where marketing and sales for all product divisions are centralised.
International diversification, on the other hand, can be defined as “expansion across the borders
of global regions and countries into different geographic locations, or markets. Thus, a firm’s
level of international diversification is reflected by the number of different [geographic] markets
in which it operates and their importance” (Hitt et al., 1997: 767). Many examples can be found
of international diversification since, in the age of globalisation, more and more firms source and
operate globally creating an increasingly internationalised marketplace. More and more firms are
leaving their home base to offer products and services abroad. Early international diversification
efforts are often carried out through special international business units that focus on marketing
and sales activities. As a consequence, most processes are duplicated and synergies are not
systematically exploited.
From a strategic point of view, it is noteworthy that firms with similar technological and marketing skills, similar product groups, common buyers and a similar level of vertical integration
also show similar patterns of diversification (Farjoun, 1994). This observation documents the
importance of relatedness of diversification: Firms orientate themselves around their existing
resources and base their diversification strategies on them. As a consequence, firms are likely to
encounter the same competitors again in new markets. Samsung and Sony, for example, were
already competitors in the television and computer market and now also compete against each
other in the market for mobile phones. Diversification strategies are often also imitated because
competitors seem to be successful in the new markets. In its very nature, imitation is basically a
tool for reducing risk: When taking decisions is risky, imitating the strategy of a successful first
mover seems (at least to the decision maker) to reduce the risk of taking the wrong decision.
Customers, competitors and the environment are all unpredictable: Consequently, imitation of
57
superior products, processes, and managerial systems occurs especially in environments characterised by uncertainty and ambiguity and is therefore more the rule than the exemption and thus
a normal element of competition (Lieberman/Asaba, 2006).
4.1.2 Diversification as a Focus of Academic Research
When diversification became popular among managers, academia picked up on the topic and
tried to provide a theoretical basis for this phenomenon. Having presented the basic concept
of diversification, we will now look back to the last fifty years of management development to
gain insight as to why firms diversified in the past and continue to do so and how academia
commented on this trend. In the 1950s, there was the first boom in management theories aimed
at describing general management skills. The predominant logic was that different companies face
basically the same problems and that these could be solved with the same set of managerial skills.
As mentioned above, Ansoff (1958) provided the management world with the first systematic
approach to compare alternative diversification decisions and to identify the variables, which
have a first-order influence on decisions concerning diversification. The 1960s were the decade
of the conglomerates, where managers tried to apply their skills proven to be effective in one
business to many different businesses. This faith seemed to justify any kind of diversification.
By the late 1960s, these conglomerates encountered performance problems and the first doubts
about the value of diversified firms came up. Academics began to realise that there must be
more to diversification than just the sheer acquisition of unrelated organisations. Furthermore,
corporate management was facing resource allocation problems as different investment proposals
were coming from a range of different sectors with different competitive positions. The 1970s
were therefore the start of strategic thinking and planning, when the first concepts of strategy
were formulated and portfolio planning was introduced as a framework to compare many different
businesses. These portfolio-planning techniques were so popular that they became the basis of
strategic planning itself. But these tools did not answer the question of how different types of
businesses have to be managed and what value corporate management can add.
During the 1980s, firms did not ask what contribution corporate management was making,
but what its cost was. This new trend eventually led to cost cutting and downsizing of corporate
staff. A new paradigm emerged, value-based planning, where economic rather than accounting
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measures were used and the firm’s stock price had to be increased. However, once again, this
concept did not provide satisfying answers leading to the successful management of a diversified
firm. The reaction was a u-turn in strategic thinking, where the concept of corporate success
based on core businesses (“stick to the knitting”) gained credence. Managers with excellent
finance and legal know-how were criticised since they did not possess in-depth experience in the
particular industry in which they held an executive position. The unavoidable consequence was
corporate restructuring and the disposal of corporate assets that brought a correction to various
diversification activities of earlier decades.
In the 1990s, one could observe three main directions (Goold/Luchs, 1993):
• Diversification should be limited to those businesses with synergy;
• The corporate focus should be on exploiting core competences across different businesses;
• Successful diversification depends upon building a portfolio of businesses that fit with the
managerial "dominant logic" of top executives and their management style.
With the concept of diversification being fairly simple and plausible, academia soon turned
to the economic effects of diversification. Berry (1971) analysed the relation between growth
and diversification and came across the problem of measuring diversification. With all their
research, researchers basically try to answer the following types of questions: When is a firm
diversified and how can we measure its degree of diversification? Furthermore, “(1) exactly what
(if any) kind of relatedness between two businesses can allow a corporation to reap improved
returns by diversifying across them, relative to the profits in both industries? And (2) is the
ability to reap these potential diversification benefits dependent on the diversifier’s adopting a
particular organisational structure?” (Markides/Williamson, 1996: 341). Diversification analyses
are always medium to long-term studies focusing on changes of industries and/or strategic groups
over time. Any research has therefore to arrive, firstly, at a demarcation of market boundaries
before any changes can be studied. This normally constitutes a fairly serious challenge, as we
will see later at the example of the logistics industry analysis in chapter 5. At the heart of the
problem is the fact that stable market boundaries are definable only in an equilibrium situation,
whereas diversification is by nature a disequilibrating process.
59
Many attempts were aimed at quantifying diversification strategies and their effects (e.g. Hill et
al. 1992; Berger/Ofek, 1995; Servaes, 1996; Hill et al., 1997; Brooks/Del Negro, 2002; Steinemann
et al., 2004; Jandik, 2005). Those researchers mostly tied their concepts to the firms’ stocks and
analysed their value before, during and after diversification. In order to make recommendations
for managers, these results were compared between diversifiers and non-diversifiers, between
related and unrelated diversification and so on. Most of these analyses came to the conclusion
that diversification strategies generally destroy (stock) value. More recent studies focused on the
effects of internationalisation and especially the international diversification in emerging markets
(e.g. Lins/Servaes, 2002). However, there are many constraints that need go along with the
results from academic studies and their value for practitioners is somewhat limited: The results
are usually based on econometric analyses of past data, in most cases from firms listed on the
stock exchange. Furthermore, they usually focus only on firms in one specific industry. It is
therefore always questionable as to what extent results can be applied to other industries, to
non-listed firms or even to future strategies in general.
4.1.3 Motives for Diversification
Again following Ansoff (1958), diversification is indicated if the most optimistic sales estimates
for the existing product line predict a decline over time, a cyclic growth or a growth beyond
the growth of the industry. Diversification with this approach is therefore a reaction to the
competitive failure of the firm. The firm’s management has to define the objectives pursued with
diversification: Does the firm need a new revenue stream because it operates in an unattractive
industry? Or is the firm’s own growth below the average industry growth rate? Does it aim at
vertical integration?
Academia differentiates three basic motives for a firm to choose a diversification strategy,
namely growth, risk reduction, and profitability (e.g. Grant, 2002). If they cannot be attained
with the existing product-market strategy, diversification is the consequent strategic option. The
quest for growth marks the escape from a stagnant or declining industry and is an important motive for managers of companies in declining industries, as they are reluctant to accept contraction
and try to stop this process by buying companies operating in stable or growth industries. Unfortunately, managers’ salary and prestige are often linked to the size and not to the profitability
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of the firm and therefore growth only benefits the managers (see also Denis/Denis/Sarin, 1999;
Goranova et al., 2007). Academia criticises such growth as it is usually pursued at the expense of
profitability, consequently destroying shareholder value. In the long term, however, profitability
cannot be neglected; otherwise, the firm will not survive or may become a target for acquisition.
Risk reduction is the second motive for diversification. Firms operating in only one market
and/or concentrating on only one product are vulnerable to volatility, be it changes in consumer
behaviour or general shifts in the structure of the industry. The ability to adapt to these instabilities is reflected in the competitive position and therefore in the cash flow a firm can generate
from a market. By diversifying, a firm is no longer dependent upon a single industry’s volatility,
but can spread the risk over different industries. The cash flows variance will then be lower than
the average variance of the individual businesses. Managers usually argue that diversification is
therefore in the shareholders’ interest. However, academia disagrees because this strategy does
not create value for the shareholders since they could diversify their risks themselves at lower cost
by holding a diversified portfolio of securities2 . The manager’s argument applies only to perfectly
uncorrelated businesses (unrelated diversifications) where the individual cash flows remain separate. As soon as relatedness is pursued to maximise the potential for synergy, interdependency
will reduce the benefits of spreading risk. The consequent pursuit of an unrelated diversification
strategy, in return, leads to holding structures, and with top management just administrating a
portfolio of independent companies. Research (see Grant, 2002) has shown that simply combining independent businesses does not create shareholder value and concludes that diversification
as a means of risk reduction is mainly in the interest of risk averse management.
The third motive is the simple quest for profitability, reflecting the very basic aim of every firm,
namely to make money. This motive often serves as justification for unrelated diversifications
because operational synergies do not have to be achieved. However, such strategies feature more
the characteristics of a financial investment, than an attempt to increase the firm’s competitiveness. Again, managers in declining industries will seek more promising industries where they
expect surmountable market entry barriers and where they can invest free cash flow generated
in the primary industry.
2
The Capital Asset Pricing Model (CAPM) proves that shareholders could themselves accomplish risk reduction
at even lower costs (Grant, 2002: 454): Shareholders do not need diversification within the firm in which they
hold shares, they can diversify their portfolio over different firms and also benefit from lower transaction costs.
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These strategic goals respond to the firm’s superior objectives, maybe even its vision, and
define whether the firm must pursue a diversification strategy rather than e.g. increased market
penetration in order to reach these goals. They do not provide the means for final evaluation
of different diversification opportunities, such as where and how to diversify, which will be the
subject of following chapters.
4.1.4 Competitive Advantage of Diversification
As we have seen so far, diversification in general is assessed by strategic management literature
as a critical concept, one that often does not meet the test of scientific requirements. Nevertheless, firms obviously see a lot of attractive business opportunities, which help them to remain
or become competitive. The bottom line is that any strategic move aims eventually at creating
or preserving competitive advantage and earning money. Consequently, we now examine the
competitive advantages, which can arise from diversification. The following considerations explain why a certain industry is chosen over another and how the firm wants to gain competitive
advantage. While the preceding chapter treated the question of whether to diversify or not, we
now analyse the questions of where and how to diversify.
Cross-business synergies are a central driver behind diversifications (see Goold/Luchs, 1993).
However, realising synergy potential should never be the objective per se, but serve as a means to
achieve a superior objective such as growth. Detecting synergies does not define whether the firm
diversifies, but rather how and where it diversifies. As a consequence, the firm’s management
must first take the decision that diversification is necessary in order to achieve higher-ranking
objectives. But, sources for synergy will motivate a firm to diversify into a specific industry
instead of pursuing another strategy. It is therefore a key proposition of management research
that the overall value of a diversified firm exceeds the sum of the individual value of each of its
businesses: “Superadditive value synergies between businesses (a) and (b) make their joint value
greater than the sum of their standalone values: i.e., Value (a, b) > Value (a) + Value (b)”
(Davis/Thomas, 1993, in: Tanriverdi/Venkatraman, 2005: 99).
As a consequence, we can state that competitive advantage arises from synergies and that synergies arise from the sharing of resources. This essential connection brings us to the importance
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of related diversification and the resource-based view (RBV). The RBV suggests that a firm is
the sum of its resources such as assets and skills and that diversification is nothing other than
the sharing or transfer of these resources. Sharing strategic assets and skill transfer should in the
end result in a reduction of overall costs (in one or both divisions) and/or in better differentiation
(of one or both divisions)3 .
Excursus 1 The Resource-Based View: Today’s perspective on diversification is dominated by
the resource-based view (RBV), introduced and elaborated on by Barney (1991). The RBV has become the dominant strategy paradigm and focuses on resources and capabilities of a firm in order
to understand its sustained competitive advantage in the marketplace. A firm gains such an advantage when it implements a value creating strategy that is not simultaneously being implemented
by any competitor and that furthermore competitors are unable to duplicate the benefits of this
strategy. Firm resources include “all assets, capabilities, organizational processes, firm attributes,
information, knowledge etc.” (Barney, 1991: 101) and can be grouped in three categories:
• Physical capital resources
• Human capital resources
• Organisational capital resources
Resources that lead to sustained competitive advantage have to be heterogeneous and immobile
and can be characterised by four attributes (Barney, 1991): (a) Valuable, (b) rare, (c) imperfectly
imitable, and (d) non-substitutable. A firm operates only as the sum (or the pool) of its resources,
enabling it to produce its specific goods and services. As a consequence, the core competences of
a firm are the experience, knowledge and systems to create a new strategic asset or to expand
the stock of an existing one (Markides/Williamson, 1996). Such strategic assets will underpin a
firm’s cost or differentiation advantage.
The resource-based view has implications for both strategic analyses (e.g. portfolio analysis,
industry analysis) as well as on business strategies such as diversification: If a necessary resource
3
Cost leadership and differentiation form together with the niche focus the three generic competitive strategies
proposed by Porter (1985).
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for market entry (therefore valuable) is rare, imperfectly imitable and non-substitutable, a new
competitor faces massive market entry barriers protecting existing players. Though in reverse
these barriers apply to a firm willing to diversify into a new market, because it possibly has to
acquire or build up also such assets. These strategic assets, however, also form an important
source for successful diversification strategies. If a firm manages to transfer some of its assets to
the new market and to found its market entry on them, it will have a competitive advantage over
its competitors. An asset that cannot be transferred into the new market is of no value for the
diversifying firm. Collis / Montgomery (2005: 93) postulate that resources must pass a number
of tests if they are the basis for diversified expansion: (1) They must be competitively superior in
the new business, (2) they must be key success factors in that business, (3) the firm must compete
on all required resources, and (4) leveraging resources must be feasible.
Imperatively, the decision on which new market to enter has therefore to be made by analysis of
a firm’s own strategic assets (its strengths) and the missing resources it has to assemble. The core
competence is then, as mentioned above, the creation of these assets. Following the resourcesbased view, the importance of relatedness becomes obvious, which is consequently often called a
“critical success factor” for diversification.
Economies of scope characterise cost savings resulting from scope (rather than scale) and were
mentioned previously as a major benefit of diversification. The rationale behind this as referred
to by most authors is economies of scope in assets that are subject to transaction costs. There
are economies of scope when it is cheaper to combine two or more product lines in one firm rather
than to produce them separately. More generally speaking, the average total cost of production
decreases as a result of increasing the number of different goods produced: i.e. Cost (a, b) < Cost
(a) + Cost (b). When both businesses (a) and (b) share common resources, their joint production
costs will be less than their stand-alone production costs. Triggered by diversification, economies
of scope can be manifold: Incurring costs for a given input can be spread over a larger volume of
output. This applies especially to tangible assets with high fixed costs as well as high transaction
costs. Cost economies if producing a larger number of products can be realised. Multimarket
companies often centralise their corporate administrative and support service centres as well as
R&D. This leads to specialisation in particular centres, higher output, synergy effects, and even
to lower costs. As far as intangible assets are concerned, brand, reputation, and management
capabilities can be transferred between multiple product or international divisions. In some
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cases, firms started to operate with “internal markets4 ” especially if transaction costs on external
markets are too high, e.g. for printing services, transport, facility management.
While economies of scope target resources and processes (internal benefits), market power as
another competitive advantage relates to customers and competitors (external benefits): The
control over the whole value chain and service provision becomes an instrument for exerting
market power. The firm benefits from it through reducing its dependency on external (factor)
markets. The exertion of market power enables various forms of predatory pricing such as crosssubsidising or squeezing out specialised competitors or reciprocal buying arrangements with
customers an especially common occurrence in oligopoly markets. Mutual forbearance is another
phenomenon that sometimes goes along with diversification when multimarket competition leads
to mutual agreements and less competition.
However, such effects are of course a thorn in the flesh of competition regulation authorities
around the world. From the firm’s point of view, these are competitive advantages and opportunities that need to be taken up. As long as diversification happens endogenously with internal
resources, this behaviour is mostly legal and the authorities have no means at their disposal to
block it. However, if diversification is pursued by M&A, these moves are often subject to the
approval of the authorities responsible for regulating competition.
Diversified firms can use their accumulated experience and transfer core competences to produce new strategic assets: Diversification allows a firm to gain access to asset-building competences. Verdin/Williamson (1994, in: Markides/Williamson, 1996: 348) established five classes
of assets that must be analysed when planning a related diversification (in brackets indicators
for those assets):
• Customer assets (e.g. brand recognition, customer loyalty, customer database)
• Channel assets (e.g. established channel access, distributor loyalty, pipeline stock)
• Input assets (e.g. knowledge of imperfect factor markets, loyalty of suppliers, financial
capacity)
4
These internal markets can furthermore become a source for diversification when they are offered to external
customers.
65
• Process assets (e.g. proprietary technology, product or market-specific functional experience, organisational systems)
• Market knowledge assets (e.g. accumulated information on the goals and behaviour of
competitors, demand price elasticity, an understanding of the right market response to
business cycles)
Diversification also acts as a catalyst for acquiring new strategic assets and creates competitive
advantage compared with a non-diversifier. Following the RBV approach, firms involved in
multiple businesses also gain from diversification, if their assets are primarily knowledge-based
and the firm manages to combine its knowledge in unique, non-imitable capabilities. Firms should
acquire knowledge that can potentially be applied in multiple product markets and combine them
to form unique capabilities.
It is important to note that diversification only creates value and long-term returns when
it allows a firm to exploit resources or assets that are unavailable to its rivals at competitive
cost. If competitors (in the one or the other market) can acquire those skills, resources, assets
or competences (buying, imitating, substituting) at competitive (or even lower) costs, diversification creates no long-term competitive advantage. The effective sharing of resources and
assets relevant to both divisions is vitally important for the success of diversification strategies
(Hitt/Hoskisson/Kim, 1997).
Economies of scale, scope, and learning effects are also commonly mentioned as competitive advantages deriving from international diversification (e.g. Kogut, 1995, in: Hitt/Hoskisson/Kim,
1997). The resource-based view postulates that a firm can use its internal resources and capabilities to exploit market imperfections across global regions and countries and to make use of
market opportunities by exploiting differences in factor markets (e.g. labour costs). Research has
shown that international diversification has positive effects on firm innovation, as the firm faces
a larger variety of customers and different market environments. Innovation in both products
and processes then becomes a possible way of securing competitive advantage as well as generally making more resources available for R&D. It further helps to overcome local disadvantages
(e.g. in factor markets) or on the other side to make use of selective advantages. In general,
diversification creates more opportunities to learn and to build up transferable skills.
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4.1.5 Risks and Costs of Diversification
However, there are significant risks and costs associated with diversification that can exceed the
benefits and competitive advantages of diversification. Diversification strategies, by their very
nature are complex moves and therefore difficult to manage. The following direct risks and costs
are generally attributed to diversification (see Hitt/Hoskisson/Kim, 1997): not only does this
type of strategy require extensive coordination measures, but it also generates high management
and internal governance costs because several organisational units are affected. The range of
resources and scope of governance can then exceed managerial capabilities. Furthermore, this
increase in requirements is non-linear and due to a potential snowballing effect difficult to forecast.
The benefits gained from economies of scope may be dwarfed by the administrative costs involved
in their exploitation. As far as international diversification is concerned, different government
regulations, different trade laws, currency value fluctuations, trade barriers, logistical costs and
last but not least cultural diversity have to be accounted for.
Berger/Ofek (1995) detected the risk of overinvestment and value-decreasing investments when
diversified firms invest in and cross-subsidise projects with a negative net present value (NPV).
This is something a single-business firm would usually not do as it must earn money with this one
business and cannot maintain a unprofitable business. A diversified firm probably invests large
amounts of money to acquire or build up a strategic position only because, for example, it seems
to be beneficial for the existing product line. These costs (e.g. for the acquisition), however,
are too high so that the new business will hardly be able to ever generate a positive return on
investment (ROI). A single-business firm that relies only on this product would probably be
able to sustain a short period of heavy investment but only with the perspective of eventually
generating ROI.
Furthermore, transaction and information asymmetry costs arise between central management
and divisional managers: central management has no in-depth knowledge of the business which
then becomes a source for exploitation by divisional managers to obtain resources and investment. Information-processing demands are generally much larger and complex for international
diversification than when a product diversification takes place in domestic setting. Furthermore,
product diversification sometimes negatively moderates the relationship between international
diversification and innovation as it provokes a shift from strategic to financial control by central
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management (see Hitt/Hoskisson/Kim, 1997). By nature, such financial considerations are much
more short-term oriented, guided by risk aversion and therefore less supportive of innovation and
moves into new markets.
4.1.6 Impact of Diversification on Performance
The previous two chapters have highlighted competitive advantages arising from diversification as
well as the costs occurring and risks that might possibly become apparent during the process. At
the end of the day, the success of diversification is however only measured in terms of additional
profits. The impact of diversification on performance is therefore of central interest. The impact
of diversification on performance has seen many years of research which nevertheless so far
provided no clear view but a troubling picture and resulted in conflicting advice to managers and
investors: “After almost 25 years of fairly intense research and investigation, very little can be said
with certainty on the diversification-performance relationship” (Datta/Rajagopalan/Rasheed,
1991). As a consequence, this section will only provide an overview over the state of research and
point out important conclusions. Confusion normally already begins when attempting to define
the nature of the relationship between diversification, performance and various other factors. In
their seminal article, Datta/Rajagopalan/Rasheed (1991) reviewed existing empirical research
and provided a first theoretical framework to integrate the various issues associated with the
diversification-performance linkage (see figure 4.2).
The degree of diversification is usually measured by comprehensive indices like the Standard
Industrial Classification (SIC) that is used by the U.S. Securities and Exchange Commission.
The underlying assumption says that two businesses with the same SIC code are more related
because they share similar assets and require similar competences. The types of diversification
can be divided into related and unrelated diversification, strategic and operational relatedness
as well as product and international diversification. For the mode of diversification, academia
typically distinguishes internal development from mergers and acquisitions. Performance as the
dependent variable is generally defined as a measure of a firm’s profitability and/or measure
of risk. The moderator variables can be grouped into industry structure (external variables)
and organisational factors (internal variables). The three direct links between independent and
dependent variables are therefore supplemented with six links stemming from moderator vari-
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Figure 4.2: Theoretical
framework
of
“diversification-performance
(Datta/Rajagopalan/Rasheed, 1991: 531)
linkage”
ables. This theoretical framework with nine possible linkages points out how complex and how
difficult it is to measure the relationship between diversification and performance. Furthermore,
Datta/Rajagopalan/Rasheed argue that the majority of authors use incompletely specified models that raise questions of validity and generalisability. All of the studies analysed focus only
on one of the three dependent variables (degree, type or mode) and neglect a possible interdependency between them. Only recently, Miller (2006) came up with a simplified model that
demonstrates the complexity of factors influencing diversification.
More recently, authors such as Miller often criticise the rigid analyses of the relationship between diversification and performance because they may be simultaneously determined by other
factors like the change in industry regulation, business cycles, R&D intensity, leverage effects
and so on. When diversification results in poor performance, the problem is probably not diversification per se, but other factors that affect diversification or its implementation. Furthermore,
69
Figure 4.3: Simple model of relationship between diversification and performance (Miller, 2006)
the resulting feedback loop from performance to diversification is often neglected: both high
performance (e.g. market power) and poor performance (e.g. competitive failure) can stimulate
diversification, either to extend competitive advantage or to escape intense competition and find
profitable niches. This phenomenon was already pointed out by Berry (1971) who commented
that diversification does not only affect growth and performance but can also be affected by these
factors. Another criticism often voiced by researchers concerns the static approach that analyses
the diversification status of a firm and the corresponding financial performance (e.g. stock price).
Diversification as a strategic move is far more dynamic and the transition phase is too instable
to be measured at a given point in time. Past research suggested a positive relationship between
international diversification and performance, but empirical tests provided mixed results. Evidence of product diversification on performance is also inconclusive: the relationship is more
complex than theoretically argued and empirically tested (Hitt/Hoskisson/Kim, 1997). Last but
not least, almost all studies focus on performance in terms of economic measures (profits or
risk): Datta/Rajagopalan/Rasheed (1991) however postulate a conceptualisation that also takes
into account performance as a composite of managerial satisfaction along multiple dimensions,
economic as well as non-economic.
Nowadays, research efforts in the field centres around two main questions:
• How do diversified firms perform relative to single-business firms?
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• Does related diversification outperform unrelated diversification?
Let us, despite all limitations, look at some concrete findings from research: Recent evidence
indicates that corporate diversification has not enhanced the value of firms in the U.S., the
U.K., Germany, and Japan (see Nayyar, 1992; Lang and Stulz, 1994; Berger/Ofek, 1995; Servaes
1996; Lins/Servaes, 1999, Guiri/Hagedoorn/Mariani, 2002; Steinemann/Veloso/Wolter, 2004;
and Ibragimov/Walden, 2006). In finance, this effect is called “diversification discount”, measured inter alia by Villalonga (2004) who matched diversifying and single-business firms on their
propensity score. Berger/Ofek (1995) compared the sum of imputed stand-alone values to the
actual values of firms in certain segments. Diversified firms showed values that during 1986 and
1991 were 13-15% below the sum of the imputed values. The authors name overinvestment from
industries with poor investment opportunities and cross-subsidisation of poorly performing divisions by better-performing divisions as reasons for this phenomenon. By splitting their results
in related and unrelated diversifiers, they discovered that this loss is considerably less for related
diversifications. Other authors (e.g. Miller, 2006) confirm that related diversifiers outperforms
both single-business firms and unrelated diversifiers as they capture value that would otherwise
not be realised.
Unrelated diversification, on the other hand, spreads risks and therefore reduces the probability
of losses while increasing the probability of positive return. However, the returns turned out
to be smaller after an unrelated diversification. If both related diversification and international
diversification are integrated, research shows increased profit stability and stabilisation of returns.
In an early stage of international diversification, the effects on performance are positive, but
they eventually level off and often become even negative as a result of increased complexity.
Interestingly, differences in resource allocation across business units result in a higher performance
than similarities in resource allocation (Hitt/Hoskisson/Kim, 1997). As far as the diversification
mode is concerned, internal diversifiers are on average more profitable than acquisitive diversifiers
(Datta/Rajagopalan/Rasheed, 1991). It would be however too simple to suggest that related
diversifier always outperforms single-business firms: recently, Pehrsson (2006) found evidence
that a high degree of relatedness has a negative performance effect, due to a lack of superadditive
values with a concurrent increase in transaction costs.
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4.1.7 The Selection of the Target Industry
The nature of diversification implies that a firm wants to enter a new industry. Most importantly
this includes the selection of the “right” target industry. So far we have seen, that relatedness in
terms of strategic assets and resources is vital, because the firm should build its expansion on
the exploitation of them and/or make use of them to gain a competitive advantage in the new
industry. More precisely, Ansoff (1958) proposes a two-step evaluation process: firstly, a firm
should apply qualitative criteria to narrow down the number of possible fields of diversification.
Managers must decide why they want to diversify and which objective(s) shall be pursued. The
vision and the mission of the firm should, in the ideal case, provide guidelines to these questions
by defining the characteristics of the firm and therefore its “raison d’être”. If a firm pursues more
than one diversification objective, each option of the admissible set of diversification objectives
can be scrutinised as to how it contributes to the objectives and should be weighted accordingly.
Secondly, quantitative criteria (e.g. sales objectives, potential savings through synergies) allow
to compare the performances of different options and to choose the preferred strategy.
This quantitative analysis proves to be difficult, as a variety of non-measurable and nonallocable changes come along with diversification and many performance tests or ratios can be
taken into account. Porter (1987: 6ff.) reduces the conditions that have to be fulfilled for a
successful diversification to three essential tests:
• The attractiveness test: The industry chosen for diversification must be structurally attractive or capable of being made attractive. Attractive features can be a high ROI, high
entry barriers, low customer and supplier bargaining power, and few substitute products.
• The cost-of-entry test: The cost of entry must not capitalise all future profits. Diversification cannot build shareholder value if the cost of entry into a new industry eats up its
expected returns. Bidding rounds for lucrative acquisition targets in attractive industries
often provoke costs that do not reflect the fair price of market entry.
• The better-off test: The new unit must gain significant competitive advantage from its link
with the corporation (or vice versa). The benefit can accrue only once, e.g. due to an
initial investment, or persistently through the sharing of strategic assets.
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The third requirement (“better-off test”) is difficult to meet in the case of an unrelated diversification, wherefore Porter’s test is also a clear statement in favour of related diversifications.
Executives often ignore this requirement by “arm waving” or trumped-up logic rather than hard
strategic analysis (Porter, 1987: 10) and justify diversification by their own ability to manage
diversity. A diversification that satisfies these three tests will result in increased profitability.
Porter’s study, however, clearly states that most companies pass some of these tests, but that
ignoring one or two of them will result in disaster. Together, these three tests form the critical
success factors (CSF) of diversification and guide managers when choosing the “right” diversification option.
4.1.8 Delimitation to Convergence
Convergence as a term is used in a similar context and often confused with diversification.
We will therefore focus our attention on the concept of convergence and its delimitation with
diversification. Moreover, this distinction is important in order to properly analyse diversification
of postal operators and to conclude whether it is really a diversification or whether it is a matter
of convergence.
Excursus 2 The Concept of Convergence: Lind (2004: 2) emphasises the importance of convergence as follows: “In line with other similar buzzwords (. . . ) [convergence] gained significant
rhetorical power and had significant impact on the world-view of top-management, and eventually
on corporate strategy. (. . . ) From the perspective of business strategy theory, convergence did
motivate aggressive diversification and firm restructuring. However, the relation between theories about firm structure and the convergence phenomena is still largely an unexplored area in the
academic community.”
Let us start with a quick look back in history at one of the first “convergences”: In the early
1800s, machines were constructed in-house to meet the specific production needs of their end
users. The degree of vertical integration was therefore very high. A separate, specialised machine tool industry only began to emerge in the mid-1800s. The main reason for this process of
vertical disintegration was, according to Rosenberg (1976), the application of similar mechanical skills such as drilling, grinding, polishing, etc. to diverse final products. In more general
73
terms, convergence can therefore be defined as “the unbundling and repacking of technologies or
their commercial application into product-market concepts. Convergence between previously disjointed markets can be viewed as the erosion of boundaries that define and isolate industry-specific
knowledge” (Pennings/Puranam, 2000: 3). Other authors emphasise the industry perspective by
describing convergence as the “confluence and merging of hitherto separated markets, removing
entry barriers across the market and industry boundaries” (Lind 2004: 2). Industry in this sense
is a group of products that satisfies the same customer need and convergence happens if a new
product from industry B suddenly satisfies the need of customers that was formerly satisfied by a
product of industry A. We need therefore two elements: 1) Technologies (in the broadest sense)
that can be used for other products, and 2) at least two existing industries affected by convergence
and whose boundaries erode.
Based on a literature research, Lind (2004) sees the driver for convergence to be an imminent
yet fundamental market restructuring that motivates these strategic moves, e.g. before a new
market or technology was established or when uncertainty about the future business logic was
high. More generally, (de)-regulation, socio-economic developments and technological innovation
are drivers for convergence because they destroy current competencies or create new ones. The
restructuring of the firm and its strategic moves during a period of convergence are then a response to re-definitions of industry boundaries and a reaction to the outside forces of industry
restructuring. Stieglitz (2002) differentiates three stages in the process of convergence of two previously unrelated markets: An outside event triggers the process, for example the invention of new
technologies or political deregulation (first stage). In the second stage, market structures and the
firm’s behaviour change in order to adapt to the new environment. The third stage marks a new
relationship between the two markets, either from a technological or a product market perspective,
and the re-stabilisation of market structures.
Greenstein/Khanna (1997) suggest a model with two types of convergence: Convergence in
substitutes and convergence in complements. According to these authors, two products converge
in substitutes when customers consider two products to be interchangeable. This form of convergence occurs if different companies develop features of their products that make them similar
to certain other products. Current examples are mobile phones that include digital cameras and
MP3 players. Although the photo and audio industries are completely independent from the
telecommunication industry, modern mobile phones work as substitutes for digital cameras and
74
MP3 players. Convergence in complements occurs when different companies develop standardised products or systems that interact to form a larger system. In this case, the components
perform a combined function which none of them could do alone. The internet is often called a
trigger for such convergence as it brought customers to perceive computers and phone lines as
complementary products.
Another differentiation can be made between technological and product convergence: Technological convergent markets produce different goods and services with similar sets of technological
capabilities. On the other hand, convergent markets at the product level offer substantial substitute or complementary product characteristics but employ different technologies (Stieglitz, 2002).
Wegberg (1995) and Pennings/Puranam (2000) furthermore distinguish convergence on the supply side from convergence on the demand side. "On the supply side, convergence means that (...)
industries increasingly use the same knowledge base. On the demand side, convergence means that
market boundaries become fuzzier, both within the (. . . ) industries and between them" (Wegberg,
1995, pp. 4-5).
Figure 4.4: Generic types of market convergence (Pennings/Puranam, 2000)
For our purpose, we are also interested in the corporate strategies an established firm can strive
for when it is involved in the process of market convergence. The possible strategic response to
this “new competitive landscape” (Bettis/Hitt 1995) is obviously the migration of firms into new
75
markets due to new market opportunities: “Broadly, [these firms] have either the option to focus
their business activities or to diversify into new markets” (Stieglitz, 2002: 14). The term “new
markets” has to be used carefully here as it describes the new market that developed from the two
(or more) converged markets.
Compared to diversification, the threat of entry with convergence is higher because this strategic
move is based on technological changes and the blurring of industry borders, which makes entry
more promising and less risky due to the easy accessibility of complementary capabilities. As
an additional strategic reaction, studies identified increased reliance on corporate networks and
strategic alliances (Gomes-Casseres 1996) where firms form vertical alliances with suppliers and
users, or horizontal alliances with competitors or firms in other markets.
When comparing diversification and convergence, industry borders become the distinctive
feature: A firm diversifying into a separate, detached industry is therefore crossing the borders
of the traditional to the new industry. As a consequence, it faces the same challenges as a
completely new player, in trying to overcome market entry barriers. Diversification is furthermore
an active and deliberately chosen strategy. Convergence, on the other hand, is a development,
which happens in the market when the borders between two industries blur and they eventually
become one industry. The firm as a player cannot directly influence this development but is
affected by it and can select how it wants to adapt to the new environment. If two (or more
markets) have converged, the distinctive feature of entering a new market is lacking.
4.1.9 Implications for Research on Diversification in the Postal Industry
The chapter on the concept of diversification has provided theoretical foundations and identified
competitive advantages gained through diversification. It further highlighted risks and costs attributed to diversification and outlined the impact of diversification on performance. Research
shows that competitive advantage arises from the realisation of the potential synergy between
two businesses on the level of strategic assets and resources. However, the chapter also pointed
out the limitations of generalisability and applicability of abstract statements about diversification strategies, primarily about the nature of relationship between diversification and financial
performance. Academia does not yet provide a solid and generally accepted framework that
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allows objective analysis. Furthermore each firm has its own capabilities and assets and the
benefits of diversification have to be judged on a case-by-case basis.
When analysing diversification in the postal industry, it will be important to carefully differentiate between the motivation (the rationale), the areas of diversification, and the competitive
advantages arising from these strategies. It will be interesting to see whether the dynamics in
the postal industry created the same motives for choosing a diversification strategy. Because
diversification cannot be measured and assessed and there is no right or wrong strategy, the
individual areas will be analysed on a qualitative basis. We must however keep in mind that
related diversifiers generally outperform single-business firms and non-related diversifiers. It will
be crucial to identify those diversification areas where postal incumbents can be expected to
benefit from their traditional business.
4.2 Diversification in the Postal Sector
The preceding chapter provided a look at the fundamentals of the concept of diversification. We
will now apply this theoretical knowledge to the postal industry and examine the current level
of diversification of postal incumbents.
The implementation of process and product innovations by both incumbent operators and new
entrants through the proactive and systematic use of information and communication technologies, have been very important in shaping today’s postal market. Thanks to the deployment of a
number of different innovative approaches, postal operators have managed to improve efficiency
in the production process by shortening the delivery time of their goods and to attain a higher
level of quality. According to the definitions and approaches for diversification, the following
analysis will however factor out these pure product and process innovations5 and focus on markets, products and services that are new to an incumbent postal operator. The diversification
areas presented will be clearly distinguishable from mere process and product innovations since
they cover products as well as markets/customers that are new to a postal incumbent. By doing
so, this chapter will encompass both product as well as international diversification.
5
An overview of product and process innovations in the postal industry can be found in Mollet (2005).
77
The challenge is to apply a framework suitable for analysing diversification areas in general
while at the same time making allowance for the characteristics of the postal sector. Traditional academic diversification research, especially in the U.S., makes use of the Standard Industrial Classification (SIC), a system for classifying industries. The U.S. Securities and Exchange Commission (SEC) also use this code for classifying firms listed on the stock exchange.
The four-digit code starts with 0100 for “Agricultural Production-Crops” and stops with 9995
for “Non-Operating Establishments”. The United Nations (UN) maintains a similar “Inventory
of International Economic and Social Classifications”. Another system is called the Industry
Classification Benchmark (ICB), which contains over 40,000 companies and 45,000 securities
worldwide. The problem with all of these industry classifications is that they only allow for a
binary examination: we can only define whether a new activity is still within the same category
(no diversification) or whether it belongs to a new category (diversification). Researchers then
carry out quantitative analyses, e.g. on how the performance varies between diversified firms and
non-diversifiers. The approach does not, however, provide a framework for exploring possible
areas of diversification. This has to be done bottom-up by analysing the specific resources of
the individual firm, a process, which requires in-depth knowledge of the unique but nonetheless
clearly identifiable resources, a task which is not possible for all players within a given industry.
Identifying diversification areas on a general basis therefore requires a two-tier procedure with
1) observing the state of diversification in the industry and 2) concluding future diversification
areas based on common industry assets.
Let us now look at diversification in the postal industry and respectively the available research. There are plenty of studies analysing this fast changing sector and many of them aim at
identifying strategic challenges for postal incumbents (e.g. IPC, 2001-2006; King, 2001; UPU,
2002a; UPU, 2002b; NERA, 2004; NERA, 2005; Ecorys, 2005; BCG, 2006). The authorship of
these studies can basically be divided into two groups, with postal associations (e.g. UPU, IPC)
on the one hand and consultants (e.g. NERA, Ecorys, BCG) on the other. Academic authors
usually focus on the economic and political aspects of postal services, such as welfare, regulation, or financing the universal service obligation. Unfortunately, especially consultants provide
only the analysis of a phenomenon and only give vague recommendations concerning concrete
measures in their studies. As mentioned already in chapter 4, all authors agree on diversification
as a major driver for an incumbent’s development, but also add that the careful management
of diversification is a demanding challenge for postal management. Based on this, they identify
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various business opportunities such as hybrid mail or financial services as being fruitful grounds
to explore, however they do this mostly without going into greater detail. The objectives of such
diversification strategies or possible sources for synergies are neglected, meaning such studies
can neither be used as a guideline by the postal management nor do they serve as a general
framework for analysing diversification in the postal sector.
One of the exceptions is the report “European Postal Landscape” from the Boston Consulting
Group (BCG, 2006; see table 4.2), a strategy-consulting firm, which analyses international expansion and diversification issues in more detail. They identified business fields (e.g. logistics)
and corresponding business areas (e.g. freight management and contract logistics), which have
their own economic logic. For each business area they identify the scale within the country,
the synergy across countries (in terms of scale, skill, and customers), and the synergies with
mail (both operational and in terms of customers). Their approach therefore provides us with
a framework for analysing diversification in the postal industry: any diversification area must
be assessed regarding its synergies with the postal core business, in terms of assets, skills, and
customers.
As a consequence, this chapter is organised as follows: 1) the reasons for diversification are
outlined, 2) the sources for synergies and related diversification are highlighted, 3) diversification
areas are identified, 4) the level of product diversification among European incumbents outlined,
5) international diversification is examined, and finally 6) convergence in the postal industry is
analysed.
4.2.1 Reasons for Diversification
The competitive analysis of incumbent postal operators in Europe presented in chapter 3.1
identified the following trends and strategic drivers:
1. Regulatory and institutional developments (e.g. postal directives)
2. Industry and market developments (e.g. globalisation, substitution)
3. New technologies (e.g. track&trace)
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No one would therefore argue that the “status quo” is still an option for these operators (see
Ecorys, 2005: 134ff.). Dirk Palder, vice-president of Capgemini (in: IPC, 2003:10) is convinced
that “the postal service of the future will not be a ‘pure last mail company’, but a network
services company with physical communication capabilities and managed, connected delivery
operations”. No postal incumbent can allow itself to depend solely on a declining revenue stream
from domestic mail. Although they will presumably all remain obliged to provide a good quality
Universal Service at affordable prices, governments expect them at the same time to develop
new revenue opportunities to finance this Universal Service Obligation (see King, 2001). When
analysing possible reasons for a diversification strategy, we can differentiate between push and
pull: the former (“push”) encourages incumbents to seek news revenues because the traditional
business no longer provides a sound basis for a long-term strategy. The latter (“pull”) attracts
incumbents because some new businesses seem attractive and an incumbent can build up a
lucrative position and develop a new revenue mix by exploiting key strengths (PWC, 2006:
175ff.; Rogerson, 2006). In most cases, the final reason for pursuing a diversification strategy
will be a combination of both these aspects. Strikwerda/Rijinders (2004: 12) explain these two
forces as follows:
1. “The postal markets in most European countries are characterised by a low growth rate or
shrinkage resulting from substitution of physical mail by other means of communication
(such as e-mail, mobile telephones and Internet chat), cutbacks by major mail senders
(banks are sending out statements less frequently for example) and a shift in the distribution
mix favoured by senders towards electronic distribution, marketing and sales.
2. Diversification into a number of adjacent markets means that these multi-product, multimarket companies can benefit from several synergy effects, which may be found in several
operational areas.”
Due to the unattractiveness of the core business, it is obviously not attractive to reinvest free
cash flow from the declining mail business into these existing activities (see Waller, 2002: 168ff.,
and Wik, 2006). The liberalisation of the letter market is ongoing and the regulators’ aim is to
further reduce the incumbents’ market share. In the same time, substitution causes the total
letter volume to decline. As a consequence, a vicious circle for postal incumbents has begun.
Let us imagine an incumbent that offers letter services, until recently as a monopoly. With the
80
ongoing liberalisation of the letter market, this incumbent by the very nature of this opening
of the market looses market share. Assuming that the quality of both the incumbent and the
private operators are comparable, any new entrant will offer lower prices and/or special deals
for certain customers, something that would happen in every given market. The provision of
postal (or general logistics) services is an extremely scale-intensive business that can only be
operated successfully if fixed infrastructure costs and low margins can be compensated by high
volumes. New entrants have therefore to quickly gain a significant market share in order to use
their infrastructure to its full capacity. The incumbent operator can now pursue basically two
strategies: he can either lower prices himself or maintain his higher prices and try to differentiate
himself with better quality. In the first case, the incumbent aims at retaining high market share
in order do utilise economies of scale and to exert market power. However, he has to sacrifice
margins without an evident opportunity of cost savings. With this approach the incumbent may
then be able to sustain a market share in the region of 80-90%.
One could argue that the aim of liberalisation, namely the introduction of competition and
lowering prices, can be achieved this way. The experience in most European countries has shown
that the national regulatory authorities (NRA) will not settle for this scenario because the
incumbent operator is still too dominant. This is then why the authority will introduce further
measures to reduce the incumbent’s market share. This will lead eventually to the scenario
where the incumbent has both sacrified its margin and nevertheless lost additional market share
and has to settle with lower volumes at low prices. He will then no longer be able to run his
expensive infrastructure and to pay his workforce. The other alternative is to maintain relatively
high prices and to offer continuously high quality services. Some incumbents have already begun
to abandon market share in a controlled manner to avoid getting into this vicious circle. For
many incumbents, it is maybe wise to lose market share but to safeguard a sufficient margin that
can be invested, for example, into process automatisation in order to save costs. However, this
strategy enables competitors to easily pickup market share by offering lower prices.
Due to this vicious circle, incumbents are often placed in a position whereby they need to open
new revenue streams by diversifying into new business areas in order to establish a sustained
profit. Their strategic moves therefore aim at reducing dependency on the declining mail market by expanding into higher-growth, higher-profitability, but more competitive business areas
(see UPU, 2002b: 34; NERA, 2004). As a consequence, the last two decades have produced
81
various attempts of heterogeneous diversification by incumbent postal operators in Europe that
sometimes seemed anxious not to acquire fast enough portfolios of various companies.
4.2.2 Sources for Synergies and Related Diversification
Having analysed the reasons for postal incumbents to diversify, we will now identify sources for
realising the potential for synergy. Related diversification based on individual assets will allow
the establishment of a lucrative position in the new market and create sustained competitive
advantage. Shared resources can include “all assets, capabilities, organizational processes, firm
attributes, information, knowledge etc.” (Barney, 1991: 101). BCG (2006: 32) proposes operations, skills, and customers as possible sources for finding synergies. As far as operations are
concerned, a distinction between synergies in the upstream, the sorting and the downstream process is recommended: upstream basically describes the collection of mail and its transport to a
sorting centre while downstream is mainly concerned with the process of delivery. NERA (2004:
27) observed, “in many cases the parcels and express networks share facilities with the letter mail
network. The most obvious facility that is shared is the network of post offices, though transport
and delivery facilities are also frequently shared.”
Unfortunately, the leading diversified incumbents DPWN and TNT are not covered by this
NERA study since it would have been useful to see where those operators see sources of synergies. The interviews #2, #3, and #7 however revealed that synergies between networks are
harder to find at the international level than within a country (contrary: Ecorys, 2005: 119).
In table 4.1, only incumbents in smaller countries like Estonia, Hungary or Lithuania operate
completely shared networks. Furthermore searching for synergies in the upstream, sorting, and
downstream process leads to other potential diversification areas, such as value added services
for receivers, utilisation of sorting centres for sorting items other than mail, delivery of items
other than mail, utilisation of collection infrastructure for other purposes and so on. Synergies
can however not only be found in the network itself, but also in expanding the traditional postal
value chain backwards and forwards. In doing so, the sharing of skills (e.g. mail handling, network management, process design) becomes crucial. Figure 4.5 shows several possibilities for a
postal incumbent to extend his traditional value chain backwards.
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Table 4.1: Parcels and express services sharing the letter mail network (NERA, 2004: 27)
Country
Belgium
Estonia
France
Greece
Hungary
Latvia
Lithuania
Luxembourg
Poland
Portugal
Slovakia
Slovenia
Shared parcels and
letter network
Coll. Trsp. Sort. Deliv.
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Shared express and
letter network
Coll. Trsp. Sort. Deliv.
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Coll = Collection | Trsp = Transport | Sort = Sorting | Deliv = Delivery
Last but not least, also sharing customers is a possible source of synergies and therefore for
related diversification. Such a customer-driven diversification orientes itself around customers’
needs and develops solutions designed to meet the specific needs of the sender respectively the
receiver. Direct marketing, as an example, can be seen as an additional service for the sender
and therefore as an extension of the traditional value chain in the direction of the sender. Many
experts believe in the potential of value added services for the receiver, an almost completely
undeveloped business segment. Some incumbents see opportunities in the introduction of the
“receiver pays principle”: because the message or goods has value for both the sender and the
receiver, both should contribute to the cost of the delivery of the message or goods. A receiver
contribution would allow for a reduction in the sending tariffs and would also allow the introduction of further services for the receiver. In the future, maybe only post office delivery will be free
of charge while mailbox delivery will be charged. However, this delivery may be meliorated with
notification services, redirection services or time-definite delivery. Innovations on the receiver’s
side mark a change in the perspective of the postal delivery process, from a push (sender) to a
pull (receiver) perspective.
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Figure 4.5: Activities prior to the traditional postal value chain (own figure)
4.2.3 Areas of Diversification
The preceding chapter examined possible sources of synergies among the categories operations,
skills, and customers. Whether these assets are suitable as a basis for diversification and how
synergies can be exploited to create new business opportunities and sustained competitive advantage, must be answered on the level of the individual incumbent. By looking at the literature
as well as by observing the postal industry, the next chapter will outline areas of diversification
where incumbents are already active today.
A Framework for Analysing Diversification in the Postal Industry
The framework developed by BCG (2006: 32ff.) was already mentioned in the introduction. Per
business area, the scale within the country, the synergy across countries (in terms of scale, skill,
and customers), and the synergies with mail (both operational and in terms of customers) are
identified (see table 4.2).
The BCG approach provides probably the best framework for analysing diversification in the
postal sector. We will now critically appraise the approach, elaborate on the model and use it as
the framework for this chapter. BCG starts with broad business fields, which there are financial
services, B2C, B2B distribution, and logistics. Unfortunately, the authors do not disclose how
they identified these four business fields as obviously the main portfolio extensions. Financial
services are indisputably an important business for postal incumbents and only a few European
incumbents do not offer financial services, some of them even as part of their universal service
obligation. Under “business-to-customers (B2C)”, the authors subsume both communication as
84
well as B2C parcels. Again, the study does not reveal what they include exactly in communication
as a business field. One can only guess they mean all communication from businesses to their
customers, e.g. bank statements, telecom invoices, direct marketing. B2C parcels are clearly a
growth area. The business field “B2B distribution” encompasses both parcels and express, which
today are separated by only a thin, blurred line which will eventually result in a new segmentation
along the mode of transport such as air and road. It is questionable as to what extent these
two business fields are in fact diversifications - or whether they are existing extensions which
just promise more lucrative growth opportunities for incumbents. BCG argues that these fields
have their own economic logic and therefore qualify as diversification. The fourth business field
is logistics, further divided into freight management and contract logistics as an often-quoted
segment (see also later chapter 5).
Table 4.2: Economics of diversification in the postal sector (BCG, 2006: 32)
Customers
0.25
0
0.25
0.25
0.5
0.5
0.75
0.5
Customers
0.75
0.5
0.5
0.5
0.75
0.75
1
0.75
high
Synergy with mail
Operational
B2B
distribution
Logistics
1
0.75
1
0.25
1
0.25
1
0.25
1
0.25
1
0.5
0.5
1
0.25 0.25
0 = low | 1=
Skill
Payments
Retail bank
Communication
Parcels B2C
Parcels B2B
Express
Freight management
Contract Logistics
Scale
Business area
Financial
Services
B2C
Scale within country
Business field
Synergy across countries
0.25
0.75
0.25
0.5
0.25
0.25
0
0
0
0.75
0.25
0.25
0
0
These four business fields are assessed along the criteria of “scale within country”, “synergy
across countries”, and “synergy with mail”. These criteria are very useful as they cover both the
geographic diversification as well as the crucial question of the potential for synergy. The values
result from BCG’s desk report, interviews with postal operators, postal operator customers,
and regulators (BCG, 2006: 6). However, they are not generated mathematically but only
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represent four levels of economics between “high” (= 1) and “low” (= 0). If we average all values
(unweighted) of these three criteria, we receive a consistent value of 0.5 – 0.54 for each business
area. The only exception being contract logistics with the value 0.29, resulting from a low value
for "scale within country" as well as across countries plus no synergies at all with mail. The
homogeneous value of the other areas may be explained by the authors’ assessment that all areas
show advantages and drawbacks and no area stands out whereby all economics were estimated
slightly positive and negative around the average.
We see in table 4.2 that all areas except logistics show a high value (= 1) for “scale within
country”, meaning those businesses can be operated within a country in order to decrease in
the long run the average cost of operations. Only the values for contract logistics are rather
low (= 0.25), where in fact a global or European scale should be the goal. Skills as synergy
across countries have the highest average value (= 0.69), which corresponds with the findings
of academic research (e.g. Hitt/Hoskisson/Kim, 1997, and Tanriverdi/Venkatraman, 2005; see
also chapter 4.1). The lowest value (= 0.29) can be found for operational synergy with mail.
This is insofar problematic since diversification only creates competitive advantage if resources
can be shared so that the diversifying firm is better off than single-business firms. If operational
synergies with mail exist as a basis for diversification, synergies with existing skills and customers
as the two other sources become more crucial.
First Approaches for Identifying New Business Areas
Nowadays postal incumbents cover a wide range of products and services in their country of origin
depending on their historical background and the development of industries in the country and
the country in general. In a few countries the postal incumbent has always offered financial
services (sometimes even as part of the USO) while other incumbents were restricted to a small
set of postal services. Some governments supported early diversification strategies while others
saw their incumbent only as a government entity for the provision of postal services. The
European Union sees the postal industry with its traditional products mail and parcels at a
strategic crossroad of three different industries:
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Figure 4.6: The strategic location of the postal services market (EU, 2002: 5)
Before analysing various diversification areas, it is first worthwhile to identify the exact starting position on which the diversification strategy will be built since this will give us an indication
of where to look for new business areas. With letters as their core product, postal incumbents
compete traditionally in the communications market: they compete for the consumers’ communication budget because consumers have the choice between other means of communications
such as telephone, fax, e-mail and many others. What connects all these means is the possibility
to transmit a message either orally, in written form or digitally. The consumer will make the
decision which communication medium best serves his actual need. For obvious reasons, the
incumbent’s share of the communication market is fast declining and therefore is no longer on
its own an attractive business proposition. The electronic means of communication in particular
suit the consumers’ needs for fast, cheap, and simple communication better than the traditional
letter. Apart from birthday cards and seasons greetings, most people nowadays use letters only
for mail that requires the paper form such as signed contracts and registered mail. From the
business customers’ perspective, letter mail is still of great importance; especially when it comes
to mailing bills, bank statements and suchlike. As soon as the digital signature becomes generally
accepted, this need for letters will also disappear.
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However, firms also use letter mail as a direct marketing tool, namely to send out mass mailings,
brochures, newsletters, and much more. In this respect, postal incumbents provide an important
infrastructure for a highly effective advertising instrument, namely direct marketing: Revenues
per contact as well as the response rate for direct marketing are much higher and the promotion
costs per contact much lower than for example for traditional advertising in newspapers or on the
TV (see BCG, 2006; IPC, 2006). The market for direct marketing is growing fast throughout the
world due to globalisation, worldwide trade and fierce competition. Within this market, postal
mailings compete directly against television, radio, the press, and the Internet.
From a process perspective, the postal service is a part of the market of logistic services where
goods are distributed through the postal infrastructure. Depending on the size, time frame and
other characteristics, we can differentiate parcels, courier/express, and pallets6 . Because the
parcel and express markets were liberalised first, the intensity of competition has increased and
a multitude of start-ups as well as subsidiaries of large conglomerates try to occupy lucrative
niches or gain significant market share. This CEP market (courier, express, parcels) is sometimes
considered a diversification; sometimes it is still part of a postal incumbent’s core business. There
is no generally accepted view (and also no need for one) on this, as it depends on the particular
history of the incumbent. Several European incumbents however, discovered the wider logistics
market as an interesting business field into which to diversify. For our purpose, we consider the
transport, handling, and storage of goods and cargo as logistics services. The competition in
this heterogeneous and highly fragmented logistics market is characterised by countless, mostly
family-owned SMEs, large networks of private operators, a few global players, as well as an
increasing number of new entrants.
It is important to mention here that postal operators are already active in these three industries, although they may not pursue a distinctive diversification strategy. However, just by
providing their traditional postal services, they compete with firms in very different markets that
often require a totally different set of competencies. A postal incumbent has therefore to decide
whether he wants to diversify further into these markets or whether he prefers to look for other,
maybe more attractive, markets.
6
There are obviously many other classifications. Chapter 5 will provide a more thorough classification of logistics
goods.
88
Diversification Areas of European Postal Incumbents
With the table below, the author shows a subjective overview of the current areas of product
diversification among European postal incumbents. NERA (2004: 144f.) provides a similar list
covering “non-postal services”, but which only focuses on the use of the retail network for the
provision of such services. Our analysis elaborates on this approach by covering all current areas
of diversification. Some products or services are in fact depending on the individual depth of
integration or a vertical integration along the value chain. However, they are included in this
table since they mark a first step towards a diversification strategy.
Table 4.3: Diversification areas of European postal incumbents (own analysis)
Diversification Area
Products / Services
Examples
• Making up
DPWN, Swiss Post
Mail Preparation
• Sorting
• Sale of address files
• Processing of computer data
• Order preparation and dispatching
Printing Solutions
• Hybrid mail
DPWN, TNT, Swiss Post
• Mass mailings
• Catalogues
• Newspapers
Direct Marketing
• Sale and management of address files
• Production of direct marketing mail
• Customer Relationship Management (CRM)s
89
DPWN, Swiss Post,
Norge, Swedish Post
Posten
Mailroom Management
Products / Services
• Mailroom Solutions
Examples
Royal Mail, Swiss Post
• Off-site and Mail Security Solutions
• Digital Mailroom Solutions
• Archive Management
Live Filing Services
Electronic Services
and
• Data Warehousing
Swedish Post, Finnish Post
• E-Mail
• Portals
• Electronic Certification
• Secure Messaging
• e-Government
• Electronic Bill Presentment
& Payment (EBPP)
CEP
• Courier
DPWN, TNT, Swiss Post, La
Poste, Post Denmark, Royal
Mail
• Express
• Parcels
Logistics Services
• Mail Order Logistics (Fulfilment)
• Storage / Warehousing
DPWN, Swiss Post, Post Denmark, Posten Norge, Swedish
Post, Finnish Post
• Transport
Financial Services
• Retail Banking
• Personal Loans
• Currency Exchange
• Payment Solutions
90
La Poste, Royal Mail, Swiss
Post,
Poste Italiane,
De
Post/La Poste
Insurance Services
Products / Services
• Car Insurance
• Travel Insurance
Licences, Forms and other Official Documents
• Passport Service
• Driver Licences
Examples
Royal Mail, Austria Post, Magyar Post, Czech Post
Royal Mail, Czech Post, Estonian Post
• Car Vignettes
• Vehicle Tax
• Television Licences
• Fishing Licences
• Travel Services
Retail
• Stationery / Office Supplies
• Books
• Phone Cards
Royal Mail, Swiss Post, Czech
Post, Estonian Post, Post Denmark
• Handy and Computer Equipment
• Sweets
Let us now go into more detail on these areas of diversification in order to explore the strategic
goals of the incumbent and the synergies with the traditional postal business7 .
Mail preparation describes the elements of the value chain before mail enters the distribution
channel. From the postal operator’s perspective, these steps are preparatory to its own activities and basically cover the making up (e.g. binding, finishing, addressing, enveloping, plastic
wrapping) and the sorting (e.g. grouping in bundles or mail bags) of mail. The range of services is almost unlimited and also includes interfaces to direct marketing when it comes to the
sale and processing of enhanced address data. The incumbent aims at covering a larger part
of the value chain, at vertically integrating its business and eventually at adding value to his
7
CEP and logistics services will thereby be factored out, as the following chapters will treat these strategies.
91
customers. Operational synergies can be found in standardising or optimising interfaces between
mail preparation and the incumbent’s processes. In countries such as the United States and
the UK where private operators have access8 to an incumbent’s processes, mail preparation has
become a flourishing business.
Further integration along the value chain is found in the provision of printing solutions. These
solutions aim at customers that have a large sending volume such as mass mailings, catalogues
or newspapers. Here, postal incumbents generally have good relationships and close contact
with their customers. These large volumes are lucrative to print and if the incumbent can
optimise print output in regards to his own processes, he can also realise good synergies in mail
preparation and sorting. Furthermore, he controls a larger part of the customer’s value chain
and therefore re-enforces his own position. Hybrid mail is another well-known printing solution,
where documents and the corresponding address files are provided electronically by the sender
to the postal operator who then prints and wraps the mail and takes care of its processing and
delivery.
Direct marketing describes the process of directly contacting individual customers (businesses
or private individuals) using addressable media such as mail or e-mail. This type of marketing
provides for better targeting and personalisation of communication efforts. As a consequence,
communication is optimised at generally lower contact costs. Besides market knowledge and
general consulting, a postal incumbent can offer his customers the maintenance, enhancement,
and management of address data because he already possesses these data in a very up-to-date
state for his own purposes. Due to its daily customer contact, a postal operator can even take
over fully the customer relationship management (CRM) of a firm. The incumbent’s strategic
goal is to offer its customers the whole range of services to meet his communication needs, already
starting with marketing, long before physical distribution takes place. At first sight, operational
synergies are not obvious, but as liberalisation continues, this integration will become even more
important because the incumbent can prevent other private operators from distributing direct
marketing mail.
8
We differentiate upstream and downstream access: A private operator has upstream access if he collects mail
at his customers and feeds it into the incumbent’s sorting processes. If a private operator uses the delivery
network of the incumbent postal operator, he has downstream access.
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Mailroom Management is another way of diversification that is very much in line with the
traditional postal business: A firm can outsource its entire mailroom activities starting from
receiving inward mail, in-house distribution to mail preparation and outward mail, either on the
customer’s premises or off-site. Furthermore, mailroom services can include scanning, rewriting,
validating, forwarding and archiving of documents to establish an entirely paperless document
transfer. As far as security is concerned, infrastructural security measures and x-ray screening
of inward mail are part of any comprehensive mailroom management. A postal incumbent is
predestinated as an outsourcing partner for mailroom services because mail is his core business
and his operations and activities are trustworthy above average.
With Electronic Services, postal incumbents try to address the negative consequences of digital
mail substitution by playing an important part in this new business field. The range of services
is literally unlimited starting with the operation of web portals and e-mail services for individual
customers to complex data warehousing solutions. Some incumbents tried to position themselves
at the forefront of this movement by introducing electronic certification and secure messaging
but none of them so far managed to launch a service based on real breakthrough technology.
The same applies to e-Government where postal operators try to provide solutions for the entire
government communication with its citizens. Electronic Bill Presentment & Payment (EBPP),
however, is an area where incumbents with their own financial services (see next paragraph) have
achieved success, although without establishing industry-wide standards.
Financial Services are a traditional area of diversification and many incumbents have a long
history of providing retail banking, personal loans, currency exchange, and many diverse financial services to their customers. Switzerland has even added the provision of financial services
to the USO. One could argue that financial services should therefore no longer be considered as
diversification. But then again, financial services are a completely different market with own dynamics and specific industry requirements whereby it seems fair to include them in this analysis.
The goals are to make use of the dense retail network (leverage effect) and to use the quality
brand for additional services based on a high level of trust. PWC (2006: 176) documented the
importance of financial services as a mean of diversification by comparing the revenue share of
postal operators associated with financial services. In Italy, in 2005 the incumbent generated
42% of its revenues through financial services, followed by Hungary (28%) and Poland (25%).
There are various ways to offer these financial services, either with a fully owned bank (e.g.
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Deutsche Post, La Poste), a joint venture (e.g. De Post/La Poste), the integration of financial
services (e.g. Swiss Post) or a shared network (e.g. TNT). The same basically applies also to
Insurance Services.
Government agencies and other official agencies also make more and more use of the extensive
network of postal offices, trust and quality attributes to make their services and products more
accessible to citizens. Royal Mail has a long tradition of offering Licences, Forms and other
Official Documents in almost every post office. The range of these services is basically unlimited
and today already reaches from issuing passports to vehicle taxes to television and fishing licences.
Last but not least, and probably the best-known type of diversification, is the development of
the postal office network into a retail chain: stationary and office supplies, books, phone cards,
mobile phone and computer equipment, sweets – almost every postal incumbent nowadays sells a
wide range of merchandise at the counter. Because they already have the space, the infrastructure
and personnel, postal operators often only count direct costs to price these goods and are therefore
able to operate as attractive retailers. Not surprisingly, the traditional retailers are not at all
happy with these new competitors.
The overview in table 4.4 again analyses all these diversification areas by pointing out their
potential synergy with traditional postal products (mainly letters) in terms of operations, skills,
and customers, which were identified earlier on as relevant sources for synergies. The synergy
potential seems highest for mail preparation and mailroom management since they are directly
adjacent to the traditional postal processes. Printing solutions also look promising, although
many new skills are needed. All services provided at the postal counter feature some synergies
in operation due to a better use of the retail network. However, they require a whole new set
of skills, unless it is really only retail sale. Few synergies are evident by providing electronic
services, that is apart from addressing existing customers before they totally turn away from
letters as mean of communication.
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Table 4.4: Synergy potential for various diversification areas, excluding CEP and logistics (own
analysis)
Area
Mail Preparation
Printing Solutions
Direct Marketing
Mailroom Management
Electronic Services
Financial Services
Insurance Services
Licences, Forms etc.
Retail
Operations
++
++
+
++
+
+
+
+
Synergies
Skills Customers
++
++
+
++
+
++
++
+/+
+
+
+
+
- no or only few synergies | + some synergies | ++ many synergies
4.2.4 Level of Product Diversification of Different Postal Incumbents
So far this chapter identified the reasons for postal incumbents to diversify, provided a framework
for analysing diversification areas and highlighted those areas in which European postal incumbents have currently diversified. The following empirical part will analyse the level of product
diversification of selected postal incumbents.
Since pressure for new products and services is obviously high, one would expect to find diversification strategies presented in annual reports, on websites and suchlike of postal incumbents.
This search has proven to be difficult because there is no accepted way of grouping postal activities and no common understanding of diversification. Some operators indicate mail as their only
core business and every other activity is already considered as diversification. Others treat mail,
parcels, express, courier, logistics and financial services as equivalent business areas and consider
themselves already diversified. Some of them have for example logistics units but provide only
parcel services without offering transport and warehousing services. Almost every incumbent
pursues a strategy of developing new products and services although most of them are product
and process innovations or value added services in the narrower sense while others can be considered as diversification. It is therefore not possible to build a simple matrix that would provide
an overview of diversification in the postal industry.
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Let us have a look at some examples of diversification strategies found in annual reports and
on websites: Post Denmark’s vision and strategy is to “successfully develop and provide new
customer services to senders and recipients. (. . . ) New services will be developed in four areas:
(1) Services paid by the recipient, (2) Extended customer options for senders, (3) Refinement of
unaddressed items as well as newspapers, magazines and periodicals, and (4) eCommunication”
(postdanmark.dk, 2007). This strategy can hardly be classified as a diversification strategy
although Post Denmark in fact pursues both product and international diversification (interview
#13). Finland Post claims to be the “the leading provider of messaging and logistics services in
Finland and selected markets in Northern Europe" and "aims to be the number one intelligent
logistics company by 2010. Intelligent logistics refers to the management of information and
material flow using state-of-the-art technology (. . . )" (posti.fi, 2007). According to this selfassessment, Finland Post is already a diversified company and there are no clues on further
efforts at diversification. The same applies to the Swiss Post who’s “fields of activity include
Mail, Goods & Logistics, Financial Services and Passenger Transport” (post.ch, 2007). Norway
Post on the other hand has a clear diversification strategy whose “ambition is to develop into a
leading mail and logistics corporation in the Nordic region. Its vision is to become the world’s
most future-oriented post and logistics corporation” (posten.no, 2007) which indicates a clear
diversification approach that goes beyond the traditional postal business. Austrian Post focuses
mainly on innovation as “a matter of developing and introducing new ideas and services that
create added value for customers“ (Annual Report 2005). A “powerful product development and
a well-considered expansion of the value chain” is also pursued by the Hungarian Post (Annual
Report 2005).
Another, maybe more promising way of assessing the importance of diversification in the
postal industry is to look at the incumbents’ current portfolio and to analyse their turnover and
revenue distribution (see also BCG, 2006; Ecorys, 2006). By looking at the percentage of mail
revenue compared with total operating income, one can assess a postal incumbent’s dependence
on the mail business. Comparing the differences between revenues and profit distribution gives
further indication as to whether an incumbent is considered as diversified as far as its revenue is
concerned or whether it really earns money with its new businesses. The following tables analyse
the financial data for 2006 of European incumbents, selected by the criteria of reporting revenues
from logistics business (as the focus of this dissertation).
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Table 4.5: Revenue distribution of European postal incumbents (in %)
Country
Company
Mail
Germany
Switzerland
Italy
Netherlands
Norway
Finland
France
Sweden
Austria
United Kingdom
Belgium
Denmark
DPWN
Die Post
Poste Italiane
TNT
Posten Norge
Posti
La Poste
Posten AB
Österreichische Post
Royal Mail
De Post/La Post
Post Denmark
19.9%
28.8%
33.5%
40.3%
44.4%
52.9%
56.3%
68.1%
75.5%
75.7%
79.1%
79.4%
Revenue distribution 2006 (in %)
Express Logistics Financial
Services
25.7%
34.0%
14.3%
12.9%
14.8%
27.5%
59.7%
16.0%
26.0%
33.3%
14.6%
6.2%
22.8%
31.8%
13.1%
14.9%
4.2%
9.9%
14.3%
Other
6.1%
43.4%
39.0%
13.6%
13.9%
0.2%
0.1%
11.4%
9.3%
6.7%
6.3%
Sources: Analysis of annual reports 2006
The column “Mail”, sorted in ascending order, shows what revenue share of an incumbent stems
from the traditional mail business. Unfortunately, annual reports are not always transparent as
to which products and services are subsumed in which business unit. Some consider express
services as part of their “postal business” (e.g. Austrian Post) while others report only financial
data for the “logistics business”, including parcels and express (e.g. Swiss Post). Where possible,
revenues from parcel services were attributed to the logistics business. The table must therefore
be taken with caution, although it nevertheless provides a good impression about the level of
diversification. The German incumbent nowadays generates less than 20% of its revenues from
its mail business (2005: 29%). Its direct competitor TNT increased its share back to 40.3%
(2005: 31%), as a result of the sale of its logistics business. In turn, the focus on worldwide
express services leads to almost 60% revenue from this field of business. Both Swiss Post and
Poste Italiane decreased their dependency on mail to around 1/3 of their revenues, due mainly
to strong financial services. Swiss Post furthermore reports its international activities separately
from its domestic business unit and does not split its numbers by business segments. In the
second part of the table, we see incumbents whose mail revenues account for more than 2/3 for
their total revenue. Even Swedish Posten AB with a strong logistics business and French La Poste
with a healthy post bank still depend heavily on their traditional mail business. Interestingly
97
for the purpose of this dissertation, there is a large group of incumbents reporting some kind of
logistics activity, mostly in the region of 10-15% of total turnover.
Table 4.6: Profit distribution of European postal incumbents (in %)
Country
Company
Germany
Switzerland
Italy
Netherlands
Norway
Finland
France
Sweden
Austria
United Kingdom
Belgium
Denmark
DPWN
Die Post
Poste Italiane
TNT
Posten Norge
Posti
La Poste
Posten AB
Royal Mail
De Post/La Post
Post Denmark
Mail
42.6%
29.0%
n.a.
55.1%
56.3%
117.2%
n.a.
n.a.
89.4%
96.9%
n.a.
n.a.
Profit distribution 2006 (in %)
Services
6.7%
15.8%
20.8%
10.6%
29.8%
n.a.
44.9%
19.40%
10.8%
30.2%
n.a.
n.a.
n.a.
n.a.
6.8%
29.6%
n.a.
n.a.
n.a.
Other
14.1%
30.6%
n.a.
13.5%
-47.4%
n.a.
n.a.
3.8%
-26.5%
n.a.
n.a.
Sources: Analysis of annual reports 2006 (Calculations for TNT by the author, based on the declared
financial data for the business units’ expenses)
In the end, however, it is not only important to spread the revenue stream across multiple
businesses, but to earn money from these businesses. Unfortunately, not all incumbents publish
data on profit per segment meaning that a full comparison is not possible. Most remarkable
is the fact that DPWN still earns more than 40% of its profit from the mail business. This
leads to the conclusion that either the mail business is highly profitable and/or that the other
businesses perform below average. Express and logistics, accounting for almost 60% of DPWN’s
revenue, fails to generate even 1/4 of the incumbent’s profit. The generally high margins in
the mail business (see interviews #1 and #7) also become manifest at all other incumbents.
This profitability stems from the incumbents’ high market share, high volumes, together with a
maximum of standardisation and technology. As a consequence, the logistics business seems to be
a revenue driver, decreasing at first sight the dependency on mail, however without contributing
to the financial health of an incumbent due to low margins. Finland and the UK both possess
a highly loss making postal network, where the loss is basically compensated for by non-mail
businesses.
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4.2.5 International Diversification
The considerations so far have all treated product diversification of postal incumbents. Internationalisation9 in the postal industry is driven mainly through 1) customer needs, 2) competitiveness with large integrators, and 3) market opportunities through liberalisation (see King, 2001)
and leads to the emergence of postal owned international parcel/express/logistic groups and the
creation of partnerships between these groups and smaller posts. As far as international diversification is concerned, we can distinguish two types of strategies: 1) international expansion of
domestic mail services, and 2) cross-border mail. Category 1) describes the offering of existing
postal services, e.g. mail10 , in other countries. Both DPWN and TNT but also smaller players
like Swiss Post are very active in this field and compete with the respective incumbent. These
postal services are often purely domestic and focused on lucrative and easy to serve metropolitan
areas (“cherry-picking”). On the other hand, category 2) consists of international cross-border
solutions, e.g. mail and logistics. Postal incumbents have a long history of providing international mail in cooperation with other incumbents and coordinated by the Universal Postal Union
(UPU). This institutionalised cooperation will however become less important due the ongoing
liberalisation that results in a “shift from a multi-lateral collegiate culture to a competitive bilateral environment” (King, 2001: 11). In the future, postal operators will either build up their
own international networks or choose their international partners more selectively.
The BCG report (2006) sees only some international scale for mail, evoked by multinationals
that tender their mail contracts at the European level. The cross-national operational level is
probably limited to bulk purchasing and central overhead (e.g. skill transfer, see also Ecorys,
2005: 119). BCG forecasts that a few European plus several regional (2-4 countries) players
will eventually compete with national incumbents. As far as express is concerned, the game
will doubtlessly be decided on an international level and consolidation among the four players
UPS, FedEx, TNT, and DHL will proceed. Asia will become the crucial market for further
development as local express operators are still leading the market and the big four have only
managed to obtain 10% market share so far (BCG, 2006).
9
10
International aspects of logistics and freight management will be analysed in a separate chapter.
International diversification is not limited to traditional postal services but can of course be combined with
product diversifications.
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4.2.6 Convergence in the Postal Industry
In chapter 4, introducing the concept of diversification, we analysed the delimitation of diversification from convergence. We then used the following definition for convergence: “The
unbundling and repacking of technologies or their commercial application into product-market
concepts. Convergence between previously disjointed markets can be viewed as the erosion of
boundaries that define and isolate industry-specific knowledge” (Pennings/Puranam, 2000: 3).
We furthermore outlined four different types of convergence:
Table 4.7: Generic types of market convergence (Pennings/Puranam, 2000)
Supply Side
Demand Side
Substitution
Different technological capabilities become similar in the sense that they can
satisfy the same set of needs.
The needs of different consumer sets become similar.
Complementarity
Different technologies are brought together to create new kinds of technology.
Different, but related needs are met by
bundling products together.
Consequently, we must look for convergence in the postal industry. Keeping the origins of
postal incumbents in mind, we see that they added a variety of both related and unrelated
activities to their primary task of mail delivery. We already mentioned that the main driver
for this development is the decline in mail volume. However, it is imaginable that trends of
convergence have also caused some of these additions to portfolios.
The literature does not give many information about convergence in the postal industry. The
term is solely used in regards to a certain level of convergence between parcels and express: due
to new technologies and process optimisations, the difference between parcels (especially B2B
parcels) and express is decreasing (Rogerson, 2006; BCG, 2006: 33). Many postal operators could
improve their services and nowadays guarantee next-day delivery of parcels if they are deposited
by the previous afternoon. They therefore offer similar time windows at considerably lower cost.
The fast and time-definite delivery of express becomes substituted by the increased quality of
parcel deliveries at lower cost (substitution on the supply side). In turn, express companies will
probably use their downtime capacity for parcel deliveries that are not time-critical. Industry
observers (e.g. Rogerson, 2006) predict that, in the future, postal services will be distinguished
between air and road, and no longer between parcels and express.
100
Another “convergence light” will eventually happen (see Rogerson, 2006) between express and
cross-border mail: Cross-border traffic will further increase and regional express networks move
up in scale. Ground networks will improve and express will get slower and the cost of the
express networks will decline. These slower networks are also able to move mail at lower cost.
As posts lose their monopolies, express companies will add domestic mail to their networks.
Incumbent postal operators may be left with “last mile delivery” to the home. In our definition,
this phenomenon is also a substitution on the supply side, because previously separate services
converge.
Since convergence is often mentioned in connection with technology, it is obvious that the
substitution of letter mail by electronic mail is another important convergence in the postal
industry. We already described this trend in other chapters. Thus this time we simply classify
it as substitution on the demand side: customers do not need letters anymore as their needs for
written communication are nowadays largely met by electronic mail. As far as logistics services
are concerned, convergence trends are more difficult to identify. In fact, the trend even goes
towards specialisation and the development of different solutions to satisfy customers’ needs.
There is however a minimal convergence between logistics and parcels, because the boundaries
between these two services are artificial and customers do not care whether a shipment is still
a parcel or already cargo. UPS, for example, offers supply chain solutions as long as they can
handle it within their standard processes and via their existing infrastructure. One can expect
logistics operators to lower their weight limits and to also handle parcels, while parcel companies
will start offering services for heavyweight goods.
4.3 Conclusions
This chapter has introduced the concept of diversification as the theoretical fundament of this
dissertation. It then applied these considerations to the postal industry and outlined current
diversification areas of European incumbents. We have seen that diversification is an important
issue and that most postal incumbent reduced their dependency from the traditional mail business
by entering new markets. However, profits still largely stem from mail while new businesses
are often insignificant (< 10%). Next, we will analyse the logistics industry as an important
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diversification area in order to identify and assess structure, segments, and dynamics of this
particular industry.
102
The preceding chapter introduced diversification as a strategic concept and examined diversification in the postal industry. We identified logistics as one of the major areas of diversification.
In order to further study this type of diversification, one must first analyse the logistics industry.
The aim of this chapter is then to define the relevant markets and their sub-segments which
should be considered as potential target markets for incumbent postal operators.
By looking back to the beginning of logistics as an industry and its developments until now,
we will also notice how logistics terms have changed over time. Logistics has become a term,
which today is used in various combinations and contexts, for production processes as well as
for the whole market or the services provided. Introducing different approaches to logistics and
supply chains will help to define various terms in the field, especially “logistics” and “supply
chain management”, in order to establish a common understanding and working definition. It is
not the aim of this chapter nor does it claim to come up with a new or better definition, but
it will provide a solid and usable market classification and quantification and thereby profound,
quantified statements about the industry.
Following this, market data and figures of the logistics industry are presented to document
the importance of logistics as an enterprise function as well as an industry. Following the “Five
Forces Model” of Michael E. Porter, the industry analysis will then present the forces influencing
the logistics industry. This model is based on the insight that a corporate strategy should meet
the opportunities and threats in the organisation’s external environment. Porter has identified
five competitive forces that shape every industry and every market. These forces determine the
intensity of competition (the driving forces) and hence the profitability and attractiveness of an
industry. The chapter then concludes with the analysis of current and probable developments
in the logistics industry as well as an outlook to long-term economic trends that will supply
the framework for firms competing in the logistics market: the chapter therefore identifies and
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discusses eight “mega trends” which influence the determining factors and actions of logistics operators regarding global competition. These trends explain how demand for professional logistics
and corresponding services will grow as well as how the range of modern logistics services, the
structure of the industry and its value chains will change.
The chapter is organised as follows: firstly, it introduces logistics as an industry and provides,
secondly, a market definition and the subsequent segmentation. Thirdly, market data and figures
are presented, before, fourthly, the fives forces of the logistics industry are assessed. Fifthly,
future trends and strategic drivers are presented.
5.1 Logistics as an Industry
This section outlines the evolution of logistics as an industry by looking back at its history and
introducing different ways of explaining logistics.
5.1.1 History of the Logistics Industry in Europe
Although the logistics industry is commonly referred to as a traditionally global industry, the
industry nevertheless evolved from strictly national companies (see Plehwe, 1999). For a long
time, private contracting of transport has been subject to legal provisions as well as to market
entry and exit controls with the aim of protecting national rail companies. National authorities
controlled the road transport industry by means of a restrictive licensing and price regulation
systems based on quantity as well as quality. Complex permit regimes were in place limiting
the number of hauliers allowed to operate in a given country. As such, these regulations did
not apply for manufacturers and retailers and their intra-company transportation, firms tended
to build-up large in-house fleets and had no reason to consider outsourcing. Before the 1980s
and long into the 1990s, the transport industry therefore belonged to the group of industries
characterised as “blocked internationalization” (Plehwe, 1999: 12). In those times, the industry
was only providing channels and mediating the exchange within the multinational trading system.
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European legislation led then to the phasing out of these regulations and is nowadays focused
on safety, technical, environmental, and employee related issues: this “wide-scale liberalisation
has involved the elimination of quantitative restrictions (limits on market entry, etc.) in favour
of qualitative criteria (minimum standards) and the gradual liberalisation of domestic and international markets accompanied by a reduction in price controls” (Boylaud, 2001: 234) which “had
a beneficial impact on business entry rates (up), prices (down) and service quality (up), and has
improved industry efficiency” (Boylaud, 2001: 241).
Since the founding of the European Union (EU) and its aim of “the single market”, the EU
has been keen to develop “Trans European Networks” that facilitate the movement of goods,
information and energy. As far as roads are concerned, the focus has been on cross border routes
that make up a number of axes across the region. The rationale behind this approach is the
expected positive impact that such networks have on the creation of the single market and the
reinforcement of economic and social cohesion (Transport Intelligence, 2004: 16).
During these decades, the relevance of logistics, but also its denotation, changed fundamentally.
Starting out as a neglected business function, logistics has increasingly gained the attention of
managers and researchers alike. Academics such as Klaus/Kille (2006) and Pfohl (2003) agree
on three meanings of logistics in order to narrow down the variety of different approaches, to
show the evolution of logistics, and to demonstrate the importance of these operations:
1. TUL logistics (transport – handling – warehousing)
2. Co-ordination logistics
3. Flow management
5.1.2 TUL Logistics and Co-ordination Logistics
The term “TUL logistics” was shaped in the 1960s and derives from the German “Transport –
Umschlag – Lager” (transport – handling – warehousing) and describes all cargo transportation activities (consolidation, deconsolidation, transhipment, picking-packing, storage, buffering,
warehousing). Because production and other business processes are geographically distributed,
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there is a need to transport objects in order to connect these processes (transport need). Furthermore, the division of labour leads to new (de-)consolidation along the value chain and temporal
allocations make a time offset (e.g. storage, buffering) necessary. It is important to understand
that – using this concept - logistics is only a transfer process, not a transformation process, as
the objects are not transformed in any technical sense. More generally and using a somewhat
sloppy definition, we can say that logistics is the transportation of objects in space and time.
This first concept was helpful at the beginning of research into logistics, but soon its boundaries limited further discussion, since its definitions are functional and only static. An extended
definition was needed and “co-ordination logistics” came into being (Pfohl, 2004). Authors and
practitioners both tried to add the aspect of operational and technical optimisation to the discussion and administrative and non-physical activities such as planning, controlling and coordinating
came to the fore: order processing, dispatching, supply chain planning and control, capital costs,
stock de-valuation and suchlike. By analysing interfaces and interdependencies, researchers no
longer focused on sub-processes but on the entirety of processes in the value chain and their
optimisation. This second meaning of logistics, also called the “Seven-Rights-Definition”, is the
integration and coordination of availability of the right product, right quantity, right condition,
at right place, at right time, to right costs and to right customer (based on Plowman, 1964). This
evolution marked the move away from a pure static approach (transport from A to B) towards
a more dynamic understanding.
5.1.3 Logistics as Flow Management
Driven by Japanese management techniques, concepts like lean management, KANBAN (demanddriven staging of materials), levelling of quantity fluctuations, analysis of processing times, quality assurance and continuous improvement were discussed in the 1980s and 1990s. As a result,
these considerations led to the concept of firms as “flow systems” with objects flowing through
chains and networks. Objects in such flow systems are physical goods/materials, financial resources or information (e.g. data, orders), so that this approach is often also referred to as
“trilogy of flows” (DHL, 2005: 12ff.; Klaus/Kille, 2006). One could even subsume human beings
and their decisions as being elements of these flowing objects. Objects flowing within this system
are of no direct use, on the contrary: the more objects in terms of number and variety, the higher
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their value and the higher their processing time, the more capital is bound up resulting in higher
costs. Let us differentiate three different kinds of flows (DHL, 2005: 13):
1. Primary flow of direct use for customers
2. Secondary flow supporting primary flow and of indirect use for customers
3. Non-value-adding flow like incorrect deliveries and returns
The approach of looking at the firm’s operations as a sum of flows reflects the change from
a “push” to a “pull” system: for decades, production and distribution management started at
the very beginning (e.g. purchasing of raw materials) from where the whole production and
each stage were planned. This planning was based on forecasts and experiences made about
the changes in demand. Every deviation led to problems in the process: higher demand causes
shortages, lower demand congestion in the process. This kind of planning is called “push” since
the first stages push the whole process - regardless of how the actual demand is developing. To the
same degree that markets become increasingly global and change ever faster, the predictability of
demand decreases. Figure 5.1 (left) illustrates the case of an incident in the value chain causing
congestion, because the first steps continue supplying (“pushing”). The division of labour across
different companies and across the world, adds to the increasing complexity and clearly shows
the need for a new logic of process engineering, called a “pull-system” (DHL 2005: 33f.):
• Fast and accurate reaction to actual orders, instead of detailed, complex and error-prone
forecasts
• Replenishment of marketed or disposed quantities at every stage of production and distribution, instead of interlocking different processes in a central planning system
• Release of new production or procurement triggered by actual quantities instead of artificially optimised lot sizes
• Accumulation of a reserve, instead of maximising utilisation ratios
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Figure 5.1: Push vs. pull principle in logistics (see DHL, 2005: 33f.)
In simple terms, logistics systems are determined by the pull principle where the customer
orders “pull” the required process steps. The material requested is picked up by the subsequent,
consumptive process step (“made to order”). Seen from a broader perspective, each process step
supplies the next one. The addition of several supply steps results in a supply chain that has to
be carefully managed.
This approach brings us to the concept of supply chain management (SCM) and its aim, namely
to provide the organisation with lean, customer oriented, and optimised logistics. Buzzwords
that are associated with SCM are “lean management”, “just in time” (JIT), “made to order”, as
well as many others. While logistics used to be a cross-sectional function focusing on physical
flows, today it is an integrated, process and customer oriented management and coordination
function. However, an even more important characteristic of SCM is the connection between
several logistics processes across enterprise boundaries, linking companies together both vertically
and horizontally. The Council of Supply Chain Management Professionals defines SCM as follows
(cscmp.org, 2007):
“Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. Supply Chain Management
is an integrating function with primary responsibility for linking major business functions and
business processes within and across companies into a cohesive and high-performance business
model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing,
sales, product design, finance, and information technology."
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5.1.4 Logistics as an “Order-to-Payment” Process
While making an analysis of logistics as a central and all-embracing enterprise function, academics
elaborated on earlier approaches. In order to take into account the wide variety of different
views, elements of flow management were combined with the value chain concept of Porter
(1985), finally ending up with an S-shaped “Order-to-Payment” process (Klaus/Kille, 2006: 27).
Strictly speaking, logistics can be seen as an indefinite number of order-to-payment processes,
constituting a firm’s daily operations and therefore becoming recognised as an issue of central
concern for today’s logistics management. As a generic term, logistics consists therefore of the
three flows “goods”, “information” and “money” (commonly referred to as “trilogy of flows”) that
have to be performed and managed: “Logistics is that part of the process that plans, implements,
and controls the efficient, effective, flow and storage of goods, services, and related information
from the point of origin to the point of consumption in order to meet customer’s requirements”
(PROTRANS, 2001: 20). The greatest potential for improving is no longer to be found inside
an individual company, but in the interfaces between companies, namely the optimisation of the
supply chain.
Figure 5.2: SCM as chain-linking of „order-to-payment“ processes (following Klaus/Kille, 2006:
27)
The end customer requests information on a certain product to make the buying decision.
The retailer then delivers the goods and the customer pays. The retailer is also a customer of a
finished product supplier to whom he transmits the order, gets the requested goods and delivers
payment. Depending on the specific value chain, this “order-to-payment” process happens until
the supply chain reaches the raw material supplier. Again, it is important to note that the supply
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chain actually starts at the end customer who “pulls” the process by placing his order and thereby
starts the information flow (see figure 5.2). Despite all the benefits of using the perception of
logistics as supply chain management, there are also fundamental problems associated with this
approach (e.g. Logistikmarkt.ch, 2006c): supply chains are complex and polycentric constructs,
which cannot simply be analysed as linear chains. If inter-company supply chains must be
optimised, firms will try to maximise their own profit and the question of control and hierarchy
arises. As a consequence, the vertical integration decreases flexibility, economies of scale and in
the end the competitiveness of the whole supply chain.
5.1.5 Definition of the Relevant Market
Having analysed the development of logistics as an enterprise function, we will now look at
logistics as an industry in detail by firstly defining the scope in terms of the industry. As already
outlined, logistics operations are increasingly subject to outsourcing because firms aim to reduce
their logistics costs. Since logistics providers (as the recipients of outsourcing orders) are our
main focus, it is useful to narrow down the entire logistics market by differentiating between (see
also Klaus/Kille, 2006):
• In-house logistic activities, and
• Outsourced logistics activities
In-house logistics activities consist of all logistics operations operated by a firm itself, without
calling in a specialised provider. Operations that are crucial in the production process or even
a critical success factor will be kept in-house in order to maintain control and to keep valuable
know-how within the firm. Since logistics operations signify a substantial part of total production
costs (automotive industry: 8.2% / consumer goods industry: 12.8% / retail industry: 27.6%;
see Baumgarten (2002)), firms look at reducing costs by outsourcing logistics operations to
specialised providers from whom they expect better fulfilment at lower cost. These outsourced
activities form the backbone of the logistics industry since they constitute a market with supply
and demand. Consequentially, we are not interested in logistics activities, which are based inhouse and not traded on a market.
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Within the scope of this dissertation, only the latter, i.e., the market for outsourced logistics
activities is considered. Only this share of the market can be accessed by a logistics provider
or postal incumbent and as such is relevant for our consideration. Logistics services are the
corresponding offerings (products and services) ranging from simple transport and warehouse
activities to the outsourcing of complex supply chains and their management. As a result, the
limits of the industry are drawn around all operators offering logistics services and competing for
receiving orders from enterprises that outsource logistics operations. The geographic limitation
encompasses logistics services within and outside of Europe. The main focus will therefore be
put on land-based logistics (road and rail) and only secondarily on air and sea. To simplify
matters, we use the term “logistics industry” to always mean the logistics services industry.
In order not to exclude early on potential segments and diversification opportunities, the
market is not yet narrowed down further. The next chapter now provides several approaches for
segmenting this market for outsourced logistics activities.
5.2 Market Segmentation
Market segmentation is the process of grouping an industry or a market into smaller subgroups
to enable an organisation to optimally define its target segments, its (marketing) strategy and
to position itself according to this strategy. Although market segmentation is the key to understanding a large and heterogeneous market, logistics researchers and consultants both have
difficulty agreeing on a common segmentation methodology. They use different classifications
depending on what they are trying to explain or prove, either grouping the industry by the type
of company, the type of service or the means of transport. Furthermore, a recent study (DVZ,
2007) revealed that most logistics operators still concern themselves insufficiently with their own
market and depend too much on secondary data. This leads to serious difficulties for academia
when trying to obtain data in order to carry out an analysis. A market can be segmented by
geographic, demographic, psychographic and/or behavioural variables in order to get customer
segments for market development (see, e.g. Kotler/Bliemel, 1999: 436ff.). Comparing product
offerings or examining technical criteria can also be used for segmentation. The logistics market
is usually segmented based on logistical requirements (see Lundberg/Schönström, 2001). The
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logistics industry can be segmented using different criteria (see also Klaus/Kille, 2006: 37, DHL,
2005: 41f., PROTRANS, 2001), such as
• Origination / type of logistics provider (e.g. contract logistics, integrator, warehouses)
• Contractor or customer (e.g. retailer, building industry)
• Objects transported (e.g. food, liquids)
• Modal split (road, rail, sea, air)
• Service quality (e.g. express)
• Mode of transport (e.g. silo, container)
• Functional speciality (e.g. distribution logistics, repair logistics, SCM)
• Any combination of these criteria
Let us now look at some segmentation approaches and examine possible advantages and drawbacks with focus on the purpose of this dissertation. These criteria will again become useful
when mapping strategic groups (chapter 6.3) as well as when elaborating diversification strategies (chapter 7).
5.2.1 Type of Logistics Provider: Standard services vs. contract logistics
A commonly used methodology is the grouping of providers into different types based on their
strategy and offerings. With the increasing importance of logistics as a success factor for enterprises, we have observed the emergence of specialised logistics service providers (LSP): freight forwarders changed their position from that of simple “box mover” to being a LSP and started providing value-added services. This generic differentiation between “basic logistics” and “value added
logistics / contract logistics” has become popular (e.g. Klaus/Kille, 2006; Lundberg/Schönström,
2001), reflecting the trend away from traditional and standardised logistics operations such as
transport and warehousing towards more sophisticated supply chain management solutions: the
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“box mover” stem from the traditional understanding of logistics provider, namely transporting a
good from A to B. This type of provider offers very standardised services and heavy investments
in infrastructure such as warehouses, cross-docking stations, and especially the fleet are required.
As a consequence, this business model leads to high fixed costs and the operator needs large operated volumes in order to re-distribute these fixed costs. Due to the increased competition, this
challenge became more difficult to master what eventually leads to massive pressure on their
margins.
One strategy out of this vicious circle is to decrease the asset-based part of the provided
services and to increase the consulting, non-asset-based part. Since there are overcapacities in
the logistics industry, it seems promising to focus on being the logistics consultant with the direct
customer contact, possessing specialised know-how and tools (e.g. supply chain management,
IT) and assigning basic logistics services to other operators. Such a lead logistics provider (LLP)
can pass the margin pressure over to these subcontractors and keeps the interesting share of the
order for himself. He further benefits from long-termed contracts (3 years at an average), so
the pressure to win new customers is lowered and a trusting partnership is established. More
often than not, the customer even agrees to a “cost plus” calculation where the lead logistics
provider adds a negotiated margin to the accumulated costs. Due to the characteristics of such
logistics services, they are commonly referred to as “contract logistics”. Such solutions require
a high level of functional problem solving competence. Lundberg/Schönström (2001) analyse
typical strategies a provider can adopt and how they differ from providing basic logistics services.
However, logistics providers try to build customised solutions by combining their standardised
services (see interviews 3, 6, and 11), so that there is no clear distinction between these two
categories.
Table 5.1: Strategies of logistics operators (Lundberg/Schönström, 2001: 23)
Value-added Logistics
Basic Logistics
Service
Value leader in global
integrated
logistics
services
Solution
Provider of consultative logistics solutions
Supporting companies
in being more competitive
Provider of complex
third party logistics solutions
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Activities
Order
processing,
kitting, repair/recycle,
network design, inventory management
Transport,
warehousing,
(de)consolidation,
labelling
The “solution segment” has been the subject of a lot of research and is well documented:
Transport Intelligence (2004: 21) estimates the total size of the European contract logistics
market at e 38 million, with the UK and Germany as the largest sub-segments. Between 1996
and 2001, the percentage of contract logistics customers among firms in Western Europe remained
relatively constant (2003: 79% / 2004: 76% / 2005: 77%; Langley, 2005: 10ff) while in North
America the percentage has shown modest growth. However, firms in Western Europe tend to
spend larger amounts of their logistics budget on outsourcing, an amount that is estimated to
grow by 18% per year. The activities most frequently outsourced to specialised providers are
outbound transportation, warehousing, and customs clearance and brokerage. Activities such as
procurement of logistics, reverse logistics and waste disposal are increasingly outsourced, but still
at a low level. 33% of the firms questioned in Western Europe consider logistics as too important
to outsource and do not want to lose control over these activities.
Furthermore, players from adjacent industries (see chapter 5.4.3 on potential entrants) such
as IT, finance and consulting entered the market, offering a wide range of services connected
to logistics. In order to differentiate these new offerings, different concepts were introduced
whereby the “XPL approach” (e.g. Third Party Logistics, 3PL) is the most common but probably
also the most confusing and inexact. Because of this, the XPL approach will not be used for
this dissertation. Nevertheless, for the sake of academic integrity, it is useful to present the
basic idea: XPL is an indication of the degree of complexity and involvement of LSP’s. The
different XPL levels correspond to the following types of logistics services (Berglund et al., 1999;
Lundberg/Schönström, 2001; Capgemini, 2005):
• 1PL: In-house logistics
• 2PL: Transport and warehousing
• 3PL: Contract logistics
• 4PL: Supply chain management
• 5PL: e-Logistics
Within the frame of this analysis, we will neglect the XPL approach, but only differentiate
(as far as applicable) between standard services and contract logistics. This differentiation is
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essential, as both type of strategies require a different set of resources, assets, and know-how.
Also the analysis of the five forces will vary depending on the specific segment. It is however
not appropriate to conduct two separate industry analysis as this would be to a large extent
redundant.
5.2.2 Modal Split
Analysing the modal split is another useful method for segmenting the logistics industry. Modal
split is the result of the mode choice analysis, determining which mode of transport will be used.
Intermodal transport is therefore “the movement of goods in one and the same loading unit or
vehicle which successively uses several modes of transport without handling the goods themselves
in changing modes” (CEN, 1997, in: PROTRANS, Deliverable Nr. 1, 2001: 24).
Figure 5.3: Modal split in goods transport in the EU 15 in billion tkm (graph following Dörrenbächer, 2003: 21 and Horstmann, 2003: 8)
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The graph above shows the constant growth of the total volume of goods transports1 (in tkm)
that has nearly doubled in the past thirty years. The volume of goods transported by rail, inland
waterways and pipeline remained stable, but one can observe a tripling of road-based transport.
This shift from the formerly predominate rail to road can be dramatically displayed by showing
the modal split in percent of the total volume (see graph 5.4): While in 1970 rail accounted
for 33% of all transport, its percentage decreased to only 14% in 1998. In the same period,
the percentage of road-based transport increased from 48% to a dominating 74%. Horstmann
(2003: 8) estimates that by 2015 this share will be over 80%. As far as revenues are concerned,
Transport Intelligence (2004: 19) calculated a share of 33.3% for road, 6.6% for rail, 5.8% for
water, 12.9% for air and a majority of 41.4% for auxiliary transport activities like cargo handling,
storage, freight forwarding and other supporting transport activities.
Figure 5.4: Modal split in goods transport in the EU 15 in % (graph following Dörrenbächer,
2003: 21 and Horstmann, 2003: 8)
1
Excluding air cargo and short sea shipping (not within the scope of this dissertation)
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There are several reasons why road has become the dominant mode in the freight industry: rail
companies are still tightly regulated, largely monopolistic and were therefore too slow to offer
competitive services. As European manufacturing has become less heavy, road transport has
become more appropriate and concepts such as “just-in-time” has led to smaller loads moved at
shorter intervals. Longer distances (> 500km) are often covered by rail, while shorter distances
(< 500km) are covered almost entirely by road. The modal split also varies considerably between
countries, depending on the expansion of the respective mode. Inland waterways are an important
alternative for countries with access to major rivers. A recent survey revealed that most European logistics operators lack the knowledge to engage in short sea shipping (Logistikmarkt.ch,
2007c). Since public concern regarding the environment is growing and the attractiveness of
road transport decreases (due to traffic congestion, taxes, and other obligations), some analysts
already predict a new boom for rail: Horstmann (2003: 11f) suggests growth rates around 3-4%
yearly for Germany between 2010 and 2015. DHL, as an example, plans to re-introduce trains
for their logistics triangle between Leipzig, Frankfurt am Main and Kassel (Die Welt, 2006).
Worldwide air cargo traffic rose in 2006 to 85.6 million metric tonnes (+ 3.6%), a performance
that largely corresponds to the industrial growth forecasts and that mirrors the economic growth
of several regions: the top five cargo airports are Memphis, Hong Kong, Anchorage, Seoul and
Tokio. In Europe, Paris and Frankfurt are the top airports, although air cargo is not as important
as other modes of transport.
5.2.3 Segmentation in the Study “Top 100”
The already cited study “Top 100 der Logistik” (Klaus/Kille, 2006) subdivides the total logistics
industry into 16 segments. These are arranged sequentially, from “bulk”, i.e. mainly national
transport services, to more logistically differentiated, increasingly international small cargo services:
1. Bulk or point-point-direct-load transport markets with sub-segments
a) National bulk logistics
b) National general direct-load cargo with non-specialized truck and freight car equipment
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c) Heavy goods haulage and plant services
d) National tank container and silo cargo
e) Other national direct-load cargo using special equipment (e.g. automobile, flat glass,
high-cube vehicles)
2. Markets for national less-than-truck-load cargo and other cargo requiring handling of enhanced logistical complexity
a) National general less-than-truck-load cargo
b) Distribution of consumer goods and contract logistics of consumer goods
c) Industrial contract logistics, in particular, supplies for industrial production and industrial spare parts distribution
d) Logistics of hanging garments
e) High tech equipment, trade fare logistics, transport of new furniture, movers
f) CEP – Courier, express and parcel services
g) Terminal services, non-integrated warehousing, and other logistics services
3. Markets for international transports
a) Cross border transport and forwarding (land-based)
b) Cross border transport and forwarding (water-based)
c) Cross border transport and forwarding (air)
4. Emerging Market
a) Letter mail – postal transportation services of printed matter and letters
By combining several segmentation criteria, the authors come up with a comprehensive yet
manageable segmentation. Furthermore, they enlarge their scope by adding postal market segments (2f and 4a). According to the state of research, they differentiate between CEP (courier,
express and parcel) and letter mail assigning the first to the logistics market (physical goods) and
the second to the communications market. This leads us to the important question how CEP
as a traditional postal business and logistics must be differentiated: logistics comprises so-called
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“truck-load (TL) freight”, mainly flows of goods between firms, which involve a relatively low
time-sensitivity and an efficient vehicle size. On the other hand, CEP as “less-than-truckload
(LTL) freight” comprises services in markets where flows are relatively sparse (e.g. flows to individuals) and timelessness is important and loads at each point in time may be smaller than the
efficient size of vehicles (Boylaud, 2001: 231). A further distinction can be done by the using
weight limits since parcels are often only accepted up to a certain weight (e.g. 31.5 kg), so that
they can still be carried by hand while LTL freight is carried with pallet carriers.
5.2.4 Segmentation of the Postal Market
The postal market has a somewhat more simple segmentation because it is less dynamic and
less researched. However, different dimensions reflecting the characteristics of postal service
provision have to be taken into account (see Ecorys, 2005; Klaus/Kille, 2006: 152): The most
important of these dimensions are: postal products, the nature of the sender and receiver of mail,
time sensitivity and predictability of mail flows and the size of the mail being dispatched. Most
studies agree on segmentation along products, for example the one provided by Ecorys (2005:
16):
• Letter mail
– Items of correspondence
– Addressed printed matter
– Un-addressed printed matter
• Parcel mail
• Express and courier services
“Historically, parcel mail and express and courier services are considered part of the postal
sector. Express and courier services cover value added services with door-to-door delivery. During the last decades, express and courier services developed into a separate industry [author’s
note: becoming part of the logistics industry]” (Ecorys, 2005, 15f). With ongoing liberalisation,
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the boundaries between parcel, express and couriers have become blurred as more and more
operators rush into the market offering new combinations of products and services. Together
with asymmetric liberalisation in Europe, this has led to an artificial and sometimes arbitrary
classification of postal products. Be that as it may, parcel has increasingly become less specific
to the postal sector, as it is also handled by the express and logistics industry. In the author’s
opinion, it will only be a matter of time until these operators also provide mail services.
5.3 Market Facts and Figures
Restrictions when establishing a practical and suitable market definition are imposed by a variety
of different approaches and classifications (Berglund et al., 1999). Systematic data collection and
databases are missing or only available for single, geographically confined markets. The structures
of official statistics (e.g. from government) were defined before logistics was recognised as an
industry whereby information on logistics can only be found hidden and scattered across many
sections of published statistics. Furthermore, the highly fragmented and heterogeneous logistics
market is still evolving and consists of many SME, most of them family-owned, which are not
required to publish any information such as financial data.
First efforts to fill this void for the German logistics market began in 1996 when Prof. Klaus
(for current data see Klaus/Kille, 2006) started a series of studies, called “Top 100 der Logistik”.
Since that time, coverage of Europe as whole has been added and the measuring methods have
been refined in order to provide an appropriate picture of the logistics market. Despite an
increasing number of additional studies, this publication is the most solid, well established and
most focused source of data available on logistics services which us the reason why most of this
chapter is based upon it.
5.3.1 The Importance of Logistics in Europe
In Germany, 45 tons of freight are transported per citizen every year (Frankfurter Allgemeine,
2006). The importance of logistics is a fact and can be measured by analysing the percentage of an
industry’s cost that is incurred for logistics operations. This cost was measured by Baumgarten
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(2002) in Germany: the automotive industry spends 8.2% on logistics operations, the consumer
goods industry 12.8% and the retail industry as much as 27.6%. International comparison (see
Jahns et al., 2005) shows similar figures for the United States (11%) and Asia (8-12%). The share
is generally increasing due the constant addition of new functions to the logistics department
and the consecutive increased complexity that inescapably result in higher cost and at the same
time increasing demands for state-of-the-art IT systems require higher investment. Stable or
decreasing costs for logistics operations are generally an indicator of efficient logistics systems.
For these reasons, more and more firms outsource large parts of their logistics operations to avoid
fixed costs. Jahns et al. (2005: 19) estimate that an average firm can lower their cost by about
37% by outsourcing logistics operations, in some industries (e.g. print, publishing, automotive)
even more than 40%.
5.3.2 Market Size, Growth Rates and Profit Margins
To talk about a “European” market is somehow misleading, as the statistics are based on the
sum of largely discrete national markets, each with its own specific local conditions, and most
goods are only transported within a limited area of approximately 150 kms. However, as the
economy has become truly European (or even global), the demand for logistical services as a
derived demand is increasingly steered, optimised and controlled centrally by the firms’ European
headquarters.
The total revenue for outsourced logistics (corresponding to our market definition, see chapter 5.1.5) worldwide has grown to an incredible amount of USD 333 billion (Foster, 2005: 30)
with a growth rate of 3-10% per annum (Bank Leu, 2001: 4). Despite the increasing importance
of outsourcing, only a small portion of worldwide logistics is already outsourced. TNT (annual
report 2004) estimates that only 22% of all logistics operations worldwide are outsourced. But
statistics vary from country to country and the percentages are significantly higher in Europe
(Klaus/Kille, 2006): 45% in Finland and Germany, 50% in the Benelux countries, 60% in Austria
and Switzerland.
Although all segments are still growing, the contract logistics (in figure 5.2: “total supply
chain management”) is the fastest growing segment and generated a volume of e 38 billion in
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Europe (Transport Intelligence, 2004: 21). Road-based trucking is stagnating at a low growth
rate of 3%, while air and sea freight becomes increasingly important. This is mainly due to
globalisation and the worldwide location of production plants (international sourcing), which
cause long-distance transport. Airfreight is expected to grow at an average annual rate of 6.1%
during the next two decades, with a threefold increase in worldwide volume (CEP Research,
2006c). Until 2030, sea trade in Europe will grow at 6.6% (Logistikmarkt.ch, 2006d) and become
slightly more important than today. Warehousing is often not considered as a separate segment,
although the sector grows strongly (Transport Intelligence, 2004) due to the centralisation of
logistics requirements by European manufactures and retailers. Trade compliance management
is a new growth area, which could gain importance for logistics operators in the future since they
are already experienced in the handling of the international flow of goods, import and export
regulations etc. Instead of transporting only goods, logistics operators will assume the entire
logistics management and even become traders themselves. Following the analysts of Frost &
Sullivan (Logistikmarkt.ch, 2006), the European market for those services today comprises e 4.6
billion and will grow to e 8.9 billion in the next couple of years.
Table 5.2: Growth of various logistics segments (Bank Leu, 2001: 4)
Segment
Currency
Total Supply Chain Management
Air freight
Sea freight
Trucking (Europe)
Trucking (North America)
Express logistics (USA)
Express logistics (Europe)
USD
USD
EUR
EUR
USD
USD
USD
1999
(in bn)
97.7
25.0
100.0
300.0
450.0
44.0
26.6
2005, est.
(in bn)
173.7
39.0
150.1
360.0
537.3
59.0
34.5
CAGR
(in%)
10
8
7
3
3
5
5
The top 25 global players alone earned USD 97 billion and account for nearly 30% of all logistics
outsourcing expenditures worldwide. In Germany, the top 10 operators accounted in 2007 for
e 36 billion turnover. The top 10 players in Germany earned e 36 billion respectively 64%
from total revenue of the top 50 players of (e 56 billion) and 21% of the total logistics volume in
Germany (e 170 billion, see Logistik Inside, 2007). This fact demonstrates the dominance of a few
players. The market for logistics services has long been the domain of SME operators. In the last
decade, the pressure on all segments increased and forced operators to adapt to this new situation:
economics of scale and risk diversification became the new paradigm while customers increasingly
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demanded international solutions for their global trade. An increased need for financial resources
is a further reason that eventually benefits larger operators (Logistikmarkt.ch, 2006).
Table 5.3: Top logistics operators in Germany (Logistik Inside, 2007)
Rank
1
2
3
4
5
6
7
8
9
10
Operator
Deutsche Post
Deutsche Bahn (Transport and Logistics)
Kühne+Nagel
Dachser
Rhenus
IDS Logistik
Volkswagen Transport
UPS
Panalpina
Fiege
Total Top 10
Turnover 2006
(in Mio e)
17’884
6’432
1’974
1’955
1’426
1’420
1’246
1’242
1’224
1’210
36’013
Change to 2005
+10.6%
+10.3%
+11.1%
+18.3%
+91.7%
+15.4%
+6.0%
+6.0%
+12.4%
+26.8%
As far as margins are concerned, the logistics industry operates on very low margins and
operators with profit margins in the region of 4-5% are considered exceptionally healthy and
successful. The following graph shows the profitability of different operators in their contract
logistics business.
5.4 The Five Forces of the Logistics Industry
Porter’s (1980: 3ff.) “Five Forces Concept” is a well-established tool for structural analysis of
industries and is grounded on the assumption that a firm’s competitiveness always relates to
its environment and the state of competition in an industry depends on five basic forces: 1)
Bargaining power of buyers, 2) bargaining power of suppliers, 3) potential entrants, 4) threat
of substitution, and 5) rivalry among existing firms. The collective strength of these forces also
determines the industry’s profit potential.
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Figure 5.5: European contract logistics profit margins (own analysis, following Transport Intelligence, 2004)
5.4.1 Bargaining Power of Buyers
The emergence of e-business and the increasing importance of global standards provide transparency within the market as well as direct linkages across levels in the supply chain. Both of
these trends strengthen the position of potential buyers. Furthermore, the pooling of worldwide
demand within companies (“global sourcing”), as well as the demand for truly global solutions
add to a firm’s bargaining power: the firms’ professional buying centres use their buying power
and the transparency of the market to achieve discounts through the effect of scale. What also
adds to this bargaining power is the simple fact that buyers can always decide to not-outsource
logistics activities. Customers, especially those with high transportation volumes, such as mailorder companies, often base their logistics operations on their own forwarding and warehousing
capacity. For many of them, logistics is one of their core competences and sometimes even a
distinguishing feature (unique selling proposition, USP), so that they do want to retain control
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over it. Against this background, suppliers do not only compete against other logistics providers
but must furthermore convince the potential customer of the cost savings through outsourcing
of their logistics operations.
After these general statements, we must now analyse some aspects in further detail: as far
as basic logistics services are concerned, the bargaining power of buyers has to be rated higher
than in other industries: transportation, forwarding, and warehousing are completely imitable,
and differentiation for service providers has always been difficult. One of the reasons is the
heterogeneous market with a countless number of players, many of which are family-run SMEs.
Again, this has been provoked by the nature of the industry where entry barriers are very low
because almost no investments in infrastructure or technology have to be made and switching
costs in transport and warehousing are low. As a consequence of this large number of suppliers
with similar and exchangeable products and services, buyers can play off suppliers against each
other to obtain price reductions – which in turn results in a price battle and decreasing margins.
When it comes to complex logistics solutions (contract logistics), we have to draw a slightly
different picture: such contracts also give power to the buyer as they can put out to tender a high
contract volume and a long-term commitment to one provider. During the offering phase, we can
therefore observe an asymmetric power relationship, as suppliers are willing to add more services
and to give discounts on the whole package in order to obtain these attractive orders. As soon
as the contract is concluded, the power of the buyer decreases: due to long-term contracts and
heavy investments (e.g. in software), the relation between buyer and supplier is strengthened
and high transaction and switching costs arise.
5.4.2 Bargaining Power of Suppliers
Suppliers that can “exert bargaining power (. . . ) by threatening to raise prices or reduce the
quality of purchased goods and services” (Porter, 1980: 27) do not exist in the logistics industry.
As this is not a manufacturing industry, the traditional value chain and therefore the analysis
of suppliers cannot be applied. However, we will make use of the framework to analyse the
bargaining power of the logistics service providers themselves (as suppliers). What has been said
for buyers can basically be applied vice-versa to suppliers because this mirrors the conditions that
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make buyers powerful. The bargaining power of logistics providers must therefore be considered
to be generally low. However, as we have seen in the development of logistics as an industry, an
increasingly global economy generates higher logistics volumes and therefore a higher need for
logistics services. Fast growing enterprises especially, are often unable to enlarge their logistics
operations at the necessary speed and therefore need a reliable partner. The ongoing trend of
concentration on core competences and therefore of outsourcing non-core competences such as
logistics operations gives power to suppliers. Although these trends are not new, most firms are
only now re-organising their business processes to meet the increasing international pressure.
Having mentioned the heterogeneous market as a factor increasing the power of buyers, we
must at this point emphasise that “the diversity of the supply side of the European industry
has considerably hindered attempts by multi-national manufacturers and retailers to create panregional operations” (Transport Intelligence, 2004: 10). Although buyers try to source globally,
they often have to rely on one logistics partner per region, if not even per country. Additionally,
few logistics operators are able to meet all the global and specialised demands of the buyer. Most
firms’ logistics operations are so complex and enterprise-specific few players are in a position to
fulfil these requirements. This is especially true of the issue of global coverage (see interviews
#3 and #6) so much so that only a few logistics operators are able to provide services in this
segment. Suppliers are forming powerful networks and strategic alliances in order to provide
the whole range of logistics services, and successfully win a larger share of the business and also
achieve higher economies of scale. This fact combined with the demand for more complex and
international solutions also explains the current trend of mergers and acquisitions in the industry:
this leads to an oligopoly that allows the supplier involved to obtain control and to wield power
over potential buyers as they do not have a genuine alternative.
Although switching costs are generally low, buyers fear the transaction costs of finding a new
reliable provider as the complexity of the contract increases. The investments in IT-based integration of processes even raise switching and transaction costs. In contract logistics, transparency
in terms of price and conditions is still low as most products and services are not standardised
and do therefore not have a catalogue price, but are customised offerings that must be negotiated. However, in more and more long-term contracts, the necessary investments and cost
structures are made transparent (“open books principle”) as mutual confidence and a realistic
pricing is key to this sort of co-operation and the customer is not interested in exploiting its
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logistics partner. As a consequence, this transparency tends to prevent ruinous price battles, as
the logistics provider has to reveal its cost structure and capabilities which gives him some sort
of power.
5.4.3 Potential Entrants
The logistics industry is very heterogeneous suggesting that entry barriers are low. In fact, this
is true as far as basic logistics services such as transport and warehousing are concerned where
only little investments must be made to run a local business. However, as we are interested in
larger operators, we will only analyse the entry barriers that apply to at least a countrywide
market entry.
Before evaluating potential entrants, one must first look at the entry barriers in the logistics
industry and their influence on possible entry strategies. Based on expert interviews and the
literature analysis, we can identify the following entry barriers:
1. Regulatory barriers
2. Economies of scale
3. Access to a regional or international network
4. Technology / IT
5. Logistics competences and network management skills
6. Mobility barriers of buyers / Switching costs
Regulatory barriers: with a large number of entries and exits, the logistics industry is, in most
cases, an industry in which there are few regulations on entry. The main restrictions relate to
requirements for setting up and opening a business, which should not be considered an entry
barrier. “The main rationales for regulating the road freight business relate to road safety, the environment and the use of a fixed infrastructure. The industry has important externalities related
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to car accidents involving heavy vehicles, harmful noise emission levels, air pollution from vehicle exhaust and congestion on and damage to the road network. These imply legitimate social,
environmental and economic concerns that have been addressed through safety and technical
standards, rules on traffic and driving conditions and charges on the use of highways. In the past
two decades, most OECD countries have strengthened safety and environmental controls and
some have improved the efficiency of road charging systems” (Boylaud, 2001: 233). However, as
we have seen in chapter 3.1, most European countries have already reduced the regulatory entry
barriers to an absolute minimum and these are therefore rare.
Economies of scale: large markets are likely seen as easy to cherry pick, while small countries
are unlikely to see many new entrants in the next couple of years, because they are difficult
or inefficient to serve. However, large markets require high investment in infrastructure which
causes high fixed network asset costs. Logistics (as is the case in the postal business) is a very
scale-intensive business that can only be operated successfully if fixed infrastructure costs and
low margins can be compensated for by high volumes. New entrants have to quickly obtain a
significant market share to use their infrastructure to full capacity. Economy of scale as an entry
barrier has therefore to be considered as high.
Access to a regional or international network: complementary to high volumes, having access
to a network ensures the connection to the regional or international inbound flows and enables a
smaller operator to offer its customers outbound services without having a international operation
of its own. When high volumes guarantee economy of scale, the network access guarantees
the economy of (geographic) scope. This access can be gained by entering into a partnership
with a global player or by joining a network of several small- and medium-sized operators.
Logistics operators doing without or being unable to ensure this access confine themselves in
their geographical scope. However, both options are highly strategic and many obstacles must
be overcome before a new entrant finds its complementary network, meets the requirements of
the network owner and finally gains access to it. For this reason, network access has to be
considered as a high entry barrier.
Technology / IT: an increasingly important entry barrier is the need for a modern yet cost
effective technological (especially IT) infrastructure in order to optimise not only the physical
flow but also to manage the corresponding information flows (and payments). Such a state-of-
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the-art technology is not only required by buyers, but in the meantime have become an industry
standard and necessary to integrate the supply chain backwards and forwards into the customers’
processes. However, with a majority of players claiming to provide global supply chain solutions,
competence in IT, implementation time, flexibility and costs of IT have become a distinguishing
competitive feature. We consider technology, and especially IT, a medium entry barrier, because
it is more a critical success factor than an entry barrier.
Logistics competences and network management skills: beside financial and technological considerations, there are other entry barriers that can be found more on the skill side, such as the
know-how to manage complex networks and the profound knowledge of customers’ processes.
These skills can be seen as complementary to the customers’ core competences. Innovation
capabilities and the development of new competencies have therefore to be considered essential.
Mobility barriers of buyers / Switching costs: as a final entry barrier, one must analyse the
customers’ mobility barriers, how easily do they change their logistics partner. As we have
seen in the previous sections, this barrier is high, as firms must take the strategic decision to
outsource, and then becomes even higher after having chosen a logistics partner due to the longterm characteristics of the contracts awarded. Due to the deep integration of processes between
each other’s systems, switching costs are high if another logistics partner is subsequently chosen.
We must stress here the word “logistics partner” as the analysis would be completely different
if basic logistics services were analysed. In that case, there are almost no mobility barriers and
many firms frequently tender their logistics volumes in order to get the lowest price.
Summary of entry barriers: compared to other industries, market entry barriers in the logistics
market are remarkably high, at least for larger firms aiming at being active on a national or
regional level and wanting to provide more than just basic logistics services. It is therefore quite
obvious that successful entry to a logistics market needs a long-term strategic commitment,
careful planning, as well as a high level of investment. As a consequence, quick and unexpected
market entry can basically be excluded. The biggest threat arises from firms that are already
active in adjacent markets or linked to a specific part of the value chain as well as from firms
from other countries that are internationalising their operations.
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Analysis of potential new entrants: the danger for new entrants is significant. New logistics
operators have to quickly obtain a substantial market share in order to finance their fixed costs
(e.g. investments in infrastructure and IT systems) and to make use of economies of scale. They
are often forced to “buy” market share by offering products below their effective cost and with
negative profit margins. As operators do no loose market share voluntarily, price battles with
the obvious consequences for profitability are the result.
Berglund (1997: 129) describes four entry times (“waves”) when different types of logistics
providers began to offer services:
1. Warehouses (70s)
2. Transport / Forwarders like Excel (80s)
3. Express like DHL, FedEx (90s)
4. Non-traditional entrants (capital, IT and consultant industries)
These non-traditional entrants from adjacent industries are able to play two different roles: on
the one hand, they provide management consulting, information technologies and financial services to existing logistics providers and therefore form powerful partnerships or other formalised
types of co-operation. On the other hand, they become active participants due their increased
knowledge and experience in this industry.
From today’s point of view, we have to add a fifth wave: postal operators as well as mail
order companies and publishing houses. Postal operators diversifying into logistics is the generic
reason of this work, so let us analyse the latter two: for mail order companies and for publishing,
logistics operations, in particular distribution logistics, are a core process, a major cost driver,
and also a distinguishing feature. Similar to logistics operators, they are based on sorting and
distribution centres. The increasing importance of e-business helped these firms to establish
new sales channels, but at the same time triggered the emergence of countless new competitors
that solely rely on this virtual sales channel. As a consequence, the utilisation of the logistics
infrastructure is decreasing which leads to negative economy of scale.
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In order to distribute the costs of their logistics operations over more shipments and therefore to keep the average cost of a shipment low, several mail order companies recently opened
their logistics infrastructure to third parties. One of the early movers and a well-known example
is Otto Versand, the German mail-order company (see, e.g. Logistikmarkt.ch, 2007b). Complementing its trading business, Otto offers its customers trade-relevant logistics and financial
services. Having founded its subsidiary Hermes in 1972, Otto is one of the pioneers in the logistics
field. The Hermes Logistics Group is now the second-largest delivery service, with a 35 percent
market share in the B2C and 15 percent in C2C business in Germany, having transported 213
million parcels in 2005. Current customers of Hermes are firms such as the Deutsche Bahn AG
(Germany’s main railway company) and eBay.
In December 2005, Hermes and TNT announced a strategic cooperation agreement in addition
to their already existing mail joint venture (CEP Research, 2005). The two partners plan to build
up a joint manufacturing company, to jointly use existing infrastructures and to benefit from
synergies in the B2C parcel market. TNT will further make use of Hermes’ full truckload (FTL)
transports, while Hermes will use the hub capacities of TNT Express. The firms announced
that they will design additional joint services such as an international parcel delivery and will
offer TNT’s express services in all 11’000 Hermes parcel shops. If the cooperation turns out
to be successful, the development of a European B2C parcel network with the involvement of
third parties will assessed for future joint operations. On March 1st 2006, Hermes Warehousing
Solutions GmbH began operations as a 100 percent subsidiary of the Otto Group. The new
provider brings together all of the Otto Group’s existing logistics operations, allowing it to
offer a complete logistics portfolio for clients outside the group. Existing procurement and
distribution logistics services, in which the Otto Group already operates successfully through
its Otto International Logistics and Hermes through its Logistics Group divisions, have been
enhanced with the addition of the warehousing sector.
Also the German retailer Woolworth, after a management-buy-out independent from its parent
company, plans to spin-off its logistics into an autonomous service centre. Woolworth operates
330 outlets in Germany and Austria with a sales area of between 400 and 4’000 square metres.
The product line consists of 56% non-food and pharmaceutical articles and 44% textiles. For the
second half of 2006, following press releases, Woolworth had plans to open up their distribution
centres to third party customers.
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This short excursus shows how mail-order companies can evolve into serious competitors in the
logistics industry. Hermes is currently, together with DPWN/DHL, the only full-range supplier
in Germany that can handle all kind of shipments from small parcels to full truckloads.
In order to provide its people a wide variety of press media, many countries subsidise the
press indirectly by subsidising their postal incumbent and enabling it to offer lower prices for
distributing print products such as newspapers and magazines. In times of decreasing national
budgets, these contributions are constantly reduced which increases the average logistics cost
for publishing houses. On the other hand, publishing houses see themselves as major customers
and therefore expect discounts and special services. In the past few years, one could observe
attempts by publishing houses to become independent from postal operators by building alternative distribution organisations. Although the distribution of print products initially affects
the narrower postal market, a possible launch will have also consequences for traditional logistics
providers: firstly, most processing steps before final distribution are typical logistics operations,
such as warehousing, sorting, and line hauling, and are operated on pallet. Secondly, such alternative distribution organisations will quite likely open their operations for third parties in order
to acquire higher volumes and to run their logistics processes cost-efficiently. Thirdly, one can
expect the members of this network to re-evaluate all their logistics processes and to possibly
allocate some of them to the new organisation.
Let us illustrate this trend again with current examples: four publishing houses in Germany are
trying to combine their activities in the market for postal services and founded a joint company
to do nationwide mail distribution. To ensure a high level of logistics know-how, the former CEO
of Thiel Logistik and most recently the CEO of TNT Logistics Central & Eastern Europe have
been announced CEO of the new company. In September 2005, the four companies signed a joint
venture contract, according to which each partner will hold a 25% stake in the new company.
In Switzerland, the Alternative Zustellorganisation (AZO) was founded by the leading Swiss
publishing houses for the purpose of distributing up to 300 million of the approx. 700 million
periodicals handled by Swiss Post every year. At the time of writing, no such distribution
organisation is effectively in operation, although the threat of a market entry caused significant
trouble among postal and logistics operators.
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Railway companies must also be considered as new entrants: many European railways have
already diversified into cargo transportation in order to open new revenue streams. The German
operator Deutsche Bahn even acquired Schenker, one of the leading logistics providers (now
operating under “Schenker DB Logistics”) and BAX Global, which enables the group to offer
an comprehensive logistics portfolio consisting of land transport, air-/sea freight and contract
logistics/SCM, rail freight and intermodal solutions (see, e.g. Logistikmarkt.ch, 2005). Smaller
operators like the Swiss SBB Cargo did not yet manage to establish a sufficiently dense network
and customer basis and are therefore struggling to earn money with their logistics services.
Reaction from Established Players: one must expect retaliation by established players after a
market entry of a new player. Not that the logistics industry had a history of vigorous retaliation,
but as the battle for market share has increased, as the market is only growing slowly and the
big players are starting to divide the market up among themselves, they will certainly not accept
the presence of a new entrant. Retaliation will be based on the substantial resources (both
financial and market power), which established operators can use to fight back. Many of them
are somehow limited and focused only on this industry (high exit barriers), a fact that will
further increase retaliation. Porter (1980: 7) even suggests that acquisitions carried out by firms
diversifying from other industries should also be viewed as a market entry as they cause shakeup. This consideration has been proven in the earlier phases of DPWN’s expansion: each time
they announced an additional acquisition, it triggered an until that time unknown increase in
the level of M&A activity. TPWN’s M&A activities, however, garnered also heavy criticism so
as to destroy the market by buying market shares. The same reaction can be expected on a more
regional or local level when national posts enter the logistics market, either by their own entry
or by acquisition.
5.4.4 Threat of Substitution
The threat of a classic substitution, which means by a product or service that completely replaces
the former product and causes demand to collapse, can be excluded. As long as de-materialising
or beaming technologies do not exist, handling, sorting, warehousing, and distribution of physical
goods cannot be substituted. However, the demand for logistics services can be substituted or
altered: on the one hand, there is the actual substitution in the form of the decision between
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“make” (insourcing) and “buy” (outsourcing). Firms extending their range of in-house logistics
activities will reduce (and therefore substitute) their demand for logistics service providers. On
the other hand, changes in the modal split can also be seen as a substitution of typical logistics
services: if shipment by rail is cheaper, more convenient, or the firm pursues ecological principles,
or the government imposes regulations, the demand for road-based logistics services will decline.
5.4.5 Rivalry amongst Competitors
The logistics industry is structurally competitive and dominated by competition in price and service quality: “In many OECD countries the industry has a large number of small firms providing
basic transport services and a limited number of major hauliers providing more sophisticated
logistics services. Firms in the first category compete mainly on price. Barriers to entry are
low because little start-up capital is needed. Firms in the second category compete both on
price and the range and quality of services” (Boylaud, 2001: 231). Due to globalisation and
the ongoing consolidation among the top players, local and domestic suppliers have lost market
shares. Providers operating internationally with lower production costs are gaining influence as
they can dominate the market with lower prices.
High volumes (in the form of market share) are needed to run logistics operations profitably
and new capacity must be added in large increments (economies of scale). This generates high
fixed costs and strong pressure for all players to fill capacity, which in turn leads to a rapidly
escalating price-cutting. Slow industry growth, the lack of differentiation and low switching costs
add to the rivalry, as the companies can only grow and expand at the expense of their competitors.
Last but not least, the top players have high strategic stakes and will continue to invest both
in infrastructure as well as in acquisitions to pursue their expansion strategies. The degree as
to how much a player can try to alter these factors by strategic moves is somewhat restricted,
since most of them are industry-inherent. By expanding their range of products and offering
new value added services, logistics providers try to tie customers and to increase switching costs.
Recapitulating, all these factors hold the level of rivalry high, so we even must expect an increase
in rivalry in the next five years.
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Another indicator of the changing nature of the industry and the consequent rivalry is the
industry’s concentration. Despite increasing merger and acquisitions and the tendency towards
larger companies, the logistics service industry is not (yet) highly concentrated: the ten biggest
players only have 44.9% market share and no single operator controls more than 10% of the
market, leaving plenty of potential for further consolidation, either within the top players or by
acquiring smaller operators. A look at the changes within the top players shows how important
M&A activities have become: the total value of transactions is estimated to be around e 20
billion and the largest players have invested approximately e 35 billion in the past five years in
acquisitions (Bilanz, 2006). A few examples: after their acquisition of P&O Trans European in
December 2002, it has been fairly quiet around Wincanton, although they were several rumours
that they were considered to be an attractive takeover candidate. In 2004, we saw more consolidation across a fragmented logistics industry, with Exel’s acquisition of Tibbett & Britten
and TNT’s takeover of Wilson Logistics. The Swiss contract logistics provider Kühne + Nagel
in October 2005 bought ACR Logistics (ex Hays) which was only taken over the year before by
US investor Platinum Equity Group. With this deal, Kühne + Nagel automatically positioned
itself among the top 3 operators. In 2005, DPWN bought Exel, becoming the largest contract
logistics provider in the world. In December 2005, TNT decided to sell the whole business unit
“TNT Logistics” (e 3.4 billion turnover in 2005) in order to focus on providing delivery services
by managing transport networks like mail, express and freight management. Market observers
expect that only another big player would be interested in buying this business unit, which would
add to the ongoing consolidation.
The question arises who will make the next step? UPS is often said to be interested in the
European market. However, UPS has a proven express and parcel network and has no direct
need to invest. On the other hand, FedEx has the financial resources and the strategic need to
strengthen their position in Europe, as they only rely on a air-based network and do not have
any ground capacity.
While at the beginning of the 90’s, players from adjacent industries were buying logistics operators, we now observe the trend that logistics operators are bought by other logistics operators.
These transactions do therefore not have a primarily financial but a strong strategic background.
The rationale (see Miebach, 2006) behind mergers and acquisitions is predominantly the development of new market potential, especially in new regions, in the sense of reaching new customers
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or being able to offer new products and services. Equally important are the increase in market
share, the buy-in of know-how as well as the realisation of synergies. So Kühne + Nagel after the
acquisition of ACR is now able to cover the whole of Europe and could significantly expand into
contract logistics (as does DPWN with the acquisition of Exel). Those logistics providers not
pursuing a merger and acquisition strategy have often formed powerful networks and alliances.
The “Logistics World Alliance”, founded by five European logistics providers, exemplifies this
trend: this alliance unites five providers with 24’800 employees and annual sales of e 2.4 billion and will offer customers a complete range of high-grade contract logistics services including
storage, handling and a variety of value-added services such as quality monitoring, repairs and
recycling (Logistikmarkt.ch, 2007)
To sum up, rivalry amongst competitors must be rated high: the industry has been quiet and
stable for decades, but nowadays larger operators are anxious to not loose ground and try to
defend their market position and anticipate strategic moves by their competitors. As we have
seen in previous chapters, the products and services are almost completely interchangeable, the
choice made by the customer is mainly based on price (high price sensitivity), meaning that
customers willing to change operator, which leads in the end to intense competition. Changes in
the industry have gained speed and it is still uncertain who will be the winners and loosers or
how the competitive landscape will look like in the future.
5.5 Trends and Strategic Drivers
The logistics industry, its players and its customers, have all become increasingly interesting for
researchers and consultants. The result is a wide variety of trends, drivers and developments,
as well as countless attempts to classify them. Most of these analyses are provided by consultants to demonstrate market knowledge and gain new customers as a result of which these
studies are often neither complete nor non-overlapping. Within the scope of this analysis, we
will therefore stick to the following “8 mega trends” explored by the Fraunhofer Institute in
Nürnberg (Klaus/Kille, 2006). Klaus/Kille established eight trends triggered by worldwide social and economic developments, which must therefore be considered as framework for the future
development of the logistics industry.
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Four “mega trends” influencing demand for logistics:
1. Globalization of production and commerce: increase of the average transport distance, new
communication and integration requirements, growing cost and other competitive pressures
2. Transition to post-industrial society: end of growth of industrial, "material" goods production, individualization of demand, expansion of the service industry sectors of the economy
3. Acceleration of the clock speed of economic activity towards an "on demand" world: immediate reaction to customer requirements, shortened technology lifetime and shortened
product cycles, declining average order and shipment size
4. Growing public sensitivity towards the environment: more recycling of goods, extended
logistics chains, increasing public resentment vis-a-vis road transport
Four “mega trends" changing supply options for logistics services:
1. (Re-)discovery of optimised organisational structures and processes: "pull" oriented, integrated management of "supply chains" through JIT and CRP
2. Deregulation and privatisation of former public service organisations: powerful new logistics
providers, new service offerings, new competition
3. Concentration on core competences and shareholder value creation: reduction of business
complexity, of capital employed, more outsourcing
4. Concentration and differentiation of industrial structures: "polarization" and "hierarchization"; growth of the biggest as well as of the smallest providers, new relationship structures,
multi-tier subcontractor "cascades"
The ongoing concentration of network providers in the global logistics market will increase
competition for market share through pricing, “customer buying”, and acquisitions, but we will
see a parallel development of medium-sized, sector-focussed experts in contract logistics and of
“2nd tier” operators in niches and individualised “one-to-one” relationships. The personalisation
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of relations and an increase of confidence between partners as well as IT and sector-specific
know how will become more important and therefore open up opportunities for unique selling
propositions. New actors will create new alliances and options within the logistics landscape,
e.g. the increased adoption of shared service networks and “coopetition” strategies, meaning
collaboration between traditional competitors.
Experts (see Logistikmarkt.ch, 2006e) predict a slowdown in the trend of outsourcing logistics
operations and an increase in alternative models: a joint-venture between the customer and
the logistic operator enables win-win-situations because the new firm benefits from the logistics
know-how of the operator as well as from the sector-specific know-how of the customer. Both
partners have a stake in the joint venture and are able to exert influence. Another option is the
legal spin-off of logistics, which increases flexibility, safeguards an organisation’s own know-how
and opens the option of offering logistics services to third-party customers.
Logistics services integrated into global value chains are a good business strategy, but the
continuous expansion of service offerings and capabilities across the supply chain and broadbased business process outsourcing are also critical for a successful logistics business. Logistics
service providers must improve their product management, their flexibility in service offerings,
cost management, ease of integration, and process orientation.
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So far we have analysed a number of postal incumbents, outlined the concept of diversification
and analysed the logistics industry. We now combine these three parts and go into more detail
into the issue of diversification in the logistics business by applying frameworks for strategic
analyses to the research question. The first step is to identify the critical success factors (CSF),
followed by a SWOT analysis and finally to map out the strategic groups.
6.1 Critical Success Factors
6.1.1 Objective and Structure
Critical success factors are elements that, as the name implies, are vital for the success of a
firm or organisation. Identifying these factors provides an understanding of the very nature of
a business and its characteristics enabling it to succeed in a competitive environment. Critical
success factors are never absolute for an industry or a group of firms and depend very much on
the research question being posed. The objective here is to elaborate the CSF for a successful
diversification of postal incumbents into logistics by carrying out an analysis of both CSF for
diversifications in general as well as CSF for logistics providers. These CSF apply to every
firm planning to diversify into logistics, not only postal incumbents, but also, e.g., mail-order
companies that make their logistics available to third-party customers. The conclusions and
the SWOT analysis will show whether postal incumbents possess the necessary resources and
capabilities to meet and exploit the CSF.
Chapter 4 has shown that diversification is about transferring and leveraging resources such
as skills and assets into a new market. Collis / Montgomery (2005: 93) postulate that these
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resources must pass a number of tests if they are to be the basis for a diversified expansion: (1)
they must be competitively superior for use in the new business, (2) they must be key success
factors in that business, (3) the firm must be competitive in acquiring the resources, and (4)
the firm must be able to leverage the resources. The resource-based view (RBV) stresses the
importance of resources for diversification and is a further motivation for this research in CSF
to ultimately identify the required resources for a diversification into logistics.
The chapter is therefore organised as follows: 1) the concept of CSF is outlined, 2) the CSF for
diversification are analysed, 3) the CSF for logistics providers are analysed, and 4) conclusions
for postal incumbents and the SWOT analysis are drawn. Critical success factors for M&A
activities as part of a diversification process are excluded, as chapter 7.4 on growth strategy will
cover this topic.
6.1.2 Methodology: The Concept of Critical Success Factors
The concept of critical success factors was proposed by R.H. Daniel in 1961 but popularised by
John F. Rockart (see Rockart, 1979, and Bullen/Rockart, 1981). In order to develop an optimal
information system, his approach was to discern which information a manager needs, so as to
determine whether events are proceeding sufficiently well in each unit of the organisation. This
information system should therefore only focus on factors that determine organisational success.
As a logical outgrowth of this work, the method was also found useful as a component of strategic
planning in general and therefore applicable to the field of business strategy research.
A definition of CSF is provided by Bullen/Rockart (1981: 3): “...the few key areas of activity
in which favourable results are absolutely necessary (...) to reach (...) goals” and must therefore
receive constant and careful attention and be continually measured. CSF are “those variables
that management can influence through its decisions and that can affect significantly the overall
competitive position of firms in an industry” (Hofer/Schendel, in: Grant, 2002: 96). To achieve
a particular goal, e.g. the successful diversification into logistics, it is crucial to be able to decide
which CSF are key to success or failure. According to Caralli (2004), CSF are powerful because
they make explicit those things that a manager intuitively, repeatedly, and even accidentally
knows and does or should do to stay competitive. Furthermore, developing and actively managing
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CSF helps firms to focus time, their most limited resource, to those areas that determine the
firm’s ability to survive and prosper. Both the industry and the firm-specific critical success
factors, together with the firm’s organisational capabilities, determine the strategy a firm will
pursue (Grant, 2002: 139).
There are several approaches that lead to a definition of the characteristics of such (critical or
key) success factors. These approaches all have in common the view that managers should focus
on those business skills and resources with the highest leverage on perceived value and relative
costs as these are first order causes of differences in performance (see, e.g., Grunert/Ellegaard,
1992). So, understanding and developing CSF enables a firm to enter an industry successfully,
differentiate with generic strategies between itself and other firms and optimally be able to
operate between higher perceived value and lower delivered costs (see Ketelhöhn, 1998). This
approach is congruent with Porter’s concept (1985) of generic strategies, namely differentiation
vs. cost leadership. Most research is geared towards explaining differences in efficiency that leads
to cost advantages and not in effectiveness that leads to higher perceived value (e.g. Ketelhöhn,
1998).
Kühn/Grünig (2002: 93) argue that CSF exist on every level of an organisation and in every
area of a firm’s activity and therefore differentiate between general success factors, market specific
success factors, firm specific success factors, and functional/sub-functional success factors. Prior
to this, Rockart (1979: 86) emphasised that CSF must always be tailored to the specific industry
and to the individual firm. The general and market-specific success factors define the minimum
capabilities a firm must master and therefore a minimal level of value-cost-combination that has
to be achieved in order to survive at all in the specific industry and guarantee just an average
position (“floor performance”) within the industry (A0 ). A firm at position A0 meets only the
industry CSF: these success factors, however, do not explain differences in the competitiveness
and the likely success of firms. As a consequence, managers must focus on CSF that are specific
to their firm, what eventually defines how and with whom the firm competes. These CSF either
increase the level of perceived value by maintaining the same relative costs (move to position
B) or reduce the relative costs by maintaining the perceived value (move to position C). Ideally,
CSF affect both levels at the same time (move to position A).
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Figure 6.1: Industry CSF versus firm-specific CSF (Ketelhöhn, 1998: 337)
When analysing the potential diversification of postal incumbents, it is therefore important
to distinguish between industry CSF that are necessary to enter the logistics industry and to
establish a sustainable position, and firm-specific CSF that allow a postal operator to differentiate
itself from other logistics providers.
When managers set goals, they implicitly know and consider success factors because these are
direct activities and tasks important for achieving goals. By making CSF explicit, key areas
of performance provide a common point of reference for the entire firm. Thus, any activity or
initiative that the firm undertakes must ensure consistently high performance in these key areas
(see Caralli, 2004). Any firm that fails to achieve CSF may not be able to achieve its goals and
consequently may fail to accomplish its long-term mission.
Let us now look at the sources for identifying critical success factors: as mentioned above,
CSF can basically found at every level of the firm, from executive to line management. They
derive from and reflect the goals of management and are also taken on board by the firm from
the industry in which it operates, its position relative to its peers, and the effects of the current
operating climate and environment. Rockart (1979: 86) summarises the sources into four prime
sources:
• Structure of the particular industry
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• Competitive strategy, industry position, and geographic location
• Environmental factors
• Temporal factors
These sources help to elaborate CSF in the logistics industry and to classify them into logical
groups. Rockart (1981: 16) furthermore proposes a differentiation between internal and external
success factors: internal CSF are related to the specific department and the people involved,
while external CSF can not be controlled by management. This should not be mixed with
industry CSF that can be both internal and external. CSF can also be separated into those
that can be influenced by management action and those that cannot. Following Grant (2002:
95ff.), identifying critical success factors is equivalent to answering two questions: 1) what do
customers want? 2) What does the firm need to do to survive competition?
It should be noted that critical success factors, are not simply a standard set of measures but
must be anticipatory by defining levels that must be reached. A contrasting example would be
key performance indices (KPI). KPI are figures that report an actual level of performance or
financial data and are therefore retrospective in nature. KPI are also often only qualitative and
cannot directly be quantified. As a consequence, CSF are sometimes misused as simple guiding
principles which is insufficient: they must be achieved in addition to the organisation’s goals and
objectives. Or in the words of Rockart (1979: 85): CSF are “the areas in which good performance
is necessary to ensure attainment of these goals”. Even though an organisation may not achieve
its goals, achieving CSFs may still get the organisation closer to accomplishing the mission (see
Caralli, 2004).
Research in success factors has often been treated with suspicion and criticised for resulting in
factors that are either too general and of no use to managers or too specific and not applicable
to other firms in the same industry. It is therefore important to note that the application of the
CSF concept does not make other classic functional areas of business administration redundant
but directs attention towards broader issues that, more often than not, cover more than one
functional area (see Grunert/Ellegard, 1992). Defining CSF is only one part of the strategy
process. Breaking them down further into sub-factors to identify actions, measurements, roles,
responsibilities and behaviour of the company and employees is the other part. Thus, the CSF
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concept is still very powerful today. It will now be applied to discern key areas crucial for a
successful diversification into logistics by an incumbent postal operator.
In both of his seminal papers, Rockart, (1979 and 1981) proposes the use of interviews as
the best method to delineate CSF for a given industry and/or a firm. Interviewing provides an
understanding of the organisation and individual’s personal goals and objectives in order to elicit
CSF and appropriate measurements. The risk, however, is that the process will provide a purely
intra-industry view: experts observe the industry, look who is successful and then deduce success
factors. So the empirical part of this chapter merges existing work on CSF for diversification as
well as for logistics providers with a defined set of interviews conducted within the framework of
this dissertation.
6.1.3 General CSF for Diversification
Having introduced the concept of diversification at length in chapter 4, we now introduce general
critical success factors for diversification. This chapter is, however, not an overview of approaches
which are purely theoretical but which are applied to the research question.
Porter (1987, see also chapter 4.1.7) proposes three essential tests for a successful diversification: 1) the industry chosen for diversification must be structurally attractive or capable of
being made attractive. Attractive features can be a high ROI, high entry barriers, low customer
and supplier bargaining power, and few substitute products (attractiveness test), 2) the cost of
entry must not capitalise all future profits (cost-of-entry test), and 3) the new unit must either
gain competitive advantage from its link with the corporation or vice versa (better-off test). Any
diversification strategy that does not pass these three criteria will inevitably fail. It is therefore
fair to conclude that these three tests serve as broad yet pragmatic and applicable critical success
factors.
More recently, academia has focused mainly on the third test and the question of whether
related diversifiers are better off than unrelated diversifiers by outperforming them, and the
type of relatedness behind a positive relationship between diversification and performance. CSF,
as a central approach, aims always at ensuring a positive performance by identifying the key
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areas the management has to focus on. A positive performance means, in economic terms,
either lower cost and/or higher value (see above). Any successful diversification must result in a
positive performance and is therefore eventually a function of both sub-additive costs and superadditive values of the underlying resource combinations (see Tanriverdi/Venkatraman, 2005).
So, the question remains how lower costs and higher value can be achieved in practice: the
implicit notion is that relevance of core competence and the exploitation of relatedness are
associated with higher performance (see, e.g., Barney, 1997; Tanriverdi/Venkatraman, 2005).
Chapter 4.1.6 already outlined that academia suggests that related diversification will, in most
cases, outperform unrelated diversification although no universally valid statements can be made
about the “right” type or degree of relatedness. In conclusion, relatedness is a key factor for
successful diversification.
For the purpose of this dissertation, it is important though to operationalise relatedness in
terms of postal operators in the logistics industry. A direct measurement of the relatedness of a
firm’s strategic resources is difficult to make at the individual firm level, whereby most studies
just use proxies and indirect variables. Furthermore, potential benefits from relatedness do not
necessarily imply that those synergies will actually be realised. Nayyar (1992) generically lists
the following types of relatedness: sharing markets, distribution systems, product technologies,
process technologies, or manufacturing facilities, relying on common technologies, managerial
capabilities and routines and repertoires. Furthermore, Pehrsson (2006) suggests that relatedness
should be viewed as a multidimensional construct and differentiates between 1) high relatedness
- high technology and high customer relatedness, 2) technology relatedness - and low customer
relatedness, 3) customer relatedness - and low technology relatedness, and 4) low relatedness - low
technology and low customer relatedness. Pehrsson then proves the hypothesis that firms with
technology relatedness are associated with higher profitability than firms with higher or lower
business relatedness, but the same hypothesis for customer relatedness is rejected. It seems that
technology relatedness is closer to optimum performance, than customer relatedness. As for
customer relatedness, greater knowledge of customers needs enables a firm to achieve a lucrative
position in certain segments but similar effects for market knowledge or brand recognition is not
proven.
Tanriverdi/Venkatraman (2005) assumed in their study that resource relatedness is a source
of cross-business synergy that improves the corporate value of the firm, but found that syner-
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gies arising from product knowledge relatedness, customer knowledge relatedness, or managerial
knowledge relatedness on their own do not improve corporate performance. Synergies arising
from the complementarity of these three types of relatedness are of key importance for creating super-additive value. Despite the presence of other types of related knowledge resources, if
one of the complementary types of relatedness is missing, the diversification may not succeed.
Markides/Williamson (1996) include the resource-based view (RBV) and postulate that commonalities between resources and assets are not a critical success factor if single-business firms
can access the same resource at a competitive cost, either by substitution or imitation. As a
consequence, providing access to valuable, rare, imperfectly tradable and non-imitable assets is
a critical success factor for diversification.
This section argued that attractiveness, cost of entry as well as relatedness are critical success
factors for diversification, yet the latter is the most important. Such synergies result either from
product/technology relatedness, from customer relatedness or from managerial relatedness while
at the same time complementarity is required. These CSF will now be applied to the research
objective - the diversification of postal incumbents into logistics. If these three conditions are
met, the prerequisites for a diversification into logistics by European postal incumbents are given.
Attractiveness of the Logistics Industry
The assessment of the attractiveness of the logistics industry is based on the industry analysis
in chapter 5 and on findings from interviews with experts and representatives from logistics
providers. The total revenue for outsourced logistics (corresponding to the market definition)
worldwide has grown to the incredible figure of USD 333 billions (Foster, 2005: 30). Generally, the
volume for logistics services is growing, by 3-5% per annum for standard logistics services such as
freight forwarding and warehousing and by up to 10% per annum for supply chain management,
outsourcing solutions and value added services. While postal operators face substitution threats
in the letter business by e-mail and other electronic means, there is almost no substitutability in
the logistics industry due to physical aspects. The main factors that would reduce market growth
are a general economic downturn or the decision of customers to keep their logistics operations
in-house.
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Internationally, we can observe an ongoing consolidation in the industry with the frequency of
acquisitions slowing down but with an increasing transaction volume. The top 25 global players
alone earned USD 97 billion and account for nearly 30% of all logistics outsourcing expenditures
worldwide. On a national and regional level, the market environment is heterogeneous, with large
international players on the one hand and countless small and medium enterprises on the other
hand. This has an influence on prices and margins, especially for standardised and exchangeable
services, because the market is saturated, and the company’s market share can only be increased
at the expense of another player, which will eventually lead to price dumping. As far as margins
are concerned, the logistics industry operates at very low levels and successful operators with
healthy profit margins in the region of 4-5% are already the exception. Higher margins are
achieved in growth segments with a predominant service character such as those with a high
outsourcing component and complex supply chain management solutions.
The potential yield of the logistics market must therefore be evaluated as being modest but
reasonable. A diversification into logistics usually generates high additional revenues for postal
operators but does not necessarily increase profits on the same scale. As an example, the logistics
division accounted for 34% of the revenue of DPWN but only for 20% of EBIT, resulting in a
return on sales ratio of 3.4% (annual report 2006). The mail division, on the contrary, accounts
for only 20% of the group revenue but for more than half (53%) of the group’s profits (return on
sales: 15.5%).
Beside growth and profitability, diversification in another industry can also be attractive from
the point of view of risk reduction (see Grant, 2002, respectively chapter 4.1.3). Because demand for logistic and postal services obeys basically the same rules and dynamics of the market,
a diversification into logistics can not be contemplated as a measure to reduce risks: both services are heavily dependent upon the volume of goods distributed by business customers, both
B2B and B2C. Any economic trend that leads to a collapse of this volume will therefore affect
both the postal and logistics business units within the company and therefore the incumbent
disproportionately.
The attractiveness of the logistics industry for diversification must therefore be assessed as being rather modest. Speaking in abstract terms, there are certainly more lucrative and promising
industries. However, diversification does not take place in a vacuum and historic developments
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as well as the availability of existing resources and assets have to be taken into account. A postal
incumbent with its specific assets and skills as well as the state owned monopolistic history and
universal service obligation is not completely free to choose its target industries for diversification.
It would furthermore not be wise to choose an industry only on the basis of its attractiveness,
as other aspects like the cost of entry and relatedness are equally important. Attractiveness is
moreover not linear across the logistics industry, but increases with the higher level of innovation
and revenue potential of more complex logistics solutions. Logistics is furthermore an industry
where new players still can move into due to its fragmented structure. In express, in comparison,
there are four big players in a rather stable industry, wherefore entry would be extremely difficult
(see also interview #7).
Cost of Entry into the Logistics Industry
In order to evaluate the entry costs for postal incumbents, both the effective costs of building up
or acquiring an organisation as well as the costs for mastering entry barriers must be considered.
Costs are incurred firstly by the entry itself, for example the acquisition of a logistics company,
and secondly by taking into account goodwill, integration and post-merger costs. A high purchase
price can easily capitalise future profits of the acquired player: Kühne + Nagel paid e 490
millions for ACR, DPWN paid e 5.6 billions for Exel and TNT sold its logistics business for e
1.48 billions. Although these three companies are specialised in contract logistics where margins
are more promising, the general cost of entry by means of acquisition is considerably high.
As far as entry barriers are concerned, the industry analysis in chapter 5.4.3 identified the
following entry barriers:
1. Regulatory barriers
2. Economies of scale
3. Access to a regional or international network
4. Technology / IT
5. Logistics competences and network management skills
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6. Mobility barriers of buyers / Switching costs
From the postal incumbent’s point of view, these entry barriers are rather modest and can
be mastered. Coming from a highly regulated postal sector, incumbents should easily be able
to deal with the few regulations concerning working hours, environmental issues and suchlike.
Economies of scale and access to a distribution network are issues with which incumbents are
very familiar. However, achieving economies of scale and access to an international network
are critical success factors and any failure in this respect will in the end make it impossible
to provide attractive products at a competitive price. Regarding technology and in particular
information technology, these are critical success factors for logistics providers and therefore an
important barrier to entry. Without providing state-of-the-art IT systems, postal incumbents will
neither satisfy basic customer needs, nor be able to differentiate themselves through innovative,
technology-based solutions. Postal incumbents have the advantage that they have a long-lasting
involvement with technology-based network management. Most of them invested heavily in the
modernisation of their IT systems in the last couple of years. The challenge remains whether
they are able to extend these systems to logistics operations or whether they must introduce new
systems and/or create additional interfaces to existing systems. Traditional logistics competences
and network management skills are certainly available due to the incumbents’ experience in postal
logistics although most of the interview partners doubted whether postal providers possess the
right skills for complex logistics solutions. Additionally, increased complexity of logistics solutions
results in higher buyer mobility barriers. Here, postal incumbents have an advantage due to their
nationwide presence, perceived delivery quality, and their trusted brand. To sum up, the costs
of entry into the logistics industry should not be neglected or underestimated, but they can be
assessed as being modest and manageable.
Relatedness of Postal and Logistics Services (“better-off test”)
Relatedness is the most important success factor for diversification that should result in a positive
performance, achieved either by reducing costs or by increasing value for the customer. The
diversified firm must be better-off by gaining competitive advantage by way of a link between
the original and the new industry. A recent study of M&A in the logistics industry (DVZ, 2006)
revealed that the acquiring firm primarily expects synergies in marketing, IT, and fleet utilisation.
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Within the frame of his empirical work, the author’s expert interviews provided insights into
where this relatedness can be found and which synergies resulted. The answers depended very
much on the firm represented by the interview partner: larger operators saw generally less
relatedness than smaller operators, academia, and consultants. Synergies are obviously harder
to realise on an international rather than on a national level. This contradicts the statement of
Ecorys (2005: 119) that “at a national level, there are very little economies of scope to be gained
by engaging in express and logistics in combination with mail. The demands that are posed
on the respective operations differ to such an extent that the activities are carried out through
completely separate networks. At international level, however, a presence in express or logistics
in a certain country offers opportunities for handling outbound B2X cross border mail as well.”
The practitioners argued that, due to very different requirements, optimisation of international
networks does not allow to fully benefit from synergies. The failure to increase profitability by
achieving synergies led TNT to the decision to sell their logistics business. They also came to
the conclusion that the type of capabilities required to run a logistics business successfully are
quite different from the type of capabilities needed to successfully run a mail and express network
(interview #7).
In more general terms, the harmonisation of networks and the sharing of infrastructure is
much easier on a smaller scale, e.g. on the national level. If for example parcel sorting and
cross docking centres are built side-by-side, line haul transports can be optimised and time
slots minimised. A combined utilisation of an existing sorting centre is very difficult because
the equipment does not leave room for space intensive cross docking operations. Although the
process of pickup – transport – sorting – transport – delivery is very similar for postal and
logistics services, competitive advantages are mainly gained in line haul transport between the
centres of the organisation’s network. Pickup and delivery are very different, e.g., an incumbent
cannot have a postman also picking up goods for logistics customers. The delivery of mail,
express and parcels normally takes place at the front door with small vehicles, while delivery of
pallets happens at the ramp or backdoor with large vehicles. Traditional postal delivery is much
faster and includes more stops than a typical logistics delivery. The network itself has to be far
denser and more efficient for mail, express and parcels, whereas for a logistics network capacity
utilisation is more important.
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As far as technology is concerned, most interviewees see the possibility of sharing at least some
IT systems. Because the physical process is basically identical, there are a lot of commonalities
in the dataflow, the database, and the application (e.g. dispatch, traceability). Further synergies
can be realised with a common interface for the customer, single-sign on for all products and
services, as well as a single invoice. However, in logistics, most providers use a number of
different systems due to customer requirements and postal incumbents themselves, like many
older companies, have legacy systems and therefore different systems for mail and logistics.
Although it is tempting to suggest one common system, this can not be realised in the short
term.
Beside operational and technological synergies, relatedness develops also from marketing and
sales activities. Most interviewees explain the need for diversification with the need to meet
customer requirements by extending the service and product portfolio. In fact, many authors
point to one-stop-shopping as the most important driver in today’s logistic market and therefore
for the strategic development of logistics service provision. New concepts of so-called Third or
Fourth Party Logistics Provider (3PL/4PL1 ) or Lead Logistics Provider (LLP) have appeared to
answer the customer’s demand to have a single contact for all logistics needs. Providers who have
traditionally covered the highly standardised bulk segment of the logistics market are therefore
trying to expand their solution portfolio in order to provide its business customers with the
whole range of logistics services. The opinions among interviewees are divergent: half of them are
sceptical and argue that, in the end, customers look for the best price/quality ratio, meaning that
they use their express services from one or more providers and other providers for their logistics
and mail business. Others are convinced that customers are reluctant to differentiate arbitrarily
between parcel, express and cargo and therefore demand complex outsourcing solutions from a
single operator. The question whether customers demand one-stop-shopping or not and whether
they really want to rely on a single operator is difficult to answer and cannot be assessed in a
general manner for all customer segments. The critical success factor is rather in finding those
customers that have a higher-than-average need for both postal and logistics services, which
demand services from a single source, and will therefore profit from a comprehensive portfolio of
services from a single postal incumbent.
1
see chapter 5.2.1 for a detailed description of these concepts
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The application of theoretical arguments for diversification applied to the research question
and critically discussed above shows that the logistics industry is a sufficiently attractive industry
where the cost of entry is sufficiently low and postal incumbents can profit from relatedness to
be better off than traditional players. Relatedness can be found in sharing infrastructure and
technology (product relatedness), in network management skills (managerial relatedness), as well
as in marketing and sales (customer relatedness). These synergies, however, are not universally
valid, depend on the specific operator and must be exploited on an individual basis in order to
create valuable, rare, imperfectly tradable and non-imitable assets (RBV approach).
6.1.4 CSF for Logistics Providers
We will now analyse CSF for logistics providers in general and then apply them to postal incumbents using a SWOT analysis. Providers managing to meet these CSF with their resources, can
be assumed to have high relatedness and may have good opportunities in the logistics service
market. The relatively homogeneous opinions of the interviewees regarding the research question
as to which critical success factors a logistics provider has to fulfil in order to be successful are
then highlighted.
Critical success factors are also an essential element in the literature about logistics providers
but most studies and analyses subsume them under other topics. As it is not the aim of this chapter to do a literature review and the screened literature is fairly consistent with the interviews,
the conclusions from the interviews are supplemented by summarising findings concerning CSF
from the following sources (in alphabetic order): CapGemini (2004 and 2005), Jahns/Langenhan
(2004), Klaus (2006), Laarhoven/Berglund/Peters (2000), Langley (2005), Protrans (2001), TransCare (2004), Tripp (2004).
• Information technology: this CSF was commonly brought up as first priority. Providing
state-of-the art IT systems is definitively an absolutely key factor. Today customers expect
single web-based interface, end-to-end integration of customer’s processes and IT systems,
track and trace, supply chain event management, invoice, billing, and so on.
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• Network and supply chain management skills: the professional competence and methodical
skills necessary to run, manage and optimise complex networks and supply chains were
the second most mentioned success factor. This requires of course qualified personnel and
competences as a network organisation. As a consequence, most diversifications are carried
out by acquisition of an existing logistics provider to buy in the required skills.
• Customer / market know-how: especially when it comes to complex outsourcing solutions,
understanding the customer’s specific needs is a key factor. In this regard, most contract
logistics providers specialise in only a few selected industries to build up the requested
industry know-how and to buy in customer contacts. The downside of this strategy is the
high level of dependency on the focus industries.
• Area coverage and density: geographic coverage and the network is consistently named
as a success factor. There is however no unanimity as to what extent a logistics provider
must be international. From the point of view of operators with an international arm, its
own international network coupled with global reach and accompanied by an integrated,
global organisation is a must. Smaller operators emphasise the importance of access to
an extendable network that combines the unique capabilities of the partners. There is
no universally valid answer to the right degree of international coverage. This decision
is furthermore largely dependent upon the targeted customers and their logistics needs.
However, having the right coverage and density to address customers’ demand is certainly
a success factor.
• Brand / trust: opinions on the importance of a brand for a logistics provider are rather
ambiguous. Some argue that a good brand that stands for quality is absolutely necessary
to build up trust. Others disagree and posit that brands matter less the more complex
and extensive the relationship with the customer is. Indisputable is the value of trust for
successful partnerships in logistics.
Following again Grant (2002: 95ff.), these critical success factors identified should now answer
two questions:
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1. What do customers want? Customers want a trusted logistics partner with an excellent
network, supply chain management skills, and industry-specific know-how whose network
covers the requested area and whose IT systems are able to integrate customer processes.
2. What does the firm need to do to survive competition? Both interviewees and literature
confirm that the CSF above are the factors a logistics provider must tune and focus on in
order to differentiate and build up unique selling propositions.
Let us analyse these five success factors with the framework proposed by Bullen/Rockart
(1981: 17), namely along the dimensions "internal vs. external" and "monitoring vs. building/adapting": all of these CSF are internal factors that can and should be given active management attention. They deal therefore with issues and situations within a firm’s sphere of influence
and control and are future-oriented so as to ensure a firm’s successful positioning within the industry. This result may reflect the composition of the interview partners as they mainly represent
strategy directors from providers and industry insiders, both of whom focus on how individual
players manage to strive and survive in the competitive environment.
The screened literature and presentations also reveal other important factors that logistics
providers have to pay attention to. Following the definition earlier, they only qualify as industry
CSF which enable a firm to maintain an average position in the industry (A0 ) and do not allow
for differentiation. Furthermore, the CSF are not valid for the whole industry but only for certain
segments.
The following elements apply primarily to general cargo transports: fixed timetables, standardisation, economies of scale, high capacity utilisation, flexibility, speed, and intermodality.
As far as contract logistics and long-term logistics partnerships are concerned, the following
critical success factors are mentioned (CapGemini, 2004 and 2005; Laarhoven/Berglund/Peters,
2000): contract logistics providers must possess a certain level of entrepreneurship in order to
both deliver value to the customer and to capitalise on the relationship to leverage his customer
base. Well-understood goals and objectives of the relationship are crucial to prevent misunderstandings and to harmonise expectations, as output, well-defined requirements, procedures
and systems must result. Due to the long-term character of such relationships, the corporative
compatibility and strategic alignment of all partners involved is very important, which ideally
includes the involvement of top management. Both partners should, right from the beginning,
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define a migration plan towards more advanced services. From the provider’s point of view, it is
vital to have capacity available for further integration of the entire supply chain. On the other
hand, a clear exit strategy and a succession plan must also be defined as early as possible.
6.1.5 Implications and Conclusions
This chapter defined critical success factors for diversification into the logistics industry as well as
for logistics providers. The logistics industry is a sufficiently attractive industry where the cost of
entry is low enough and postal incumbents can profit from relatedness to enter the business and
be better off than traditional players. Once entered, logistics providers must pay constant and
careful attention to their IT systems, their network and SCM skills, their industry and customer
know-how, their area coverage, and their brand.
Table 6.1: Summary of CSF for diversification and for logistics providers
CSF for Diversifications
• Attractiveness of the (logistics) industry
CSF for Logistics Providers
• Information technology
• Network and supply chain management skills
• Cost of entry (into the logistics industry)
• Customers / market know-how
• Relatedness (of postal and logistics
services)
• Area coverage and density
• Brand / trust
Although different industries and businesses show different sets of CSF, most interviewees
confirmed that these success factors are by all accounts adaptable to both sectors. This relies on
the assumption that at least some of the CSF are similar for both industries. This is especially
true for information technology, network management skills, as well as area coverage and density.
Ketelhöhn (1998: 336) describes CSF as “the key to enter” an industry: after having identified
these industry CSF, we must now “examine our company skills – capabilities – to check whether
or not they are suited to deliver what it takes to compete in the industry”. Consequentially,
the next chapter analyses the strengths, weaknesses, opportunities, and weaknesses (SWOT) of
postal incumbents that diversify into the logistics industry.
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6.2 SWOT Analysis
6.2.1 Objective and Structure
The preceding chapter detailed critical success factors for diversification in general and as applied
to the research question in particular. Furthermore, critical success factors (CSF) for logistics
providers were discussed at and applied to postal incumbents diversifying into logistics. We
will now confront the incumbents’ capabilities regarding these CSF by analysing their strengths,
weaknesses, as well as the opportunities and threats within the specific market (SWOT).
The SWOT analysis framework is regarded as one of the most popular instruments for strategic
analysis and planning. It serves as a starting point for strategic initiatives in order to establish
a strategic fit between business opportunities on the one hand and the firm’s capabilities and
actions on the other hand. Barney (1991) established this link between internal and external
factors by embracing both firm resources and sustained competitive advantage. This framework
examines organisation-specific strengths and weaknesses, as well as opportunities and threats that
arise from its environment. The goal of the SWOT analysis is to determine whether the current
business strategy in respect of the firm’s strengths and weaknesses is capable, adequate and
relevant enough to face the changes in the industry environment. Resulting strategic implications
are 1) connecting strengths with chances, 2) transforming weaknesses and threats into strengths
and opportunities, and 3) eliminating risks and weaknesses.
The central concept is the fit between unique capabilities and the competitive requirements
of an industry. To identify the competitive advantage of a firm, it is necessary to carefully
match the firm’s strengths and weaknesses to the opportunities and threats presented by its
environment (Collis/Montgomery, 2005: 56). A successful strategy is consistent with the firm’s
goals and values, with its resources and capabilities, and with its external environment such as
the industry and the macroenvironment.
The analysis of the firm deals with internal factors, the strengths and weaknesses of a firm.
Barney (1991: 101) proposes the resource-based model (also known as RBV, see chapter 4.1.4)
to identify resources such as assets, capabilities, processes, attributes, information etc. that a
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Figure 6.2: SWOT-analysis in a strategic framework (Collis/Montgomery, 2005: 58)
firm possesses or can influence. Particular factors differ depending on the specific firm under
examination. Benchmarking with the strongest competitors or comparable firms is a helpful tool
in order to assess whether these factors are a strength or a weakness. The external part, the
macro environmental analysis, identifies opportunities and threats that arise from trends and
changes of environmental factors and which the firm cannot influence directly. These factors can
be political, economical, socio-cultural, technological, legal, or ecological. Besides assessing size,
attractiveness and segmentation, the industry analysis makes often use of Porter’s “Five Forces”
(Porter, 1985) to include all forces affecting the respective industry. Depending on the research
question, the choice and weighing of factors will of course vary.
The results are often presented in a matrix with strengths and weaknesses on one axis and
opportunities and threats on the other. The four resulting fields correspond to the so-called
SO-, ST-, WO- and WT-strategies. SO-strategies explain how a firm should use its strengths
to exploit market opportunities, while ST-strategies explain how a firm should counteract its
weaknesses in order to benefit from market opportunities. The same applies vice versa for WOand WT-strategies. Within the frame of this dissertation, we will however not carry out this
step, since this assessment must always be made for a specific firm.
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The SWOT framework faces criticism from authors like Grant (2002) who point out difficulties
in distinguishing strengths from weaknesses and opportunities from threats since a strength (e.g.
a unique product) can always be also a weakness (e.g. if the firm relies solely on this product)
or a threat (e.g. if a new technology emerges that makes the product obsolete) and vice versa.
However, it is less an arbitrary classification of factors that count than a careful identification of
both factors and their implications.
Establishing a strategic fit between internal and external resources becomes in the end the
source for sustained competitive advantage (Barney, 1991), because it matches the firm’s strengths
and weaknesses with opportunities and threats that arise from the industry and the macroenvironment. Whether using this framework or not, when a firm is occupied with strategic planning
there comes a point at which the firm’s capabilities must be related to and compared with its
industry environment. Carrying out this strategic analysis using the SWOT framework helps
to focus specific activities on areas where combinations of strengths and opportunities can be
exploited or in which weaknesses and threats must be carefully watched and counteracted. The
SWOT analysis appears therefore to be a suitable tool by which to further explore the research
question,
6.2.2 The Application of SWOT to Diversification of Postal Incumbents into Logistics
Any SWOT analysis must start with defining a desired end state or objective. For this particular
research question, the following SWOT analysis evaluates how the resources, assets and capabilities of postal incumbents respond to the requirements and success factors of the logistics industry.
One challenge lies in the fact that the analysis of strengths and weaknesses is not just for one
firm, but basically for all postal incumbents in Europe. It is quite obvious that not all factors
will apply to all incumbents, at least not to the same extent or in the same priority. Statements
relevant to individual operators or groups of operators will therefore follow the descriptions of
the particular strengths and weaknesses. The macroenvironment (trends and strategic drivers)
of the postal industry has already been analysed in chapter 3.1, while the logistics industry
analysis can be found in chapter 5. The aim is not to carry out a traditional, comprehensive
SWOT analysis of an individual firm but to focus on elements relevant for a diversification into
logistics. These opportunities and threats stem primarily from the logistics industry and its
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CSF, however, we cannot neglect opportunities and threats arising from the postal industry and
affecting a potential diversification into logistics.
In order to build the SWOT analysis on a sound basis, we start with a review of the literature
and studies of the postal industry. A number of associations analyse incumbents on a regular
basis in their annual reports, e.g., the EU (2002), the UPU (2002c and 2005), and the IPC (2002,
2003, 2004, 2005, and 2006). However, there are rarely comprehensive SWOT analyses, often just
an examination of challenges and trends and the corresponding strategic issues for incumbents.
In the cases of traditional SWOT analyses (e.g. UPU, 2002c: 60ff.; EU, 2002: 34, Schwarz, 2004:
124ff.), the authors came to relatively homogeneous results that can be summarised as follows:
• Strengths: delivery and retail networks, brand/trust, customer knowledge
• Weaknesses: USO, cost structure, political restraints, ownership, insufficient competitiveness (as a result)
• Opportunities: diversification, new business models
• Threats: liberalisation, substitution, globalisation
These factors, though, apply to the whole postal sector and do not respond directly to the
research question, as some factors are of no importance and others are missing. This SWOT
analysis will therefore go deeper and focus only on elements that are relevant for diversification
into logistics. The existing SWOT analyses (or the existing elements from literature and studies)
have been supplemented with statements from interview partners. The opportunities and threats
stem from the logistics industry analysis.
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The results can be summarised as follows:
Table 6.2: SWOT analysis for postal incumbents diversifying into logistics (own analysis)
Weaknesses
Strengths
Products / Services
Products / Services
• Quality
• Standardisation and focus on bulk business
and economies of scale
• Network outreach / Geographical coverage
• Customer contacts and accounts
• Customer confidence and loyalty
• Affordable products and services
• Lack of flexibility
• Brand
• Pricing
• Brand
• Synergies in marketing and sales
• One-stop-shopping
Infrastructure
Infrastructure
• Dense distribution and sorting network
• Low productivity and efficiency
• Line hauls / Fleet
• IT systems
• Economies of scale
• Influence of politics and regulatory authority
• Standardisation
• Technology / IT systems
Organisation / Structure
• Continuous management
• National organisation
• International networking (e.g. UPU)
• Ownership / Political restraints
• Overhead / Processes
• Ongoing restructuring projects
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Human Resources
Human Resources
• Network management skills
• Lack of logistics and industry know-how for
complex logistics and supply chain solutions
• High standards of quality
• Experiences in M&A
• Civil service culture / Missing customer
orientation
• Lack of flexible labour conditions and contracts
• Lack of international experience, particularly in management
• Politically assembled top management
Financial Resources
Financial Resources
• Stable cash flow from mail business
• Dependence on mail business
• Equity ratio
• Cost structure / Fixed costs
• Financial resources / Liquidity
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Opportunities
Threats
• Increasing demand for logistics services
• Internationalisation
• Demand for one-stop-shopping
• Consolidation
• Economies of scale / Market share
• Increasing costs of entry
• Diverging groups of players
• No acquisition targets
• Increasing importance of partnerships and
networks
• Increasing investments in infrastructure
and IT systems
• Increasing importance of reputation
• Price dumping / Margin squeeze
• Financial resources for investments
• Demand for specialised solutions
• Financial resources for M&A
• Ongoing substitution of letter business
• Full postal market opening
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Opportunities
Threats
• Increasing demand for logistics services
• Internationalisation
• Demand for one-stop-shopping
• Consolidation
• Economies of scale / Market share
• Increasing costs of entry
• Diverging groups of players
• No acquisition targets
• Increasing importance of partnerships and
networks
• Increasing investments in infrastructure
and IT systems
• Increasing importance of reputation
• Price dumping / Margin squeeze
• Financial resources for investments
• Demand for specialised solutions
• Financial resources for M&A
• Ongoing substitution of letter business
• Full postal market opening
A first assessment reveals that many strengths can also be weaknesses and vice versa (e.g.
brand, IT systems, standardisation) for which there are three reasons: firstly, some factors are a
strength because they enable the incumbent to enter the logistics industry and establish an average market position, however, they are insufficient to differentiate the firm from its competitors.
Secondly, for some incumbents some factors are a strength, while for others the same factors are
a weakness. For example, some incumbents have a robust IT infrastructure while for others IT
is a weakness. Thirdly, not all factors are equally important for different market segments or
may have to be assessed completely differently.
6.2.3 Strengths
Products / Services: the quality of their products and services is without doubt an important
strength of postal incumbents across Europe. Although quality levels like delivery times or post
office density may vary, the incumbents’ provision of quality is well above average. This is mainly
due to the universal service obligation and international terminal dues that impose high quality
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standards as well as the monopolistic history of the incumbents which meant they were not forced
to reduce costs at the expense of quality. Quality is an essential element of logistics services and
takes on more importance the more complex and comprehensive a solution is. The perceived
quality of many logistics operators, especially for standard logistics services, has decreased due
to price pressures and margin squeeze. Postal organisations, however, are still a synonym for
high delivered quality. The challenge will be to transfer these quality standards into the logistics
business and even to an acquired company or to subcontractors that actually perform the service.
Part of an incumbent’s quality is also achieved through the extent of the network and dense
geographic coverage, a strength that a competitor can attain only with difficulty. A similar player
is unable to offer its customers as many pickup possibilities and a delivery network without gaps,
and above all, at affordable prices. Due to the USO, the incumbent’s employees have contact
with countless private as well as business customers on a regular basis, i.e. five to six days a week.
This adds up to a comprehensive database and unique knowledge of their customers, their needs
and their preferences. Incumbents have also, due to their mail business, much experience with
large business customers and key accounts that is useful in developing long-term partnerships
with new customers. Customer confidence in postal services and their loyalty to the incumbent
are still unbroken whereby the incumbent’s brand is a valuable and inimitable asset2 . A recent
survey (Logistik Inside, 2006) revealed, for example, that 87% of the logistics buyers interviewed
would not choose a provider with a bad reputation within the industry. For 86%, the high profile
of a provider plays a decisive role. Most logistics provider brands are rather weak and possess
only a medium level of recognition. This deficit opens up substantial opportunities for postal
incumbents for whom the brand is an important strength.
Postal incumbents that diversify into logistics are able to exploit synergies in marketing and
sales activities. Potential customers can be addressed centrally creating opportunities for cross
selling. Even if the sales representative is specialised in selling specific services, e.g., direct mail
solutions and with no expertise in selling logistics services, he will be able to recognise a possible
need for logistics services, to explain the incumbent’s offering and to call in a logistics specialist.
Without additional expenditure, the postal operator has thus simple access to potential logistics
customers that would otherwise probably choose another logistics provider. Most of the individuals interviewed predict that today’s distinction between mail, express, parcels, and logistics will
2
The importance of brands and reputation will be further elaborated on in chapter 7.5
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continue to blur and that customers simply demand solutions for a given problem. Many experts
are convinced that “one-stop-shopping” is only a marketing term to describe the operator’s broad
portfolio. Although the term is highly disputed, the importance of one-stop-shopping in terms of
serving customer needs and solving their problems will increase to the benefit of the diversified
postal incumbents.
Infrastructure: a dense distribution and sorting network is, in addition to a high capacity
utilisation, an essential asset in logistics, as the flow of goods must be optimised in order to reduce
costs. The postal operators’ existing line hauls between mail and parcel centres can be expanded
so that they serve also as line hauls for larger goods and cargos. Postal operators already
possess their own truck fleet and often have partnerships with subcontractors where additional
synergies in line hauls can be realised. Although the postal infrastructure cannot always be used
directly for logistics operations, synergies are realised by minimising distances and optimising
time slots. The existing infrastructure is therefore assessed above all as a strength, because it
guarantees economies of scale. In contrast to a SME provider, a diversified postal incumbent is
able to take on much larger volumes. The high standardisation of postal operations is a further
advantage because diversified incumbents will attempt to introduce the highest possible level of
standardisation in their logistics operations, tending in the end to optimise the flow of goods.
Those incumbents who made investments in technology in general and in their IT systems in
particular, will be able to create synergies if their systems are expandable and scalable. Operational synergies are probably difficult to exploit because the requirements and platforms are too
different to integrate, especially if systems from a firm acquired specifically for the purpose of
expanding into the logistics business must be integrated with existing systems. However, back
office functionalities like order management and invoice processing may create synergies.
Organisation / Structure: as far as the organisation or the structure is concerned, strengths are
more difficult to find. The longevity and commitment of the management of postal incumbents
can be assessed as being a strength due to the long industry experience and in-depth knowledge.
Compared to the mostly family-owned logistics provider, it can be generally stated that patrons
of such providers show similar characteristics compared with the postal incumbents management.
Another advantage is probably the fact that the postal incumbents management has experience
in international logistics networking and the corresponding contacts.
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Human Resources: as confirmed by most of the individuals interviewed, postal employees
at all levels possess many network management skills. This begins right at the top with the
conceptual design of the logistics network infrastructure, through the management skills at the
front, right down to the culture, training and motivation of each employee involved in the logistics
process. These skills are a great asset because knowledge relatedness is extremely important for
successful diversification (see also chapter 4.1.6). Interestingly, both DPWN and TNT have not
seen the need to introduce programs that systematically enable skill transfer between business
units (see interviews #2, #3, and #7). The quality awareness and high quality standards among
all employees are a further strength of postal incumbents, particularly in direct comparison with
traditional logistics providers that often struggle with quality of delivery. On a management level,
experience in mergers and acquisitions are available as the result of an increase in acquisitions in
the last decade. This applies not only to large operators but also to smaller incumbents, which
acquired firms along the value chain, mostly in the mail business.
Financial Resources: the financial performance is an important and significant strength of
postal incumbents. The stable cash flow from mail business guarantees unequalled financial
resources and an attractive level of liquidity. Additionally, their equity ratio is higher than
comparable firms and much higher than logistics providers. These financial assets enable postal
incumbents to make high investments into their infrastructure and to invest in acquisitions. Both
DPWN and TNT as the largest operators have in the past demonstrated their financial strength
and pursued an aggressive growth strategy. Compared to logistics providers, especially national
and family-owned providers, the financial resources of postal incumbents are an essential factor
when a diversifying incumbent is considering a market entry with the aim of establishing an
attractive market position. However, in return, incumbents face restrictions on where and how
much they are allowed to invest their free cash flow and more importantly the fact that their
major competitors are also financially strong, or have ready access to the capital required.
6.2.4 Weaknesses
Products / Services: standardisation can be a strength if it enables a postal provider to reduce
costs, to optimise processes, and to increase profits. On the other hand, the same high level of
standardisation and focus on bulk business can be a weakness, since logistics customers demand
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individual solutions that are tailored to their specific needs. If a provider does not satisfy
customer requirements due to the inability to adapt standard processes, the customer will chose
a competitor as his logistics partner. An example could be a fixed time slot for pickup that does
not suit the customer’s production process and the postal incumbent’s unwillingness to pick up
earlier respectively later because this would require alterations in his standardised and optimised
process or destroy his economies of scale. According to the individuals interviewed, this lack of
flexibility is the biggest weakness of postal incumbents wanting to offer logistics services. The
same applies to the pricing level, which is generally too high as incumbents have been spoilt
with high margins from their mail business. If they want to maintain the same margins in the
hard-fought logistics market in order to cover their fixed costs, potential customers will not take
them seriously. Consequently (but with no data material to prove it), the incumbent’s brand
must also be assessed as a weakness, because it is associated with a lack of flexibility, high prices,
and civil service attitudes.
Infrastructure: density and outreach have both a positive and negative aspect. On the one
hand, outreach means potential access to many customers, while on the other hand the legacy
network also implies a less efficient network with lower productivity. The infrastructure was built
for the purpose of handling mail streams and is not necessarily extendable to serve the needs of
logistics processes. Since the incumbents as monopolists were not put under pressure to invest
into the modernisation of their infrastructure, this was never done. The same applies to their
IT systems which were designed to handle mail and do not feature state-of-the-art applications,
such as those to track and trace cargo or manage RFID. The upgrade of both infrastructure and
IT systems requires heavy investments whose short or medium-term payback cannot be guaranteed due to the low margins. Postal incumbents modernising their legacy mail technology and
adding logistics applications at the same time will face numerous challenges concerning interfaces
and connectivity between the systems. Furthermore, traditional systems are often standalone
applications that do not allow the integration of other processes or applications. However, this
inclusion of customer processes and systems is an important component of competitive logistics
solutions.
The incumbent’s infrastructure is an essential part of his ability to provide a universal postal
service and is therefore closely watched by both politicians and the regulatory authority limiting
the incumbent’s flexibility and freedom to optimise his network. Although parcels and logistics
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services are non-reserved and competitive services, the incumbent’s infrastructure is often considered as an element of regional policy, especially the locations shared with mail operations. If
the regulatory authority grants competitors access to the incumbent’s network, any changes in
the infrastructure will also be critically assessed under the aspect how it changes the competitors’ access. Compared to private logistics providers, the political dimension of an incumbent’s
infrastructure is therefore a weakness for a diversification into logistics.
Organisation / Structure: facing increasing internationalisation of the logistics industry, the
national organisation of postal incumbents is a further weakness. If they do not pursue a purely
national logistics strategy with domestic services, then besides the diversification itself, they are
confronted with the additional challenge of building up an international organisation. As outlined
in chapter 4.2.5, this combined product and international diversification is often underestimated
and the prerequisites for success much higher than expected, especially if the diversification is
carried out by acquiring a foreign logistics provider and merging it into the existing structure.
Since they are largely still owned by government, most incumbents in Europe face political
constraints when it comes to strategy and business development. Most administrations do not
have yet a clear vision as to how the universal service obligation will look like in the future and
how it will be financed. As a consequence, diversification attempts will probably be assessed
critically or even be restricted. This causes a lack of entrepreneurial freedom and flexibility
on the one hand, but also additional political processes and overhead on the other hand, all of
which will tend to handicap the competitive agility compared to private and mostly family-owned
logistics providers.
Ongoing restructuring projects, e.g. for reengineering mail processing, absorb management
attention and workforce and financial resources. This often instable state of transition does not
promote or support new strategic developments such as an acquisition of a firm to diversify into
a new industry.
Human Resources: as far as human resources and skills are concerned, the lack of logistics
and industry know-how for complex logistics and supply chain solutions prior to diversification
is a weakness, as this is a crucial success factor for logistics providers. The same is true of the
still persistent dominant civil service culture and the corresponding missing customer orienta-
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tion. The lack of flexible labour conditions and contracts due to government ownership, political
considerations, and legal constraints are further drawbacks to competing in the labour-intensive
logistics industry, as this causes higher labour costs. The lack of international experience, particularly in management, may create further disadvantages in addressing international customers
and responding to their global needs. Last but not least, the mostly typically political nature of
the management of postal incumbents, may constitute a lack of entrepreneurial experience and
the motivation to encourage and support diversification strategies.
Financial Resources: the ongoing dependency on the decreasing mail business is a weakness,
as it may create financial constraints for diversification and new market entries, especially if
the incumbent is no longer capable of cross-subsidising low-margin or even loss-making new
businesses. When it comes to the cost structure, postal incumbents must generally deal with
higher fixed costs due to a politically motivated infrastructure, higher labour costs, and often less
efficient processes than private operators. This fact either increases the price level or decreases
the attainable margin.
6.2.5 Opportunities
The logistics industry analysis shows a generally increasing demand for logistics services creating
opportunities for new logistics providers with new business models that offer specialised solutions,
be it through specific industry know-how or by realising synergies with other businesses. This
trend also includes the demand for one-stop-shopping solutions although this does not apply
to all customer segments. Postal incumbents that realise leverage effects with their existing
customer base by also cross-selling logistics services and those organisations that have identified
potential new customers that profit from an incumbent’s extended portfolio, will therefore gain
attractive market positions.
Because the price as a decisive criterion will become even more important, providers that
manage to achieve higher economies of scale across all processes will be able to optimise margins
or pass on these cost advantages to their customers in the form of lower prices. An important
prerequisite for economies of scale is of course the market share that can be further increased
through a competitive pricing, which again can be realised through economies of scale.
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Due to the increased level of specialisation (e.g., industry or international focus, type of cargo,
transport mode), the groups of similarly positioned players diverge, creating new opportunities
for niche players. The importance of partnerships and networks will increase for the same reasons.
Postal incumbents as specialists in their country are becoming attractive partners for international operators and integrators because they need local knowledge and dense area coverage and
can rely on the incumbent’s retail presence and its strong brand (Balance, 2007).
Reputation becomes an increasingly important factor in the selection of a logistics provider
because customers are aware of the value of efficient logistics operations in terms of customer
satisfaction, process optimisation and cost saving. The continuation of quality provision and the
corresponding reputation and brand value of “post" tends therefore to result in an opportunity
and an asset.
Although the majority of logistics operators will remain family-run SMEs, the actual development in the logistics industry will be driven by only a few major players that possess the
financial resources for heavy investments in their IT systems, their fleet and infrastructure on
the one hand and for further M&A activities on the other. Despite low barriers to entry, the
dynamics of the industry require strong financial players, something that could play into the
hands of postal incumbents with a solid financial background.
6.2.6 Threats
All experts from academia and industry interviewed agree that the internationalisation of the
logistics industry will proceed further in parallel to the globalisation of the economy. At the
minimum, customers request European solutions to their logistics problems and do not want
to deal with different providers in every country in which they require services. Providers with
an international presence and an international network (or at least access to one) will gain
advantage over small and purely national providers. This trend results in a threat for national
postal incumbents that have not yet established an international presence or network.
Although the level of activity in aggressive M&A activities seems to have slowed down, consolidation among logistics providers will continue and new players will find it increasingly difficult
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to achieve sufficient market share in order to play a significant role. This development further
increases the cost of entry in general and in particular entry by acquiring another company. This
is because, as the number of possible targets decreases, the targets will rise in value, if there are
any lucrative targets left at all.
The necessary investments in infrastructure and IT systems already covered will pose a threat
to those incumbents that do not possess the financial strengths to invest or that face political
constraints.
Price dumping and the ongoing margin squeeze are disastrous for the industry as a whole
but will particularly affect those incumbent postal operators with high fixed costs, unnecessary
overhead, process inefficiencies and inflexibility in terms of their product and service portfolio.
A similar threat arises from customer demand for specialised and tailored solutions that require
in-depth industry knowledge and process flexibility, something that postal incumbents were not
used to in the past when they could focus on bulk business, as well as on standardisation and
optimising infrastructure utilisation.
In their traditional market, postal incumbents face ongoing substitution of the letter business,
as well as full market opening and the corresponding loss of their remaining monopoly3 . Both
threats negatively affect the financial strength of the incumbent, as the fixed costs for infrastructure remain high while revenue decreases, eventually destroying margins and profits. As already
outlined, diversification into logistics requires heavy investments that, at least in an initial phase,
incumbents must be able to finance with revenues from the mail business.
6.2.7 Implications and Conclusions
The in-depth analysis of strengths, weaknesses, opportunities, and threats reveals quite a balanced picture of how resources, assets, and capabilities of postal incumbents respond to the
requirements and success factors of the logistics industry. In order to subsequently elaborate
generic strategies, we must answer the following questions:
3
See chapter 3.1 for further information on the trends and developments in the postal sector.
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1. Do postal incumbents meet the critical success factors of the logistics industry?
2. Which of the strengths are resources that create a competitive advantage (RBV view)?
As far as the critical success factors (CSF) are concerned, the picture looks as follows: network
management skills, area coverage and density, as well as brand and trust can be confirmed as
CSF. However, geographic reach in most cases only covers one country, namely the incumbent’s
home market. Area coverage as a real success factor includes also access to an international
network that enables operators to offer international solutions; something which incumbents
do not necessarily possess. Customer and industry know-how basically exists, but is based
on bulk business and basic logistics services. This know-how is clearly insufficient if industry
specific and/or customer tailored logistics solutions are envisaged to complement the incumbent’s
portfolio. An assessment of IT systems as a success factor is very much dependent upon the
specific incumbent and the logistics services he aims for. Based on the expert interviews, one must
assume quite a backlog of investments in IT infrastructure among European postal incumbents.
Meeting critical success factors is important but does only guarantee market entry and an
ability to keep up with the competitors. Based upon this prerequisite, a firm must use its
resources (resource-based view, RBV, see section 4.1.4) to establish a competitive advantage
with respect to its competitors. Such resources must be valuable, rare, imperfectly imitable and
non-substitutable. Applying these characteristics to the identified strengths, we get the following
table:
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Rare
Imperfectly
imitable
Non-substitutable
Products / Services
- Quality
- Network outreach / Geographic coverage
Valuable
Table 6.4: Incumbents’ strengths as RBV resources (own analysis)
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imitable
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Brand
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Financial Resources
- Stable cash flow from mail business
- Equity ratio
- Financial resources / Liquidity
We see that virtually all strengths are assessed as being a valuable resource for a diversification
into logistics. This does not come as a surprise as they strengths of are always valuable. The
ability to offer one-stop-shopping is not necessarily valuable as customers may not demand it, but
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it is of course not a disadvantage. Own line-hauls and fleet are certainly not valuable resources as
these services can be insourced. Experiences in M&A are helpful but nevertheless not a resource
that could create a competitive advantage. If being valuable is defined as creating value for
the customer, only quality and network density or geographic reach qualify as valuable. Most
strengths are definitely not rare resources and as such commonly found among logistics operators.
Neither are these resources difficult to procure or to build up. This is especially true for the whole
infrastructure. More and more players try to get rid of their infrastructure by outsourcing the
basic yet asset-intensive services that have long since become a commodity. Quality and close
customer contact as well as the corresponding confidence, loyalty and trusted brand are difficult
to imitate for competitors as they originate from a long history of providing postal services. The
same applies to the dense distribution and sorting network as well as the level of economies of
scale. Also soft factors like skills, quality awareness and the established, committed management
are not reproducable in the short term. Technology and the basic infrastructure, however, are
perfectly imitable. Logistics services per se are almost not substitutable; however, all products
in an incumbent’s portfolio can be substituted by the product of another provider, since the
vast majority of services are commodities. However, there are features of the service provision
like quality, network outreach, customer contacts, confidence, loyalty, and brand that are not
substitutable. The same applies to the advantages deriving from economies of scale and the
skills of the employees. Because logistics is an investment intensive business, financial resources
qualify as well as non-substitutable, although they can be obtained in different ways.
In conclusion, only the following strengths of postal incumbents qualify as resources that create
competitive advantages in the logistics industry:
• Quality of products and services
A successful strategy of an incumbent postal operator must therefore build on these resources
by exploiting them, in order to create and sustain a competitive advantage compared to other
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logistics providers. Equally important are customer contacts and accounts, the postal brand,
and international networking, because they feature all the characteristics except rarity.
To sum up, this SWOT analysis identified the relevant factors on which a postal incumbent’s
strategist must focus when planning diversification into logistics. It identified strengths and
crosschecked whether with these strengths, postal incumbents meet the critical success factors
for entering the logistics industry and establishing a competitive position. Furthermore, the
analysis assessed which of these strengths qualify as strategic resources that create sustainable
competitive advantages. Most elements, however, cannot be assessed definitively and are not
universally valid for every type of postal incumbent or strategy. We established a suitable
framework and applied it to European postal incumbents. Postal strategists should therefore be
encouraged to make use of this framework and to apply it to their company when formulating
diversification strategies.
6.3 Strategic Groups
The purpose of this section is to identify which postal incumbents are active in the logistics
market either by following a defined strategy or by some other competitive activities; then to
group those which appear to be following a similar path and further to identify the characteristics
of those groups. Taking this approach allows us to discover a firm’s strategic intent and to draw
conclusions for a group of operators instead of analysing every single operator individually.
Firstly, we introduce the concept and analyse methods and relevant dimensions for mapping
diversifying incumbents. Secondly, we apply this framework to the European postal operators
and elaborate their strategic groupings. Based on this, we then analyse the mobility barriers
between these strategic groups.
6.3.1 Methodology: The Concept of Strategic Groups
The concept of strategic groups was developed as an approach to explain differences in economic
performance of firms. As highlighted in McGee et al. (1995), many industries have enterprises
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with similar or even identical strategies. These firms compete with similar assets, strengths,
and competences and as such can be considered part of a strategic group. They often even
target the same customers. As a consequence, Porter (1980: 129) defined a strategic group as
the “group of firms in an industry following the same or a similar strategy along the strategic
dimensions”. Strategic groups mark an important step in structural analysis as they describe
and typify the strategies of all the significant competitors along a certain set of dimensions
(represented by the axes of a graph). The crux of the matter, however, is to define the correct
axes: the grouping should follow those strategic dimensions that provide an overall picture of the
firm’s position and “include those decision variables that best distinguish the business strategies
and competitive positioning of firms within an industry” (Grant, 2002: 127). The dimensions
must therefore reflect the two4 most important strategic characteristics that effectively account
for the differences within an industry. At the same time, the dimensions should not be too
correlated since that would decrease the explanatory power of the analysis. Furthermore, each
firm must unambiguously be assignable to exactly one position on the axis.
Examples of such dimensions may be the product range, geographic scope, customer focus,
distribution channels, vertical integration, specialisation, distribution channel, relationship with
parent company, type of technology, or technological leadership. The automobile industry,
for example, can be mapped in groups along the dimensions of “market segments served” and
“price/quality” (Kühn/Grünig, 2000: 134) or “geographical scope” and “product range” (Grant,
2002: 128) while the dimensions “geographical scope” and “vertical balance” are used to map
the petroleum industry (ibid.). It is important to note that there are no right or wrong dimensions for mapping strategic groups but only more or less meaningful and explanatory choices
of dimensions one wants to consider. The choice of dimensions is therefore always dependent
upon the type of conclusions one wants to draw from the analysis. Each competitor must then
be analysed along these dimensions to describe its exact position on the axes. Additionally, the
firm’s position along the dimension, respectively its position on the axis, should also be somewhat measurable to establish a ranking between them. In most cases, we will find only a limited
number of strategic groups in an industry. It is nevertheless possible that all firms belong to
the same strategic group (e.g. in polypolistic markets) or that each firm builds its own strategic
group (e.g. in oligopolistic markets).
4
Most portfolio analysis tools are restricted to two axes to allow an actual drawing on a printed page that allows
the reader to quickly grasp the essence of the portfolio.
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Firms tend to view other firms from the same group as their main competitors. Interestingly,
they generally have comparable market shares and are similarly affected by external events (e.g.
entry of a new competitor, technological innovations, changes in regulation, economic downturn). Additionally, it can be argued that a firm’s position within a strategic group influences
its actions and at the end of the day the firm’s performance, so that when taking decisions,
managers benchmark with comparable firms, namely the competitors within the same strategic
group that have a similar business model. The same applies to the valuation of the financial
performance and the setting of financial targets. Although managers want to outperform their
direct competitors, their financial targets (e.g. turnover, revenue) will be also geared to the competitors’ performance. This type of imitation is a tool to maintain the firm’s relative position
or to neutralise the strategic actions of a competitor. It is furthermore a way of risk reduction
when management is unsure whether to pursue a different strategy or to match the behaviour
of the rival. The driving force, however, is not so much the uncertain environment but more
the intention of easing the intensity of competition and/or reducing the risk of making a wrong
decision. In doing so, management sticks to its current market position, not wanting to give
ground or significantly improve their standing. This usually results in an acceptance of relative
positions, i.e. a tacit collusion.
Due to variations in the economic performance of different strategic groups, some firms will
attempt to move into another group. One can expect that, ex ante, all firms would choose to
enter the most profitable group (McGee et al., 1995). However, as with market entry barriers,
mobility barriers between these strategic groups exist that permit some groups to be persistently
more profitable than other groups. For example, if one dimension for mapping strategic groups
is the type of distribution, then access to certain distribution channels or economies of scale in
distribution can be mobility barriers preventing firms from changing their type of distribution and
therefore their shift into another strategic group. Existing players within an industry will often
face the same difficulties in entering another strategic group, as would an entirely new entrant.
These barriers then become factors impeding the ability of firms to move from one strategic group
to another, or in doing so would generate considerably high costs. Firms within a given strategic
group will be persistently more profitable if they have some competitive advantages protected by
high mobility barriers. Vice versa, one can expect that the more profitable groups are surrounded
by higher mobility barriers. Lower mobility barriers will in all probability allow imitation by
others sooner or later. Much as external events can trigger changes in the mobility barriers,
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firms will possibly abandon some strategic groups, which leads to changes in the composition of
strategic groups or even to the creation of new ones.
Mapping these strategic groups should not be confused with the segmentation of a market
because segmentation is the process of grouping an industry or a market into smaller subgroups by
the characteristics of the market. The strategic group analysis, however, uses the “characteristics
of firms as the basis for division” (Grant, 2002: 127). Market segmentation enables a firm to
optimally define its target(s) segment, its (marketing) strategy and position itself according to
this strategy. A market is usually segmented by the geographic, demographic, psychographic
and/or behavioural variables, especially if customer segments result. In some cases, the strategic
groups can be congruent to the market segmentation although this is usually an exception.
Strategic groups are not identical to generic strategies (differentiation, cost-leadership, niche; see
Porter, 1985). A strategic group may pursue one of these generic strategies but there are in
general more strategic commonalities between the firms within this group such that the generic
strategies do not reflect at all the diversity of strategic styles within an industry.
Nowadays, strategic groups are mainly used as an analytical tool to create a picture of the
types of firms within an industry rather than to make any predictions (Grant, 2002). McGee et
al. (1995) stress the importance of strategic groups to understand the ways in which firms change
their asset structures and how the industry will evolve in the future. Furthermore, Hatten/Hatten
(in: McGee et. al, 1995) suggest that this tool (1) generates information about individual firms
without aggregating, (2) allows to investigate firms concurrently and to assess the effectiveness
of their strategic actions, and (3) summarises information to make key dimensions evident.
Porter’s framework still faces some criticism due to its two-dimensional approach that probably
neglects further important dimensions. Additionally, these dimensions are defined a priori rather
than by an empirical approach. The inability of research to develop conclusive evidence either in
support or disagreement of the hypothesised relationship between strategic groups, rivalry, and
performance, adds to the scepticism of some academics. Most of these studies are data driven
and rely on clustering variables which may not correspond to the effective competitive groups.
Furthermore, the authors concentrate on well researched manufacturing industries. McGee et
al. (1995) postulate that strategy researchers should move towards studying firms which operate
in multiple businesses in order to understand complex organisations. Nowadays, the debate on
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strategic groups revolve around three areas: (1) definition of the concept, i.e., do strategic groups
really exist or are they methodological artefacts, (2) competition between strategic groups, i.e.,
do different strategic groups compete with each other, and (3) the relationship between strategic
groups and performance, i.e., are firms in one strategic group more profitable than firms in other
groups (Shah, 2005).
6.3.2 Validity in the Postal Sector and for the Research Question
It is legitimate to apply the structural analysis of strategic groups in the postal sector since the
competitive analysis done in chapter 3.2 has already outlined the existence of different types of
incumbent operators. McGee et al. (1995: 265) postulate that “strategic groups should be applied
to problems of real significance beyond classification and taxonomy” and that the focus should
rather be on complex issues like diversification. When applying the framework to diversifying
postal incumbents, we must take into account the dynamics of diversification as a strategic move.
Furthermore, we must allow for the fact that the postal operators included in these groups do
not compete directly against each other in the same market, as most incumbents are still mainly
active in their home market. In general, the method of mapping strategic groups is used to group
firms within an industry that are direct competitors in the same market. In our case, we group
firms that have a similar business model and pursue comparable strategies but that do operate
not necessarily in the same geographic market. Grant (2002: 129) supports this approach by
bringing up the fact that “members of a strategic group, though pursuing similar strategies, are
not necessarily in competition with one another”. One may argue that the industry therefore
has to be defined at least as a pan-European market to include all incumbents, but then the
incumbents still do not necessarily compete with each other, usually a fundamental characteristic
of an industry.
When mapping the strategic groups, we will focus on the criteria of similar business models and
comparable strategies. The purpose is therefore to establish a structural analysis that maps the
European postal incumbents allowing a comparison of the degree of diversification into logistics.
Having mapped the strategic groups, we are able to identify mobility barriers between them and
to develop strategies to overcome these barriers. Even if the strategic groups do not necessarily
explain differences in economic performance, the framework helps us understand the types of
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diversification strategies incumbent operators pursue and the competitive responses they will
make to changes in the industry. Herein lies the true value of this structural analysis relative
to the research question, as it allows some level of prediction of both strategic intention and
the reaction by a certain type of company to changes rather than having to analyse each firm
separately.
6.3.3 Dimensions for Mapping Postal and Logistics Operators
The general approach to identifying strategic groups is to look for similar business models and
similar combinations of strategies. This is done by observing the players in the industry and by
analysing their actual strategies as far as they can be derived from a firm’s actions. Most authors
(e.g. Porter, 1985; Grant, 2002) recommend expert interviews to elaborate relevant dimensions
and the various firms’ respective positions on them.
Table 6.5 stems from the empirical analysis of the postal reality on the one hand and on the
other hand from inputs from interview partners. It lists possible strategic dimensions that can
be used to map strategic groups of postal incumbents and potential parameter values to establish
a hierarchical order or even to quantify a firm’s position.
Table 6.5: Dimensions and parameter values for mapping strategic groups (own analysis)
Dimensions & parameters
Assessment
Financial Data
• Financial data are always a good source
because they are publicly available
and not disputable
• Turnover
• EBIT / EBIT margin
• Stock exchange capitalisation
• Unclear connection to strategic position
(positive, negative)
• Return on equity
• Only current state, not future-oriented
• Economic Value Add (EVA)
• Growth Rates
• Non-mail Revenue
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Assessment
Key Performance Indices
• Difficult to observe, measure and benchmark
• Quality
• Volumes
• Unclear connection to strategic position
(positive, negative)
• Runtimes
• Turnover per employee
• Customer satisfaction
• Employee satisfaction
• Market Share
Geography
• Easy to observe and delimitate
• Local
• Only current state, not future-oriented
• National
• Regional
• European (or other continents)
• International
• Alternative: Number of countries
Value Chain
• Difficult to measure
• Collection / Sorting / Distribution
• Not evolutionary (no order)
• Upstream vs. Downstream Activities
• Procurement vs. Production vs. Distribution Logistics
• Value Added Services
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Assessment
Product Portfolio
• Difficult to measure
• Specialisation vs. Full Range
• Not hierarchical
• 2PL / 3PL / 4PL
• Maps only the generic strategy
• Parcels, Express, Transport, Warehousing, Contract Logistics
Transport Mode
• Road
• Modal splits can not be mapped
• Rail
• Air
• Sea
Transport Speed
• Day uncertain
• Not strategic, maps only the product
portfolio
• Day certain
• Next day
• Time certain
• Same day / In-night
Weight (per consignment)
• Document (< 1 kg)
• Not strategic, maps only the product
portfolio
• Parcel (< 31.5 kg)
• Freight (< 1 ton)
• Less than Truckload (LTL)
• Full Truckload (FTL)
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Assessment
Network
• Strategic importance
• Own Network
• No clear attribution
• Single Partnerships
• Network Cooperations
Consulting firms in particular (e.g. JPMorgan, 2005; Mercer Management Consulting, 2004a;
Armstrong & Associates, 2007) often rely only on financial data to map postal or logistics
operators, as these can easily be measured and reviewed. Their portfolios normally aim at giving
an overview of the firms’ financial health to investors, financial analysts, and suchlike. However,
this kind of data describes the current success of a strategy but does not reflect the broader
conception of strategic posture and allows therefore no statements about probable strategic
moves. Although financial figures should not be neglected, a purely financial mapping would
therefore not serve to answer satisfactorily the research questions.
6.3.4 Strategic Groups of Postal and Logistics Operators
Let us now look at some mappings of strategic groups for both postal and logistics operators.
There have been countless attempts to arrange operators in groups because such an analysis and
visualisation are an important source for strategic analysis and discussion both within a firm and
from outside. These attempts all serve different purposes and therefore reflect different strategic
detail requirements and approaches. Each of the maps will therefore be presented, its concept
outlined, critically discussed, and then analysed whether it could be applied to map diversifying
postal incumbents.
The consulting firm NERA presents in its paper “Postal Business Strategies in Europe” (2005)
the typology in figure 6.3. The service range is related to the “trends towards vertical and
horizontal integration of universal service providers (...). Operators that offer the full spectrum
of mail, express and logistics services have been classified as ‘full-service firms’ ” (NERA, 2006:
50). It is however fair to challenge the position shown in the table of various so-called full-service
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Figure 6.3: Typology of postal operators (NERA, 2004: 51)
firms as, e.g., both the French and the Italian incumbent do not offer logistics services at all,
but only CEP services. This typology suggests merely that all incumbents pursue a full-service
strategy and none of them remains a specialised operator (e.g. mail). The consultants from
NERA further discuss future directions and assume that the common strategy for all incumbents
is to pursue development towards a more international operator offering the full range of services
(see NERA, 2005: 18ff.). However, there is only limited evidence for such developments in the
postal industry. Large operators that are in the eye of media and the public doubtlessly express
their intention to expand their portfolio and to pursue growth abroad. Smaller operators though,
especially in Central and Eastern Europe, focus very much on establishing lucrative positions in
the CEP market.
At first analysis, this grouping seems convenient to map the diversification of postal operators.
The service range, however, should be broken down into more specific types of services. The
unambiguous assignment of operators to such categories remains difficult. If for example the
differentiation between mail, express, parcels and logistics is made as an ascending order, it
becomes difficult to assign a postal operator that provides mail and parcels, but not express.
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The consultants from Ecorys (2005: 113, no graphic) analyse business models of competing
postal operators and discover that they differ from each other in a number of ways, such as
1) ownership, 2) focus of activities, 3) scope of activities, and 4) development of a delivery
network. While the ownership does not explain strategic differences between incumbents and
all of them have their own delivery network, the focus and the scope of activities are congruent
to the attributes used by NERA. As far as incumbent postal operators are concerned, Ecorys
differentiates only between those operators following a national, a regional, a pan-European, or
a global strategy.
A more generic approach is used by the International Postal Corporation (IPC, 2006: 25),
which postulates a general trend towards globalisation and industry diversification, namely from
heavy assets to light assets. However, the X-axis suggests a kind of evolution or ascending order
so that for example e-services seem to be “better” than just mail and parcels. Incumbents in the
lower left corner would then be inferior to incumbents in the upper right corner. Even expressing
the extension of these services over time seems to be wrong, as some incumbents (e.g. Finland
and Denmark) first provided e-services as an alternative to the traditional letter mail before
starting to offer logistics services. Moreover, IPC gives no explanation as to what it subsumes
under logistics and where the differences to freight forwarding lie.
Figure 6.4: Diversification of postal operators (IPC, 2006: 25)
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WIK, another consulting firm, offers an alternative positioning of postal operators, namely
along the dimensions of weight per consignment and transport speed (WIK, 2006: 156). Although the aim of their map is segmentation and does not focus on building strategic groups,
it nevertheless provides a valuable approach for our purpose. As mentioned above, firms often
align their strategies to market segments in which strategic groups can be shown following market
segmentation.
Figure 6.5: Positioning of European parcel and express service providers (WIK, 2006: 156)
When we turn our attention to the grouping of logistics operators, we can observe a similar
situation with a variety of different maps. Heijveld/Bindels (2003) propose mapping along the
two dimensions of “contract logistics specialisation” and “geographic coverage”. They estimate
that nearly 40% of logistics providers are in the upper right segment of high geographic coverage
and logistics specialisation, while 33% choose a high logistics concentration and a low geographic
coverage. At the same time, Heijveld/Bindels found a general trend towards a higher logistics
specialisation and a higher geographic coverage. The combination of a low focus on logistics
specialisation and low geographic coverage does not appear at all. Unfortunately, the authors do
not provide an explanation as to which criteria a provider has to meet to be included in the map.
One can only guess that it is a minimum level of turnover otherwise a lot of smaller logistics
providers would appear in the lower left corner.
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Figure 6.6: Strategies of leading European logistics providers (Heijveld/Bindels, 2003: 60)
Lundberg/Schönström (2002) use a traditional way of mapping strategic groups among third
party logistics providers along axes that represent the product related and service related requirements of customers. The axes show also the existence of different levels of complexity. Services,
in their terms, are activities that add value, but not by handling or refining the basic product.
Consumer goods (segment 1) consist mainly of outbound logistics with low complexity and low
value products, but large sales volumes. It is neither possible nor worth refining these products.
The authors expect this segment to potentially develop and grow on both axes, but mainly in
service related activities. Firms that provide industrial goods (segment 2) are mainly active in
B2B, and focus strongly on inbound logistics and require further service related activities from
a logistics provider. Unlike these two segments, capital goods segment (segment 3) is characterised by a high level of complexity and high value leading to high product related requirements.
Logistics is here often contemplated as a way of differentiation rather than as a cost factor.
Although Lundberg/Schönström aimed at providing a segmentation of third party logistics
providers, their mapping also provides an interesting approach for building strategic groups.
They differentiate between product dimension and service dimension, an approach that is also
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reflected in the trends of the logistics industry (see chapter 5.5) where we pointed out that logistics
develops from mere transport (“product”) towards more integrated supply chain management
solutions (“services” around the product). Today’s logistics operators can therefore strategically
be differentiated by the degree of product range and service range they offer.
Figure 6.7: Strategic groups of third party logistics providers (Lundberg/Schönström, 2002: 65)
Another promising approach is provided by Halldorsson/Skjøtt-Larsen (2004) who use three
dimensions, although competences and asset specificity are correlated. They, too, establish an
evolution from pure market exchange (delivery from A to B) towards more integrated logistics
solutions. Parallel to this evolution, both the required competences and necessary assets increase.
One may criticise that this mapping along a competence perspective is difficult because, again,
this is a general trend in the industry and firms are not just active in one of these groups. However,
strategic groups could be mapped by dividing operators by how well they have already adapted
to this trend. The correlation between competence and asset specificity is more problematic
because one can observe a certain trend towards non-asset-based but high skill operators. They
offer logistics services without actually relying on own assets such as lorries or warehouses but by
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investing heavily in supply chain management and industry know-how. It is therefore appropriate
to question the correlation between competence and asset specificity.
Figure 6.8: Logistics providers in a competence perspective (Halldorsson/Skjøtt-Larsen, 2004:
199)
The last approach of differentiating logistics operators by their strategy is provided by Berglund
et al. (1999) who use the following dimensions: service vs. solution and basic logistics vs. valueadded solutions. These strategic groups reflect the differentiation between basic offerings like
transport and warehousing and more sophisticated integrated solutions of supply chain management. However, the authors provide the arguments themselves as to why it is not possible to
attribute firms to a single group: “The survey results indicate that a reasonably clear differentiation of strategies in the (...) industry is emerging”, but “that almost all companies carry out
activities in all four segments” (Berglund et al., 1999: 63f).
6.3.5 Assessment and Implications
All of these mappings reflect a variety of different approaches being used to construct strategic
groups and obviously each has their advantages and limitations. Like all strategic analyses,
they were built for a certain purpose, e.g. to prove a hypothesis, a trend or to identify findings
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Table 6.6: Strategic segmentation by mission statements of logistics provider (Berglund et al.,
1999: 63)
Value-added logistics
Basic logistics
Service
Value leader in global integrated logistics services
Supporting companies in being
more competitive by using our services
Solution
Provide consultative logistics solutions
Provide complex 3PL solutions
which could usefully be transferred to other firms and therefore to create generalised statements.
Much criticism derives from the fact that the specific parameter value of an operator may not
be directly measurable but somehow determined arbitrarily. In most cases, the authors aimed
at market segmentation without actually conducting a strategic analysis that accompanies this
technique. Interestingly, mobility barriers between strategic groups were almost consistently
neglected although they are an integral part of Porter’s framework.
As far as the literature research has shown, there does not yet exist a strategic grouping that
focuses only on the logistics strategies of postal operators. The existing mappings of logistics
providers of course include the two leading postal incumbents DPWN and TNT, but smaller
incumbents like the Norwegian, the Finnish or the Swiss incumbent are neglected. Both NERA
(see Figure 6.3) and IPC (see Figure 6.4) integrate diversification in general and logistics in
particular into their analyses. However, NERA remains too undifferentiated to usefully be able
to deduce statements about different levels of diversification into logistics. IPC only provides
the framework without including actual incumbents. The next chapter will therefore elaborate
a framework in order to map strategic groups of postal incumbents that are diversified or plan
to diversify into logistics, in order to analyse mobility barriers and to support further strategic
analysis.
6.3.6 Strategic Groups of Diversified Postal Incumbents
Similar to the general characteristics of mapping strategic groups, the new framework must meet
the following requirements:
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1. Mapping postal incumbents by displaying their level of diversification into logistics
2. Comparing various levels of diversification into logistics
3. Identifying trends among and between different diversification strategies
4. Identifying mobility barriers between strategic groups
As mentioned earlier, strategies are seldom disclosed and determining the strategy of a particular firm can prove difficult. The individuals interviewed were therefore firstly asked whether they
observe different diversification strategies and, secondly, how these types of strategies differ. This
question aimed at elaborating the relevant dimensions for creating a framework to map strategic
groups. All interviewees agreed that, for postal incumbents, the most important dimension that
defines their differences is the investment made in geographic expansion respectively the level of
international engagement. As consistently shown so far in this thesis, internationalisation is both
a driving factor in both the postal and logistics industries, but also an increasingly important
element of the operators’ strategies. Not surprisingly, the group mappings presented earlier in
this chapter also used geographic expansion as a relevant dimension. The other dimensions proposed by the experts interviewed were less coherent: the product range and the service portfolio
were often mentioned as major elements of the incumbents’ strategies. However, a first attempt
to group postal incumbents based on their offerings revealed the following difficulty: there are
literally no two incumbents that offer the same range of logistics products, and aggregating products on a common but higher level makes no sense as the map would lose its explanatory power.
The type of organisation, how the logistics business unit is run and integrated in the parent
company was equally often suggested as a parameter: it obviously makes a difference whether
an incumbent just adds logistics services to its existing portfolio or whether logistics is seen
as own operational business unit and marketed as a separate brand. This dimension seems to
give evidence for management’s intended position and goals for the logistics market. Specifically
interviewees from consulting firms proposed financial figures as a differentiating characteristic.
The percentage of turnover or profit that is not earned in the letter business is a useful variable
to rank incumbents, as this parameter is applicable to every incumbent and can be objectively
measured.
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In order to map a portfolio of strategic groups among postal incumbents with the explanatory
power to identify, compare and discuss their respective level of diversification into logistics, these
are therefore three potential dimensions (see 6.7): geography, positioning of logistics business,
and turnover / EBIT.
Table 6.7: Dimensions for mapping diversified postal incumbents (own analysis)
Dimensions
Geography
Parameters
• National
Pros and cons
• Easy to observe
• Regional
• European
• International
Positioning
business
of
logistics
• Addition to core business
• Evidence for future plans
• Strong separation
mail business
• Not necessary correlated
to the degree of diversification
• Logistics as own business
unit
from
• Easy to observe
• Probably difficult to delimitate
Turnover / EBIT
• Turnover/EBIT in the logistics market
• Percentage
of
turnover/EBIT stemming from the logistics
business
• Ratio between core business
and
logistics
business
• Financial data are always
a good source because
they are publicly available and not disputable
• Unclear connection to diversification (positive,
negative)
• Only current state, not
future-oriented
Strategic Groups: Positioning of the Logistics Business
With the positioning of the logistics business on the x-axis and the geographic reach as the
dependent variable on the y-axis, we can map the strategic groups from a marketing perspective.
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The map identifies the market appearance and the geographic coverage of the postal incumbents.
Three types of positioning can be distinguished:
1. Addition to core business: core business describes both letter as well as CEP services until
the maximum parcel weight (circa 31.5kg). The incumbent adds logistics services around
its offerings without creating a separate brand or actively positioning itself as a logistics
provider.
2. Logistics business unit: the incumbent establishes a separate business unit for its logistics
operations and equips it with own resources and stand alone strategy. The brand is often
based on the original brand and the business units share some resources and/or corporate
services.
3. Strong independence: although the logistics business is legally and economically part of
the group, the business unit is completely independent from the core business.
Figure 6.9: Strategic groups of postal incumbents offering logistics services (own analysis)
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Several incumbents operate only on a national level while another group of incumbents is
active on a regional level. Those active on a national level mostly add logistics operations
to their core business. This not un-common strategy is driven by customers’ demands for a
broader service portfolio and by the firm’s desire to have prospective synergies with the existing
business. It is therefore neither necessary to separate these operations from the core business
nor to introduce a new brand. Swiss Post, as an exception, created a separate business unit
for its logistics services (including parcels and express) under the new but closely related brand
“PostLogistics”. Practically all incumbents operating on a regional level position their logistics
service as a separate offering, often under their own brand. For example, Finland Post introduced
“Itella” as brand to market all its services for business customers, especially logistics and IT.
Norway Post offers its logistics services under various brands: “CarryOn” (international logistics),
“Nor-Cargo” (cargo transports), and “BOX” (international express). This specific approach can
be explained by the fact that these diversifications were carried out by way of acquiring logistics
companies. Instead of integrating them under the traditional brand, the logistics brand already
established is continued or a new brand created for all acquisitions.
The same applies to DHL (and in the past also TNT), which bought strong internationally
active logistics operators, took over their brands and subsumed their own logistics operations
under the acquired brand. This makes sense, as both acquired firms (DHL and TNT in this case)
had very powerful logistics brands with a worldwide reputation, while their traditional brand
was attributed to postal services and had no supra-national recognition. The two dominant
incumbents have separated their logistics business completely from their mail business and run
these units independently from the rest of the group. This is due to the fact that their letter
business is still largely tied to their home market while they have become global players in terms
of logistics. Both operators had therefore to adjust their positioning in order to be successful in
the global market.
There is apparently a certain correlation between these two dimensions: higher internationalisation goes along with a stronger separation of the logistics business from the core business.
Probable reasons have already been given above. Moreover, synergies are more difficult to achieve
between a national letter business and an international logistics business. This fact was also
identified in the context of the critical success factors (chapter 6.1) and the SWOT analysis
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(chapter 6.2). If both businesses are operated nationally, the potential for synergies is higher
and a close management of both units advantageous.
Let us now look at the mobility barriers between these groups: diversifying into logistics was
used as a way to internationalise business while the letter business remained mainly national, due
to various regulations both in the home as well as in potential target markets. In the future, an
incumbent may first expand geographically with its core business and continue to offer logistics
services simply as an addition to it. Such incumbents would then form a new group in the upper
left corner. However, this vertical mobility requires heavy investments, mainly for the purpose
of acquiring logistics operators that provide the necessary infrastructure and market share to
internationalise an incumbent’s logistics business. Furthermore, incumbents also face political
restrictions when it comes to entering foreign markets. The horizontal mobility barriers are much
lower as this strategic move basically requires only internal changes and the normal effort required
to enter a new market. The interviewees therefore expect as the higher priority option to see more
separated and independent logistics businesses and only expect cautious internationalisation as
a second option.
Strategic Groups: Logistics Turnover from Total Turnover
The percentage of total turnover or EBIT stemming from the logistics business is the other
significant dimension to map diversification strategies: incumbents with a high percentage are
generally longer/more active, more experienced, as well as better established in the field of
logistics. Let us again look at the revenue distribution5 of European postal incumbents, but only
the ones that have diversified into logistics:
The value of logistic services as a percentage of total turnovers is now used as a source for
strategic groups:
• Already diversified into logistics
– Sub-group (> 15%)
5
The complete table can be found in chapter 4.2.4.
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Table 6.8: Revenue distribution of European postal incumbents (in %)
Country
Company
Mail
Germany
Switzerland
Norway
Finland
France
Sweden
Austria
United Kingdom
Denmark
DPWN
Die Post
Posten Norge
Posti
La Poste
Posten AB
Royal Mail
Post Denmark
19.9%
28.8%
44.4%
52.9%
56.3%
68.1%
75.5%
75.7%
79.4%
Revenue distribution 2006 (in %)
Services
25.7%
34.0%
14.3%
12.9%
14.8%
16.0%
26.0%
33.3%
14.6%
6.2%
22.8%
31.8%
13.1%
14.9%
14.3%
Other
6.1%
43.4%
13.6%
13.9%
0.2%
0.1%
11.4%
9.3%
6.3%
Sources: Annual reports 2006
– Sub-group (10 - 15%)
• On the verge of diversifying (< 10%)
If we group the postal incumbents along this dimension together with the geographic expansion
as the dependent variable, the map looks as follows: we detect four very similar groups to the
first map (figure 6.9), again with DHL as a group of its own6 in the upper right corner and a
group consisting of Nordic postal operators on the right hand side of the map. This regional
level seems to be very lucrative for doing logistics businesses. We did not find an incumbent on
an international or European level with a low turnover percentage from logistics. This may be
due to economies of scale and scope, so that any geographical expansion must be carried out by
full market entry in order to quickly build up a relevant market position and thus market share.
One may identify a certain correlation between high percentage and higher internationalisation
and hypothesise that an incumbent will never gain more than circa 15% of its total turnover from
logistics if it is only active in its home market. The turnover from the national letter business
remains high relative to the business generated by diversification into logistics. In terms of
turnover on the national level, the incumbent will therefore never manage to compensate for its
6
TNT recently sold its contract business and would have also appeared in this strategic group
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Figure 6.10: Strategic groups of postal incumbents offering logistics services (2)
dependency on the mail business by diversifying into logistics. In the same time, a decrease in
the core business (letters and parcels) will increase the logistics share of total turnover.
It is important to note that turnover figures should not be overestimated although they are
useful for our purpose because they are accessible and objectively measurable. However, logistics
(and especially international logistics) is a booster for turnover, but not necessary for margins.
We have already seen that the logistics business is a low margin business. So a high percentage of
logistics turnover does not necessary imply a profitable position. Unfortunately, most incumbents
do not publish the profit figures of their business units, so mapping along the dimension of
profitability is not possible.
As far as the mobility barriers are concerned, a horizontal move into another strategic group
requires a substantial increase in logistics turnover. An incumbent with 2% turnover from logistics, for example, must more than quintuple its logistics turnover to enter the group of operators
with more than 10% turnover. Any strategic moves are therefore expected to be vertical first,
before turning horizontal.
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6.3.7 Conclusions
This section has introduced the concept of strategic groups and presented existing mappings
of incumbent postal operators and logistics providers. It outlined the considerations behind
these mappings, their explanatory power, and possible criticisms. Based on the responses from
interviewees, we defined a framework to map strategic groups of postal incumbents that have
diversified into logistics. The first map uses the positioning of the logistics business unit and
the geographic expansion as the two relevant dimensions. The second map groups the incumbents according to the percentage of logistics turnover from total turnover and their geographic
expansion. Both maps show comparable groups with DHL as the only global player, which
also operates its logistics businesses completely independently from the core business. Another
strategic group includes mainly Nordic postal incumbents that operate on a regional level (the
Nordics) through an independent logistics business unit and also generating more than 15% of
their turnover from logistics. Smaller, nationally operating incumbents often add logistics around
their core services (mainly letters) whereby the turnover from logistics accounts for 10-15% of
total company turnover. The mobility barrier to position logistics services as a stand alone,
independent business is small, as this concerns only internal structures. However, increasing the
share of logistics turnover as well as geographic expansion requires heavy investments, almost invariably through acquisitions. The strategic groups identified can therefore be assessed as being
rather stable and, therefore, fundamental changes are not to be expected.
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This final chapter synthesises the preceding work. It is based on conclusions from the strategic
analyses and therefore provides a set of generic strategies that European postal incumbents can
apply in order to diversify into logistics.
This dissertation began with a competitive analysis of postal incumbents in Europe and identified diversification as a driving force for an evolving business strategy. It continued by studying
diversification as a theoretical concept and applied it to the postal sector in order to identify
areas of diversification. The logistics industry was presented as an important field of diversification: its forces, market size as well as trends and developments were subsequently analysed.
The next part of the dissertation carried out a number of strategic analyses with a focus on
postal incumbents diversifying into logistics. Firstly, it identified strategic success factors and,
secondly, carried out a SWOT analysis. Thirdly, a mapping of the strategic groups of postal
incumbents in the logistics industry was done. This brought together all the elements necessary
to explore potential strategies for European postal incumbents that intend to diversify, are on the
verge of diversifying or have already diversified into logistics and want to advance their strategic
activities. The objective of this chapter is to draw conclusions from the preceding work and,
as output, to come up with a set of generic strategies. This set anticipates the development of
the market and proposes possible strategic development initiatives and therefore reflects on the
future of postal incumbents as players in the logistics industry.
Because strategies are not built on green fields, we always need to take into account the historical background of the organisation, and in particular for postal incumbents their background as
government organisation and monopolistic businesses. It is therefore not the aim (nor is it even
possible) to develop specific strategies for a certain incumbent, as this would require in-depth
knowledge of the individual corporate strategy, as well as an insight into the resources available.
This information is something that no firm will disclose to external persons. In addition, this
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dissertation is the first of its kind with a focus specifically on the postal operators’ diversification into logistics. As such it has to remain somehow non-specific but nonetheless capable of
providing a framework for specific strategic work, both by academia and by internal company
strategists.
Even if all the necessary information were available and we had insight into one firm’s strategies,
there would be no such thing as “the” right strategy. Collis/Montgomery (2005: 10) go even
further by saying that “there is not even a taxonomy of a limited number of generic corporate
strategies that can be identified as leading to success” because every firm has a unique set of
assets (resource-based view) and must therefore find its own way on how, where and when it
wants to compete within its chosen industry. Furthermore, at the firm level, the choice of a
specific strategy from a possible set is influenced by many different factors, including economic
trends, political restrictions, financial restraints, other diverging business strategies, managers’
personal goals, and others.
As a consequence, no checklist or framework exists indicating which key elements must be
addressed in a strategy. A firm’s strategy documents are generally grown historically and do not
necessarily cover every factor that would be considered strategic. There is of course an abundance
of frameworks for analysing strategic situations and each newly discovered phenomenon provokes
a set of new frameworks to help analyse a particular set of strategic choices. However, following
Hambrick/Frederickson (2005: 51), neither scholars nor consultants are able, to provide “any
guidance as to what the product of these tools should be – or what actually constitutes a
strategy”. Strategy has become the label for both strategic plans as a tool for management, but
also the sum of strategy analysis tools. Many strategies nowadays are therefore nothing more
then an aggregation of strategic analyses and conclusions. Every new measure or initiative is then
labelled strategy, creating more confusion than helping managers to take decisions. Kühn/Grünig
(2000) therefore propose differentiating between an intended strategy (as a management tool)
and the implemented strategy (as the sum of conclusions from the set of strategic analyses).
These two types of strategy can be either congruent or differing, e.g. through an adjustment
of the strategy because of a change in the economic environment. In a third case, no intended
strategy exists and the realised strategy is in fact an emergent strategy resulting from the sum
of a variety of more or less consistent individual decisions.
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A strategy “consists of an integrated set of choices, but it isn’t a catchall for every important
choice an executive faces” (Hambrick/Frederickson, 2005: 52). So what are the key elements of
a strategy? Grant (2002: 11) names four factors conducive to a successful strategy: 1) longterm, simple, and agreed objectives, 2) profound understanding of the competitive environment,
3) objective appraisal of resources, and finally, 4) effective implementation. A “(...) corporate
strategy is a consistent set of five elements that together as a system lead to a corporate advantage
that creates economic value (...)” (Collis/Montgomery, 2005: 10). These five elements, following
Collis/Montgomery, are 1) the vision, 2) goals and objectives, 3) resources, 4) businesses, and
5) organisation. Goals and objectives describe short- and medium-term quantitative targets
(e.g. aspired turnover in the next three years) plus qualitative intentions (e.g. being the most
innovative player). The resources of the strategy can be considered to be all the assets, skills
and capabilities a firm possesses or has to build up or acquire. “Businesses” consist of the
selection of an industry and the choice of a specific competitive strategy to be pursued. However,
Hambrick/Frederickson (2005) argue that visions, missions as well as objectives stand apart from
strategy and just guide it. The strategy is then “the central, integrated, externally orientated
concept of how [the firm] will achieve [its] objectives” and in this way provides answers to the
following five questions (Hambrick/Frederickson, 2005: 52f.):
1. Arenas: where will the firm be active?
2. Vehicles: how will the firm get there?
3. Differentiators: how will the firm win in the marketplace?
4. Staging: what will be the firm’s speed and sequence of moves?
5. Economic logic: how will the firm obtain its returns?
Arenas define the business(es) that the firm will be in and should be as specific as possible
about product categories, market segments, and geographic areas, but also e.g. about technology,
manufacturing, distribution, partners, and outsourcing. When more than one business is chosen,
the strategy must also indicate how much emphasis will be placed on each. Vehicles are the
result of the strategic choice of how the firm will get from its starting point to the chosen
arena. This element can often be equated with the growth strategy and the question of whether
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the firm should rely on organic, internal product development or choose other vehicles such as
acquisitions, joint ventures or maybe licensing. Winning in the marketplace is then the result of
creating differentiators. This must not be one single differentiator, but more often than not just
the best combination of differentiators. A firm must therefore not necessarily have the cheapest
or the best products, but maybe the best value/price-ratio. If the management fails however
to clearly define the differentiators, the firm will eventually be doomed because it is unable
to differentiate itself from the competitors. It will eventually fall into a "stuck-in-the-middle
position" because it tries (but will not achieve) to simultaneously surpass competitors on too
many levels. Without clear differentiators, the firm also runs the risk of trying to fulfil every
customer request and thereby loses control over its costs. Furthermore, a firm cannot pursue all
strategic initiatives on all fronts at all times and must therefore chose the staging respectively
the sequence of these initiatives. The reasons behind staging are limited resources, different
priorities, credibility, and early wins. Strategic staging can be applied to maps of strategic
groups by defining which move on which axis comes first. Last but not least and rather at the
heart of every strategy is the economic logic that shows how the firm generates profits above its
cost of capital. It can either explain why the firm is able to successfully receive higher prices
from customers or why it is able to produce at relatively lower cost. Again, the economic logic
must be rooted in the firm’s unique assets and resources.
As a matter of fact, we encounter two different strategy concepts in the literature (see e.g.
Hofer/Schendel, 1978: 16ff., in: Kühn/Grünig, 2000: 33): one uses an all encompassing, broad
definition of strategy that includes the topmost goals and objectives as well as targets and
resources needed to achieve and secure them. Proponents of a more narrow definition of strategy
argue that the topmost goals and objectives are superordinate to strategy and that the real
strategy consists only of specific targets and resources. Note that in the tradition of normative
business administration studies, we see that the topmost goals are primarily subjective, while
the way of achieving these goals should be based on objective analyses. This narrower definition
of strategy serves us better for the purpose of elaborating a framework of generic strategies for
postal incumbents that plan to diversify into logistics. Furthermore, the diversification strategy
should support the topmost goals and not in the first instance require additional superordinate
goals and objectives. As mentioned above, it is also not the aim of this dissertation to propose a
vision or mission statement or even specific objectives for individual firms as this would require
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both an in-depth knowledge of the firm as well as the specific application of all strategic analyses
carried out for the firm.
We make use of the narrow definition of strategy and see strategy as an integrated set of
choices following the framework proposed by Hambrick/Fredrickson (2005). Figure 7.1 describes
their understanding of strategy as being guided by the mission and objectives of the firm as well
as the result of various strategic analyses. The strategy therefore becomes the output of the
subjective-internal and the objective-external inputs.
Figure 7.1: Putting strategy in its place (following Hambrick/Fredrickson, 2005: 53)
The chapter is organised as follows: firstly, a general assessment of diversification into logistics as a strategic move for postal incumbents is made. This summary of all strategic analyses
is necessary in order to build a common framework around the different types of strategies.
Secondly, generic strategies1 are identified and outlined, following the five dimensions of Hambrick/Fredrickson, namely arenas, vehicles, differentiators, staging, and economic logic. The
focus, however, will be on arenas, differentiators and economic logic, meaning highlighting where
1
The term “generic strategies” is closely linked to Porter’s concept (1980) that differentiates between the following
types of generic strategies: differentiation strategy, cost leadership and segmentation strategy. We will therefore
use the term “types of strategies” to describe generic strategies in order to avoid confusion.
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postal incumbents should be active (geographic outreach and portfolio) and how should they
differentiate themselves from traditional logistics providers. Vehicles and staging depend very
much on the starting point of the individual postal incumbent and cannot be answered in a
general way. Examples of potential postal incumbents capable of pursuing this type of strategy
are then identified. Thirdly, we point out today’s gaps between the current situation and the
strategically desirable positions, as well as possible actions and how to implement them for each
type of strategy. The chapter closes, fourthly, with selected functional strategies, namely growth
strategy, brand strategy, and recommendations for organisation and ownership.
7.1 Assessment of Diversification into Logistics
Before immersing ourselves in specific diversification strategies, we must first assess diversification into logistics by summarising all the strategic analyses of the preceding chapters. With this
in mind, we can then elaborate effective strategies that take into account the various aspects,
analyses, and their conclusions. This section is an aggregation of the whole work so far, enriched with statements and opinions of experts in order to introduce answers to the question
of what postal incumbents should take with them from this dissertation when they formulate
their strategies and what categories of strategies the author recommends for a diversification
into logistics. Our considerations are therefore based on critical success factors (chapter 6.1), the
SWOT analysis (chapter 6.2), as well as the mapping of strategic groups (chapter 6.3). We also
include a selection of goals to be pursued with diversification; this was the subject of chapter 4.2
on diversification in the postal sector. This step is, however, not a repetition of the strategic
analyses, but draws conclusions as to how they influence the process of mapping out strategies.
We saw above that the chosen industry (as the “arena”) of the diversification must be attractive, that the postal incumbent must be better off than traditional logistics providers (the
“differentiators”), and that market entry should not capitalise future profits (Porter’s essential
tests). The logistics industry is an attractive field for diversification for postal incumbents because the business model is similar to the postal business and is, due to this, also understandable.
Furthermore, logistics is an adjacent industry to the incumbents’ core business. Postal operators
therefore see the potential for synergies that would create for them a sustainable competitive
advantage over traditional logistics providers. When choosing the target industry into which to
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diversify, it is essential that the industry is still accessible. So another motivation for diversification into logistics might be the fact that the logistics industry is an arena where entry is still an
option. A postal operator would not dream of moving into the international express industry,
one that is highly competitive and dominated by four big players (UPS, FedEx, DHL, TNT),
and therefore relatively stable with virtually no acquisition opportunities left. Logistics, on the
other hand, is still an industry where it is very easy to move into because there are hundreds of
firms still active in this highly fragmented market. This, for example, was also the main reason
why TNT moved into logistics, since the management was convinced that, with growth and acquisitions, TNT could become number one in that industry (see interview #7). Another reason
might be that - for most postal operators - the margins in logistics may seem attractive compared
to the margins they can achieve in the highly standardised mail business. Mail volumes decrease
and incumbents lose market share while fixed costs remain high which eventually results in a
massive margin squeeze. Contract logistics, on the other hand, is a business priced according
to the “cost-plus principle”, where price is determined by the sum of the occurring costs plus an
attractive margin.
So then we must ask what the ambition of the postal incumbent in the logistics market should
be. Here we can distinguish basically between two different levels of ambition: 1) either the
operator aims at taking up a leading position in the chosen industry/segments, or 2) he considers
the diversification into logistics as a complement to his core business. Large operators will
normally try to become the regional or even global market leader. Naturally, representatives
from these large operators as well as consultants argue that it is not attractive to diversify
into an industry or segment where it is not possible to become one of the top 5 players (see, e.g.
interview #1). An incumbent should therefore not diversify into 4-5 businesses and there become
just one of twenty or more operators. Smaller, predominantly nationally oriented operators
however argue that their logistics offerings serve only as a complement to their traditional postal
business. In these cases, diversification is primarily customer-driven and the strategy does not
necessarily include an active and ambitious role as a logistics provider. Swiss Post, as an example,
introduced its brand “PostLogistics” under which it offers all its logistics services from parcels, to
express and full truckloads and aims at becoming the leading logistics provider in Switzerland.
In terms of revenue, the new logistics services account for only approx. 10% of total revenue.
The share might increase to 20-25% but it will never be the objective to realise more turnover
with logistics services than in their core business (see interview #11).
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Regardless which level a postal incumbent pursues his strategic ambition, his strategy must
build on exploiting strengths and to overcome existing weaknesses. We identified the following
strengths of postal incumbents that qualify as resources that create competitive advantages in
the logistics industry (see chapter 6.2.7):
• Quality of products and services
When choosing the arena for competition, postal incumbents must assess their position and
be clear as to how they can best utilise their strengths. As a consequence, it seems advisable
to focus on quality-driven services which are of higher value to customers. There is no use in
offering basic logistics services that are already a pure commodity such as cargo transportation
and warehousing. These services should be bought in from independent operators. In this way,
the postal operator can profit from lower prices due to fierce competition and does not have
the responsibility of capacity utilisation nor the workforce on its payroll. He can furthermore
invest resources in the development of value-added services instead of building up low return
assets themselves or acquiring asset based firms. At the same time, postal operators wishing to
diversify must aim at large volumes contracts. Such contracts provide a better fit with the core
business model, guarantee a better utilisation rate of infrastructure and personnel and enable the
operator to achieve economies of scale. Due to its history and today’s setup, a postal incumbent is
not preordained to compete with small logistics operators that focus on specific niches by offering
very specialised services. Quite to the contrary, a postal incumbent must envisage offerings for
customer segments and/or industries whose needs can best be served with scalable standard
services, customised to the specific needs of the customer/industry.
By exploiting resource-based strengths and realising synergy effects, the postal incumbent will
eventually be “better off” than a traditional logistics provider and thereby be able to establish an
interesting and successful position within the market. The major connection between the postal
core business and new logistics services will also result from these considerations. However, the
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question about the specific strengths and synergy effects has to be answered on an individual
basis for each postal operator. Most incumbents will find leverage opportunities within the traditional cross-departmental functions that can be shared (see, e.g., interview #11), such as product
management, marketing, communication, sales, and information technology. The experts interviewed agree though that most synergies are primarily qualitative and do not therefore bring a
direct pay back. Synergies can however be used to better serve customers resulting in the end
in higher customer satisfaction and customer retention and therefore in higher profits.
A diversified postal operator automatically offers some level of “one-stop-shopping” by adding
new services to existing ones so that the customer does not need an additional provider for
the other products/services. It is however questionable as to what extent one-stop-shopping
is really a customer requirement. If the avoidable transaction costs occurred in dealing with
several suppliers are sufficiently high, there may be a pull from the customer’s side for onestop-shopping. In accordance with a published survey (DVZ, 2005), the two main goals of
outsourcing logistics operations from a customer’s perspective are those of retaining independence
and cost saving. 75% of the firms that collaborate with more than one logistics partner named
independence as the main reason for this strategy. Only 40% of firms aim at collaborating with
only one logistics partner. Cost saving is still the main reason (62%) for outsourcing logistics
operations. As a consequence, the price (85%) and the reliability (92%) are the main criteria when
choosing a logistics partner. Customers themselves try to diversify their risk of depending on one
provider and additionally try to save money by choosing the cheapest provider. Furthermore,
the diversified player cannot cross-subsidise all its businesses, so there has to be at least one
business where he must earn money. This creates a point of vulnerability and tends to open
opportunities for smaller and more specialised competitors that are focused on a single segment
or industry. One-stop-shopping also harbours the danger of adding too many offerings in order to
serve all customer needs. As a result, both standardisation and economies of scale may decrease
and the incumbent runs the risk of dissipating resources. The incumbent’s management must
therefore balance the degree of extending the portfolio (product diversification) against the focus
on standardisation and economies of scale.
The same applies to the geographic extension of business (geographic diversification). Coming
from a small or restricted home market where there are clear limits to growth, incumbents try to
establish businesses in their neighbour country. Both the international and foreign domestic mail
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markets look very promising (see, e.g., interview #1), because these markets are only now in the
process of being liberalised and consolidation is not yet well advanced, thus creating opportunities
for fast-moving and innovative new entrants. This research takes product diversification as given
and in this chapter attempts to answer the question of finding the optimal level of geographic
diversification. The market itself or the customer need tend to strongly influence the level of
geographic extension: air and sea logistics must be operated internationally, while express is
often a European business. Parcels, on the other hand, are also a European business that can be
operated nationally (see interviews #1 and #6). This does not necessarily mean that the postal
incumbent must operate an international or European network itself. It does however mean that
the market and customer demand obey international rules and dynamics. Most experts agree
that logistics is not a business that can be operated within national borders because logistics
depends upon economic conditions and the subsequent flow of goods. So it is tempting to suggest
that a successful logistics provider must have a global platform. And this certainly helps growth
and convinces customers that a provider can show he operates worldwide. However, the truth of
the matter is that 80 or 90% of the logistics business is still domestic (depending on the specific
region and measurement; see interview #7).
In conclusion, there is certainly no point in reverting to strategies pursued back in 1995 when
DPWN and TNT took a strategic decision to diversify into logistics and made large acquisitions
to enter the market on a major scale. Today’s diversification strategies must focus on new
growth opportunities, new offerings, and probably new markets. It is certainly reasonable to
decrease dependency on mail business by opening new and sustainable revenue streams. These
diversifications must however imperatively focus on exploiting resource-based assets and synergies
in order to create a competitive advantage. Whether or not the much lauded “one-stop-shopping”
is the right strategy should be of secondary concern, because the main objective is to offer
products and services that fulfil customers’ needs.
Another interesting topic, that came up during the interviews and must be analysed before
formulating strategies, deals with the type of generic strategy that should be followed regarding
diversification into the logistics sector. In order to maximise synergies, postal incumbents will
need to closely link new logistics services to their existing parcels or maybe express services.
These services are highly standardised in order to optimise operations, which, in end effect,
should maximise margins. Commodity logistics services like transportation and warehousing are
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as well a bulk business and have price as the main decision criteria wherefore operators strive
for a maximum of standardisation. This is especially true for sea and air transportation. These
business areas, however, are not at all interesting because margins are minimal and there are too
many players with better cost structures than a postal incumbent. As far as value-added services
and contract logistics as the more lucrative segments are concerned, tailor-made solutions are
essential. Postal incumbents therefore face the problem that a high level of standardisation in
the core business is a requirement whereas logistics customers demand customised or at least
industry-specific solutions. Price is still an important criterion, but competitors must primarily
pursue a differentiation strategy. As a consequence, a dual strategy seems necessary, although
the core business and the new logistics services should be closely linked to realise a maximum of
synergies. This poses a certain challenge to the incumbent’s management and their strategists,
but also for the design of the production process, as well as for the marketing and sales people.
However, not all experts agree on the need for a dual strategy. Some see the strength of a postal
incumbent in the attainment of standardisation and its application in the solution business (see,
e.g., interview #11). The provider should only deviate from standards where it is supported by
information technology. Furthermore, there is a tendency for large customers to expect postal
providers to tailor the offerings to their specific processes. Standardisation is not necessarily a
disadvantage for incumbents: those providers that master their standard processes and deliver
quality, are able to set up individual solutions using them as a basis. A key factor for being able
to cope with this dilemma is the implementation of effective process management. The postal
incumbent should however always include as many standard processes as possible and not design
new processes for each customer. Even large contract logistics providers like Kühne+Nagel try
to standardise their core services and build individual elements around them so that they look
tailor-made (see interview #6).
7.2 Arenas, Differentiators and Economic Logic
The considerations highlighted in the preceeding chapter demonstrate challenges but also the
heterogeneity of opinions when it comes to questions around the “right” strategy. It is quite
clear that a scientific work, even when it goes into depth like this dissertation, cannot provide
universally valid strategies that are “right” for each and every postal incumbent in Europe. These
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operators, on the other hand, are probably not as diverse as one may assume: they have all a
public past and therefore a history as a monopolist. Despite some exceptions, they are in the
majority still fully owned by their government and their strategies are primarily controlled by
politics. The collection and distribution of letters is their core business, although their current
service portfolios vary. All incumbents depend therefore very much upon the liberalisation of
their home mail market and are searching for growth opportunities and new revenue streams.
They also have in common a certain reluctance or diffidence on deciding which strategy to best
pursue.
It is therefore fair to conclude that it is possible to elaborate a number of different strategy
options for diversification into logistics applicable to most incumbents. Our considerations and
recommendations are, however, not meant as a recipe that should be applied 1:1 without adapting
them to the specific situation of the individual incumbent. In the following pages, we will focus
on the strategic elements “arenas”, “differentiators”, and “economic logic”, because we believe that
they can be answered quite detachedly from the specific operator. How (“vehicles”) and when
(“staging”) the incumbent reaches the envisaged strategic position must be answered case-by-case
because they depend very much on the incumbent’s current position. Additionally, chapter 7.4
is dedicated to the topic of growth strategies as part of “vehicles”.
Both the mapping of strategic groups and the expert interviews have shown that the geographic
reach of a logistics provider’s activities is the single most important criterion to differentiate their
strategies. It is therefore obvious to first take the geographic arena to describe the strategies. We
then make statements on the product and service portfolio and analyse how postal incumbents
should distinguish themselves from the competition, especially traditional logistics providers. For
each type of strategy, the economic logic is described by elaborating possible synergies that enable
the incumbent to produce relatively more cheaply and by analysing the competitive advantages
that create added value for the customer enabling the incumbent to charge more.
7.2.1 Strategy “National Hero”
Due to their national background, becoming the national hero suggests itself as a strategy for
postal incumbents. This strategy is especially suitable for cases where political control is very
209
strong but with no clear intention concerning business strategy. Within this framework, the
incumbent remains a national operator that enlarges its portfolio with logistics services. The clear
geographic focus enables the concentration of resources to become a leading logistics provider in
the home market. The incumbent does not necessarily have to offer the full range of logistics
services, but can perfectly well specialise in attractive offerings in order to complement the core
business. In both cases, the ambition must however be to be recognised as a top logistics provider.
Just adding services on the basis of some customer requests nevertheless implies a high level of
investment, which in and of itself does not guarantee a competitive position. The recommended
portfolio includes mainly domestic and maybe inbound transportation and warehousing services
for national customers. Large international customers will, in the majority of cases, not rely on
a national provider but prefer providers operating internationally since they will try to avoid
having too many contact persons and country-specific solutions.
Depending upon the competitive situation, the postal incumbent should aim at becoming the
first partner for all imports into the country. This requires not only a dense, reliable domestic
network, but also proven partnerships with large international shipping companies, efficient crossdockings to their own line hauls, plus experience with customs clearing. One strategy is to
become the exclusive or preferred partner of an international player (or even several) for all
their transport needs into the incumbent’s home market (there is a danger here of being pressed
into a unattractive sub-contractor role, see below). Probably more promising is to become a
member of a European cargo network like IDS, System Alliance, or 24plus: these are networks
of SME-sized logistics operators that normally focus on a certain geographic region and pass on
shipments to other members of the network. In doing so, they are able to offer their customer
full geographic coverage without having to build up a network of their own or having to always
rely on sub-contractors.
Lucrative customer segments are the manufacturing industry that imports semi-finished products, as well as distributors, especially the electronic and the fast moving consumer goods industry. Distributors are also a very interesting customer segment for postal incumbents due to
their B2C shipments. The same applies to mail-order companies that not only send parcels but
also need inbound logistics services. Postal incumbents can offer a unique selling proposition for
customers that have a very heterogeneous recipient structure e.g. spread over the whole country
and not concentrated in large cities. Such B2C shipments suit incumbents due to their dense
210
X2C network and their daily deliveries of letters and in most cases also parcels. If the incumbent
manages to realise synergies between these businesses, he is able to offer a true one-stop-shopping
at really competitive prices and stand out from the competitors. As we have seen in chapter 6.1,
it is easier to align and optimise the postal and logistics concepts and networks on a national
level than to do so in international networks. Line hauls can be used jointly and many steps of
the delivery processes can be pooled. Furthermore, there are synergies in the areas of marketing
and sales as well as in administration, e.g. a combined invoicing or shared call centres and human resource services. UPS (see interview #9) is a good example of how to expand traditional
postal services (international express and parcels): this operator does not offer the whole range
of logistics services, but is very selective. UPS’ aim is to have multi-user facilities and repeatable business models. UPS wants to maintain their high standards of quality, so they render
all services with own resources and offer only services that they can fulfil with own assets. By
doing so, they do not necessarily limit the weight of parcels they process. However, their services are priced in a way that UPS is only attractive for customers with a focus on international
parcels and additional logistics services. In this way, UPS can benefit from synergies while still
maintaining an interesting level of profit margin.
The economic logic must be to create unique offerings at competitive prices by making use of
identified strengths (quality, confidence/loyalty, and economies of scale) and realising synergies.
Due to their market power, postal incumbents should be able to offer logistics services that
add value to customer processes. Where perceived quality makes the difference between the
postal incumbent and other operators, customers will be ready to pay more for these services.
More standardised services should only be provided by the incumbent, if he is able to save
costs through synergies and therefore to increase margin. Highly price-sensitive customers that
request commodity services should not be the main focus because the postal incumbent is not
competitive in this segment.
Postal incumbents aiming at becoming a national logistics provider constantly run the risk of
being perceived as a pure forwarder and carrier with no further logistics competence. Furthermore, they become sub-contractors of international logistics providers for final delivery and must
pass-on a part of their margin to the lead logistics provider. Such postal incumbents then compete for a relatively small market against countless small and medium sized logistics providers
in a highly competitive market.
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The acquisition of a logistics provider in order to become a leading logistics supplier oneself
seems not be mandatory. The postal incumbent certainly needs an internal centre of competence
where logistics and industry know-how is concentrated. There is however no reason why a postal
incumbent must buy assets such as trucks and warehouses. In most cases, his own line hauls e.g.
between mail sorting centres, are already operated by a third-party logistics provider because
this increases flexibility and generally decreases costs. As a consequence, additional transport
capacities for any new logistics services should also be bought in. The incumbent must then
decide whether to choose one strategic partner or whether it is preferable to manage a portfolio
of partners enabling him to optimise transport fulfilment depending on the situation.
This strategy is especially suitable, as mentioned in the introduction, for incumbents that
have a strong focus on the home market and whose owner (in most cases the government)
does not pursue a strategy of internationalisation. It furthermore applies to incumbents whose
neighbouring markets are highly competitive or are difficult to serve from the home market.
Examples for such postal operator could be the incumbents from Austria, Switzerland, Denmark,
Finland, Spain, and Norway, but also France and the UK. This strategy is also an option for the
emerging, financially weak incumbents from countries in Central, Eastern and Southern Europe.
7.2.2 Strategy “Selective Geographic Expansion”
Selective geographical expansion to become a regional logistics player is especially recommended
for incumbents 1) with a small home market, 2) very strong competition in the home market,
and/or 3) which have already gained some experience in foreign markets, e.g. with foreign domestic business mail. As the name implies, the expansion happens only in a few selected geographic
areas and results basically in “cherry picking”. The choice of new arenas depends primarily on
the economy in that region and the resulting flow of goods. IKB Deutsche Industriebank (2004:
11) lists seven significant logistics regions:
Table 7.1: Significant logistics regions (IKB, 2004: 11)
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Region
Frankfurt/Oder,
border
triangle
Germany-Poland-Czech Republic
• Increasing importance as the interface West/East
• Good integration into the European waterway network
• Close to urban centre Berlin and
its airports
• Connection
to
the
European
railway network
Greater Vienna, border triangle AustriaHungary-Slovakia
• Important hub for East/Westtraffic
• Connection to North Sea and
Black Sea ports
• Important airport for European
air traffic
• Centrally located
Metropolitan area Rhine/Ruhr
• Dense motorway network
• Excellent connection to railway
and waterway networks
• Large
airports
in
Frankfurt,
Düsseldorf and Cologne/Bonn
with passenger and freight
transportation
connections
to every important destination
213
Border triangle Switzerland-France-Germany
• Basle as important hub in the Eu-
ropean railway and motorway
traffic
• Connection to waterways (Rhine)
and to international air traffic
(airports Basle-Mulhouse and
Zurich)
• Basis
for
servicing
Southern
European markets
Region Turin
• Increasing importance in the
exchange
of
goods
be-
tween Southern and Western/Northern Europe
Region Trieste
• Increasing importance due to
eastern enlargement of European Union
Region Calais
• Traditional logistics centre
• Close to waterways and to the
Eurotunnel
• Hub for important industries
Table 7.1 names very specific regions where a lot of hubs, warehouses, and therefore many
logistics providers and decision makers are concentrated. More generally speaking, we must also
add Central and Eastern Europe (CEE), the Nordics and Germany as larger and significant
logistics regions. The economic importance of CEE is increasing significantly, due especially to
the enlargement of the European Union. Several economies with large and increasingly affluent
populations have now access to European flows of goods. Due to their geographic location, the
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Nordics are rather self-confined economies, difficult to serve from outside, but also important
importing countries. As a consequence, many logistics operators have emerged in the Nordics
that serve the whole region. Germany has moved into the centre of an extended Europe and
will further increase its role as an important logistics hub, due also to its dense and extensive
transport infrastructure. Both the buying power of its more than 80 million inhabitants as well
as the exporting power of German industry and the resulting flows of goods makes the country
interesting from a logistics point of view. Not surprisingly, Germany is home to some of the
worldwide leaders in logistics (e.g. DPWN, Schenker, Dachser, Fiege).
As mentioned repeatedly throughout this dissertation, today’s logistics are no longer tied to
country borders with the result that logistics regions have become much more important. The
overview in the table above clearly shows that selective geographic expansion does not necessarily
mean expanding into a neighbouring country and covering the whole country. Rather it means
careful consideration of where the home market should be linked to in choosing a geographic
region. Access to an important logistics region provides a kind of corridor for import and export
services for firms in the home market. This is an extension of the value chain because the
incumbent does not need a partner for this part of the logistics chain anymore. This access to
one or even several important logistics hub(s) enables the incumbent to play an active role in the
decision regarding how and with which provider goods will be transported into the incumbent’s
home market. Selective geographic growth therefore increases the incumbent’s control over the
logistics chain, which further improves his position in negotiations both with customers and with
other logistics providers. The differentiation, once again, must happen in conjunction with an
indisputable position with respect to quality and the availability of a dense network in the home
market.
As far as the product and service portfolio is concerned, statements are extremely difficult to
make and depend very much upon the incumbent, the target region, and the customer segments
served. Of strong interest could be industries whose supply chains (from raw material supply
to sales distribution) are centred in such a region because the incumbent can provide industryspecific solutions. Possible industries are the food and near-food as well as the pharmaceutical
and health industries, potentially also the mechanical engineering industry.
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For this type of strategy, network control is essentially and must be achieved via the acquisition
of a specialised logistics provider in the target region. A postal incumbent pursuing the strategy
of a selective geographic expansion must acquire both logistics know-how but also local know-how
of the specific region. An acquisition however is not necessarily needed for the transport of goods
between the home market and the target region. The incumbent is better off by buying in these
services from independent operators. Synergies with the postal business can be realised from
three aspects: 1) if the incumbent is already active with services e.g. domestic mail in the target
region, the customer basis should be used for cross selling. Existing hubs and sorting centres
should be examined for shared utilisation and new infrastructure should be built next to existing
ones so that distances can be kept limited and line hauls transportation can be shared. 2) By
controlling import flows, the incumbent is able to control and optimise the distribution within
his home market. Further. in the home market, synergies arise primarily from sharing corporate
services, especially marketing and sales. 3) Once diversification is completed, infrastructure,
local know-how, as well as the customer base can be used for also establishing domestic mail
services, a lucrative business with an inherent high business potential (see, e.g., interviews #1
and #7).
The economic logic for a selective geographical expansion is found in economies of scale and
the control over important parts of the supply chain. Heavy investments (e.g. information
technology, RFID) can be spread over more businesses and eventually over more contracts.
Incumbents that operate as purely national logistics providers will in the long run the risk of
ending up as sub-contractors for large international logistics providers, only receiving orders
for the less lucrative distribution within the country. Offering comprehensive solutions for the
whole logistics chain from the central hub to the receiver enables the incumbent to charge the
customer for the management of this part of the supply chain and to outsource the less profitable
transportation. This strategy means establishing a presence where the decision makers are
located and focusing on the customer’s area of activity instead of confining the range of services
to national borders. A further advantage of this strategy is its expandability: based on an initial
expansion, connections to other significant logistics regions or even other domestic markets can
be added.
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7.2.3 Strategy “European Network”
Being a truly European logistics provider means covering the whole of Europe with a fully owned
network and logistics services. All the experts interviewed agreed that the quality and effectiveness of the network is the key to being successful across Europe. This full geographic coverage,
however, leads inevitably to specialisation in certain customer segments, types of services and/or
means of transportation. It is unrealistic, in the current stage of market development, that a
former national postal incumbent would become a full service provider covering the whole of
Europe. Anyway a precondition is that the incumbent already has a large home market and
established postal services, e.g. an express network, in Europe. By choosing this diversification
strategy, the means of transport being operated also comes into the equation: if the incumbent
sticks to ground transportation, serving the UK and the Nordic countries is complex and costly
and/or only possible with a partner. Depending on the targeted customer segments, the utilisation of waterways is an option. If the focus is on European express services, even air logistics
must be considered. Regardless of which specialisation an incumbent chooses, it is necessary to
have control over a fully owned network in order to be able to offer customers comprehensive
solutions and to guarantee the quality and speed of service. Strategic partnerships, alliances
or outsourcing certain transportation sections will most certainly not suffice. Due to ongoing
consolidation across Europe, it is probably also too late to accumulate a portfolio of leading regional players, especially if the huge integration efforts in the post-merger process are taken into
account. A further option is the acquisition of an already successful European logistics provider
but such provider will be most probably not for sale or be too expensive for a diversifying postal
incumbent.
The strategy to establish a European-wide logistics network is therefore only an option for
a postal incumbent that operates already with an own (postal) network across Europe and
unsuitable for most other incumbents. As we have seen in chapter 6.1, operational synergies
between the postal and logistics businesses are much more difficult to realise on a supra-regional
level because international networks must be optimised according to other criteria than national
ones. The economic logic, once again, is therefore not to be found in cost savings and lower
prices but in offering existing customers a broader portfolio of services and therefore not losing
them to competitors. The incumbent choosing this diversification strategy must thus already
have a broad customer basis across Europe, which he can build upon in order to quickly develop
217
a clientele for the new logistics services. This applies basically only to incumbents in France and
the UK, because they possess an established European parcel network (DPD, respectively GLS).
Differentiation will not happen through lower prices or the improved performance of the logistics
network. Competition is too fierce, the operators have become replaceable, and services are
now commodities. The incumbent must focus on very specific industries and customer segments
for which he designs value added services, probably heavily IT-based, that create a unique
selling proposition. His offering will then suit perfectly the needs of target customers and offer
optimised interfaces into the customer’s processes. There are, however, basically no industries
left that are not yet served by several specialised operators. So this diversification strategy is both
risky and requires an extensive acquisition of know-how, technology, and customer contacts. No
expert interviewed seriously recommended this diversification strategy for any postal incumbent
in Europe.
7.2.4 Strategy “International Player”
Becoming an international logistics operator and a relevant player as a diversification strategy is
only mentioned for the sake of completeness. What has been said for European networks applies
even more to the ambition of full geographic coverage. The market for international express and
parcels is to a large extent dominated by the so-called “big four”: UPS, FedEx, TNT, and DHL.
As far as ground, air, and sea transportation for heavier goods (approx. > 31.5 kg) is concerned,
the leading dozen firms basically control the international market (see logistics industry analysis
in chapter 5). The market for contract logistics is still developing, so consolidation is not yet
as advanced as in the other segments. It is, however, virtually impossible to still enter the
international logistics market with the ambition of becoming a true international player. Such
an incumbent would face latecomer disadvantages (see interview #6). An international network
requires a market presence in at least 100 industrialised countries, a developed transportation
system and the presence of a population with significant buying power to ensure the flow of
goods. This will however take a long time and massive acquisitions in the range of many billions.
Experts moreover expect a slowing down of consolidation, especially because few lucrative targets
are left: either 1) they have already been bought or 2) they are not for sale or 3) they are not
an interesting target (e.g. not profitable, no unique selling proposition).
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7.2.5 Strategy “Lead Logistics Providers”
The concept of the “Lead Logistics Provider” or LLP has already been outlined within the logistics
industry analysis (chapter 5). It is basically a refinement of the fourth party logistics provider
(4PL) as a non-asset based integrator that assembles and coordinates resources, capabilities,
and technology of his customer’s supply chain. The 4PL then chooses the most efficient subcontractors for each part and acts as a single point of contact for the customer. The lead logistics
provider, in turn, may own some of the resources, especially information technology, but maybe
also including warehouses and trucks. Normally, these resources are specialised for certain types
of logistics, e.g. temperature controlled shipments or food logistics. Every other service that
is not his core business will then be bought in by the LLP from cheaper or more specialised
operators. The LLP will however always keep the lead, meaning the contact (and responsibility)
towards the customer and control over the whole supply chain.
Playing the LLP requires comprehensive logistics management know-how, state of the art
IT systems, and superb customer relationship management. This is where the strengths of a
postal incumbent come into play: the customer trust in the quality and reliability of “their”
postal incumbent is (at least in most cases) much higher than towards any other operator. He
is therefore predestined to take on the leading role of coordinating various sub-contractors and
to be the single interface to the customer. Unlike a 4PL operator without its own assets and
the focus on consulting, the postal incumbent brings in his own resources, his technology, and
particularly his network management know-how. Where smaller items must be transported or
sorted, he can use his own fleet and sorting centres; where transportation capacities for larger and
heavier goods, warehouses or a specialised infrastructure is needed, the incumbent sub-contracts
to other logistics operators.
As a lead logistics provider, a postal incumbent can differentiate himself from other logistics
providers because he has the primary customer contact, he is flexible to adapt his offering to
customer needs, and he is not under pressure to build up and maintain an extensive logistics
infrastructure. While a traditional logistics provider must somehow focus on specific industries,
the postal incumbent is able to use his existing customer basis and to develop his offerings around
existing contracts. If he can utilise his own assets to provide the service, he will realise these synergies; if not, he just sub-contracts the operator with the best ratio in terms of price/performance
219
ratio. The economic logic therefore results from the fact that heavy investments are not needed
(expense side) and that any costs incurred through the use of sub-contractors can be passed on
with a margin to the customer or time and materials can be charged by the hour (revenue side).
By pursuing the strategy to become a lead logistics provider, the postal incumbent does not have
to decide up-front on geographic coverage but can do this based on fulfilling individual contracts.
Every postal incumbent can therefore apply this diversification strategy, as it is a scalable and a
rather low risk way of diversifying into logistics.
7.2.6 Strategy “Postal Logistics Network”
Quite interestingly, most experts interviewed (see, e.g., interviews #1, #5, and #6) are convinced
that postal incumbents missed the chance to establish a worldwide or at least European “Postal
Logistics Network”. If they had managed - prior to market consolidation - to adopt the idea
of the Universal Postal Union (UPU) to the logistics business, the postal incumbents would
have had the opportunity to control a large part of the worldwide logistics market. The idea
behind this would have been to link all networks by standardised (and lucrative) agreements
between incumbents. If all incumbents had extended their services from letters and parcels to
logistics, they would have been able to create an efficient logistics network across the globe.
However, in times of globalisation and the liberalisation of the letter markets, such global unions
and agreements become less important. For decades, postal incumbents have been partners.
Nowadays, however, these incumbents have suddenly become competitors and try to enter each
other’s markets. The larger players have bilateral agreements between themselves and also with
private operators in situations, where such cooperations better serve their needs.
In the author’s opinion, it is not necessarily too late to pursue such a light version of a postal
logistics network. However, without aspiring to offer full geographic coverage, this strategy most
certainly will not work. In Western Europe and the Nordic countries, the market is already
consolidated and the big players are well established. Untapped potential for such a network
exists in Eastern and Southern Europe where economies show a backlog demand and the transnational flows of goods are increasing. Furthermore, the incumbents in these countries are
financially and politically not powerful enough to engage in M&A activities, so those countries
should start thinking of working together to establish inter-governmental alliances and to create
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a network (see also Postal Technology International, 2006:16). As a consequence, diversification
could be pursued without having to make heavy investments, but by realising synergies with the
postal business (economical logic).
7.2.7 Strategy “Exit/Divestment”
A comprehensive analysis of diversification into logistics by European postal incumbents would
not be complete without also analysing exit strategies and divestments. The example of TNT
has shown that a diversified postal incumbent must also be ready and prepared to sell its logistics
business if it is no longer performing or is no longer a part of the business focus. The author has
identified and outlined several strengths and synergies that could create competitive advantages
for the incumbent compared to traditional logistics operators. These are, however, only potentials
that must first be tapped and developed into an offering and thus provide a differentiation from
the competitors and a healthy financial returns. Chapter 4.1.5 examined the risks associated with
a diversification into logistics: in a situation where there is a lack of synergies, dissipating energies
to perhaps achieving only a "stuck in the middle" position can lead to the postal management’s
decision to re-focus on core competences and to stick to the traditional postal business (or to
chose other diversification areas).
The more infrastructure and personnel are acquired and/or built up, the more difficult a possible exit will be. Management will most probably run the risk of sticking to their diversification
ambitions, even if it does not achieve economic success. In addition to planning diversification
into logistics, a serious examination of exit strategies must indeed take place. This is important
because the vast majority of incumbents are still owned by their governments and divestments
(or even divestitures) are very politically sensitive, especially if many employees are concerned.
Incumbents must therefore at an early stage analyse if there are competing logistics operators
that could run their own business more efficiently. As in the case of TNT, one may even find a
professional financial investor to be an optimal buyer.
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7.3 Summary of Diversification Strategies
In this section, the author has identified the following diversification strategies for postal incumbents:
Postal
Logistics
Network
Significant
logistics
regions
Network,
quality
Lead
Logistics
Provider
Home
market
International
Player
Arena
European
Network
National
Hero
Selective
Geographic
Expansion
Table 7.2: Summary of diversification strategies (own analysis)
Europe
Worldwide
Mainly
home
market
Quality,
trust
Home
market
Differentiators
Network,
quality
Economic logic
Economies
of scope
Network
control,
economies
of scope
Industryspecific
solutions
Synergies
with
postal
business
high
high
medium
Importance of synergies
Examples for incumbents
A, CH, DK, F, FI, NO,
SP, UK; incumbents in
CEE and Southern Europe
F, UK
IndustryQuality,
specific
trust
solutions
Economies Synergies, Focus on
of scope
subhome
contracting market,
attractive
agreements
low
high
high
-
all
all
In the introduction of this chapter, the author explained “staging” as another important element of a firm’s strategy. The reasons behind staging are limited resources, different priorities,
credibility, and early wins; so it is necessary to establish a sequence between individual strategic initiatives. Staging, however, can also happen between the following types of strategies: a
postal incumbent can very well start diversifying into logistics by aiming at becoming a national
hero. Once established in this position, management can then decide to expand their activities
selectively into other logistics regions.
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7.4 Modes of Expansion
One of the distinctive features of the various strategies outlined in the previous chapter is the
way how growth should be achieved, in other words the development of a “vehicle” which can be
used to achieve the desired position. The growth strategy depends very much upon the current
position of a postal incumbent and the assessment should be done based on the strategy as applied
to the operator. The expansion options can be categorised as follows (Collis/Montgomery, 2005:
104):
1. Internal development (endogenous growth)
2. Mergers and Acquisitions (M&A, exogenous growth)
3. Joint-Ventures
4. Alliances
5. Contracting with external partners
This chapter deals more generally with modes of expansion and especially with M&A in logistics. The logistics industry analysis in chapter 5 has highlighted the importance of M&A
activities and mentioned some recent examples. There are of course several general reasons why
a firm pursues M&A activities as mentioned in Prism (2005: 37): realising synergies and increasing efficiency by vertically integrating processes are amongst the most popular reasons. In the
case of incumbent postal operators, it is often difficult to assess if the major motivation is the
corporate strategy of product or international diversification or whether the M&A opportunity
was just too tempting. The Universal Postal Union has made the point to postal incumbents
that the “primary role [of M&A activities] is an enabler of corporate strategies – not an end
in itself” (UPU, 2002a: 71). M&A, especially acquisitions are however a central and necessary
initiative for any diversification into logistics as the author has outlined in previous chapters.
Building up an own market presence in a foreign country requires at least half a dozen employees
and investments that will quickly add up to several million Euros or more (see interview #6).
This amount must then be multiplied by the number of countries where the incumbent plans to
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operate. As a consequence, market entry barriers are high for late movers. Endogenous growth
will always be slower than growth by acquisition, so exogenous growth seems to be the better
option.
During the mid 90s, mainly firms from outside the industry or financial investors acquired
logistics operators. Today we have observed a trend that both logistics and postal operators buy
logistics providers. While the first group of acquirers primarily follows purely financial objectives, the latter pursue strategic goals. A recent study (DVZ, 2006) researched the motives for
acquisitions in the logistics industry: most important is the aspect of developing new market
potential be it by entering new regions, increasing market share or entering new segments (see
Figure 7.2). Kühne+Nagel’s acquisition of ACR, for example, led to a wider geographical coverage across Europe and access to new customer segments. DPWN, on the other hand, bought
its entry into the contract logistics of the market with the acquisition of Exel.
Figure 7.2: Motives for M&A activities for logistics providers (DVZ, 2006: 11)
1 = very important; 5 = not important
From the perspective of incumbent postal operators (UPU, 2002a: 73f.), geographic expansion
was shown to be key, followed by providing one-stop-shopping and linkages along the supply chain.
Also value adding to the existing service portfolio as well as diversifying into new markets have
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been additional motives as to why incumbents engage in M&A activities. However, improvements
in efficiency are less important.
The M&A process in principle is normally relatively standardised2 and consists of three generic
phases (e.g. DVZ, 2006: 7): 1) screening, pre-selection, and initial contact, 2) due diligence and
assessment of value, and 3) signing and closing. De facto, there is also a fourth phase, namely
the post acquisition or post merger process and the actual realisation of synergies. There are
however some aspects of M&A activities which are unique to logistics and postal incumbents:
in contrast to acquisitions with a purely financial background, extensive industry know-how
is necessary to evaluate and assess potential targets if they are to complement the acquirer’s
activities. Additionally, it is necessary for the firm to conduct a thorough process of its own
value assessment in order to clarify its current position, the desired future position and the gap
that should be closed by the acquisition.
Let us assume that a postal incumbent pursues one of the diversification strategies presented
earlier in this chapter and has decided that M&A activities are necessary to accelerate diversification. The next step will then be to identify the right target to acquire. Various analyses have
clearly shown that it is not primarily necessary for a logistics provider to possess its own fleet of
vehicles. This applies especially to diversifying postal operators: they should not buy just any
transportation firm so that they then have trucks and warehouses in their portfolio. The evaluation of potential targets is of course much more complex when a strategic fit is aspired to rather
than when an investor just wishes to improve its financial figures. In the literature, synergies as
a central motive for M&A activities seem however less important for logistics providers, probably
because they are aware of the difficulties in realising the synergy potential (DVZ, 2006: 16f).
The DVZ study showed that acquisitions are mostly carried out between logistics providers
of about the same size in terms of turnover and employees; seldom does a provider acquire a
much smaller or a much larger firm. The target’s service portfolio and the customer segments
served are the most important criteria when choosing a target. Here we see a clear difference
to financial investors, for whom the actual field of activity is normally less important than
financial figures. However, the providers interviewed did not show any common preferences as to
which types of logistics services are more attractive; this seems to depend much on the acquirer
2
The author will not go into M&A in general, but recommends further reading on the subject.
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service portfolio. When the target’s financial performance is assessed, cash flow forecasts are
more important than profits. Furthermore, process know-how within the target firm is more
important than management know-how and in any case top management may very well not
remain in the organisation after acquisition. The brand of the firm being acquired is, somewhat
surprisingly, not important. However, this will probably vary across providers and industries.
The examples of DPWN and the Dutch incumbent showed that the brand of the acquired firm
(DHL, respectively TNT) is often more valuable and better established in the market into which
the acquirer wants to diversify (see also the next chapter on brand strategies). As far as ownership
is concerned, acquirers clearly prefer family-owned logistics providers or firms with less than 5
shareholders.
Although selecting the “right” target is a matter of the individual provider and its specific
strategy, there are factors that will generally create value either to the acquirer, to the target,
or in the ideal case to both. Problematic with many acquisitions in the logistics industry is
the fact that the investments necessary for the acquisition can often not be returned because
margins are too small. Furthermore, investments are not finished once the acquisition has been
carried out, but a lot of new investment and management attention is required in the postmerger process. So most acquisitions of logistics providers by postal incumbents are rumoured
to be cross-subsidised with revenues from the mail business, a practice heavily criticised by
private operators (see Oldenburg, 2004). This is a typical problem stemming from the nature
of diversified firms whereas a single-product firm is not able to run a business that does not
generate a return on investment3 .
Unfortunately, research does not provide conclusive answers due to methodological constraints:
each acquisition is an individual case and control groups are not available to check how the firm
would have performed without the acquisition. Researchers focus mainly on stock prices as
impartial data. However, this obviously excludes all takeovers involving private firms. Some
conclusions can nevertheless be drawn (Prism, 2005: 40f): shareholders of the target firm are
normally winners, with their shares going up 25% on average. Shareholders of the acquirer, on the
other hand, tend to be losers, with their shares going down 4% after the acquisition. The shortterm return for the combination of target and acquirer is +2%, but conclusions for long-term
3
See chapter 4.1.6 for more details about differences in diversification and performance between multi-business
and single-business firms.
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results are very divergent. Generally speaking, there seem to be some statements that can be
made concerning value creation: 1) size: small targets and takeovers by small acquirers normally
yield higher returns due to less post-merger difficulties and smaller takeover premiums. 2) A
higher degree of relatedness affects the value positively, as does 3) the frequency of acquisitions
which generates experience and learning effects. 4) Financing the acquisition with cash instead of
shares is also a sign of commitment and therefore creates higher value. Likewise positive effects
arise if 5) the target is a privately owned firm and 6) if there are several bidders, which obviously
makes the target more interesting and valuable (Prism, 2005: 40f).
As a first conclusion, M&A as a strategic move to diversify into logistics should not be underestimated. Evaluating the right target, which fits the acquirer’s strategy, provides a sound
financial performance and in the end creates value for the acquirer is a long and difficult process.
Even once the evaluation has been done, the process may still not necessarily be crowned with
success because the target is maybe not for sale or too expensive. As a result, building up M&A
competence is an important task for postal incumbents. It is however also important to note that
M&A activities are not the only mode of expansion, as contractual alliances and joint ventures as
attractive alternatives. For a long time, postal incumbents operated solely on the basis of multilateral arrangements, most of them brokered by the UPU. In more recent times, the importance
of bilateral arrangements, especially for CEP and logistics services, has increased. A successful
example is the Pan Nordic Logistics (PNL) alliance: in 2000, Denmark Post, Sweden Post, and
Norway Post bundled their individual cross border parcel businesses into a joint venture. After
the withdrawal of Sweden Post from the joint venture, an express operator in Sweden was acquired and cooperation agreements were entered into with Finland Post, Estonia Post, Latvia
Post, and Lithuania Post. PNL aims at keeping Nordic countries in the business and becoming
the leading Nordic company in the express and parcels markets. A similar venture, “Spring” is
an alliance in the mail businesses of TNT, the Royal Mail Group, and Singapore Post.
The benefits of alliances lay primarily in their flexibility, allowing the partners to first test the
waters instead of acquiring a firm. Alliances also provide the strategic advantage and flexibility
of cooperating only in certain segments: “The posts have entered into alliances to co-operate in
the express market but compete in the cross-border market.” (UPU, 2002a: 74). Due to legal and
competitive reasons, alliances are often also easier to contract. The limit on duration also lowers
the risks associated with acquisitions and the costs incurred, an issue, which makes alliances
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especially attractive if financial constraints must be taken into account. What is more, alliances
and joint ventures, are often a first step towards a permanent partnership or takeover.
The risks of alliances (see UPU, 2002a: 74f.; interviews #1 and #2) are instability and inconsistent quality, a severe drawback to establishing a trans-national network and providing logistics
services. In contrast to an own network, control over the processes is much lower. Different goals
of the partners and the emergence of a dominant partner over time can further jeopardise a
successful logistics alliance. The same applies to misunderstandings when it comes to access to
confidential information and customers. Last but not least, services provided jointly by alliances
and networks of operators tend to be higher priced, this is because each member of the alliance
wants to earn money from the same customer and adds its margin on top of its costs.
7.5 Brand Strategies
After having looked at some considerations concerning modes of expansion, this section deals with
the question of the ideal brand for a diversification into logistics. This issue is important because
the diversifying postal operator will enter a new industry with a new set of customers as well as
competitors. Beside the unique selling proposition, he must also maximise name recognition by
establishing a brand that conveys the values, which will convince potential customers to switch to
the new provider. If the brand creates loyalty, this will automatically reduce further acquisitions
costs, not only in respect to keeping existing customers but also by acquiring new clients through
recommendations. The brand equity should reflect the sum of all activities of the incumbent and
result in a promise to the customer, which makes the buying decision easier because it provides
information for the customer to choose between options. In both the postal and the logistics
industry, the people behind the service and their awareness of and focus on quality are extremely
important. Therefore, the brand is also an important instrument in order to attract talented
and dedicated people that like to work for the postal operator.
In most countries, postal incumbents rank among the highest in terms of recognition, trust,
and loyalty. The postal brand is therefore very valuable and powerful. However, due to their
government-owned background, postal incumbents often have neglected their brand management. From a logistics and technical perspective, this was obviously not the first priority for
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management. However, an effective brand management is especially important when facing liberalisation and in times of globalisation, consolidation, and diversification of both markets and
competitors. A consistent "look & feel" over the whole group, as well as a strong and unified
brand message for postal incumbents is essential. The brand must stay coherent, especially when
new businesses are acquired; the philosophy behind the firm must be transferred to the image the
company conveys and a strong brand can help to establish the cultural fit (see Logistik Inside,
2006).
Brand is therefore an important asset for differentiation from competitors by enhancing the
trust felt between the customer and the organisation. Within the scope of the author’s interviews,
experts were also asked to judge the importance of a strong brand in the logistics industry and
to assess the value of the postal incumbents’ brand in the logistics industry. Most interviewees
confirmed the importance of the brand although no one named the brand a decisive instrument.
Opinions about the value of the postal brand were divided almost 50/50: the postal brand is
powerful, trustworthy, and stands for quality. However, state-run, stolid, slow, and expensive
are also adjectives associated with existing incumbent brands. This heterogeneity of their brand
becomes a serious challenge for postal incumbents because they have to decide whether to adapt
their existing brand to the new logistics business or whether to introduce a new brand.
Since 2002, the trade magazine “Logistik Inside” conducts an annual study to establish an image
ranking of the leading 99 players within the logistics industry in Germany (Logistik Inside, 2006).
300 logistics decision-makers from trade and industry are interviewed and a percentage figure
established for the interviewed persons knowing a particular trade name. Although its focus is
only on Germany, the implications on brand value and name recognition for logistics providers
are essentially applicable to all the players in Europe. In 2006 in the category of logistics service
providers, UPS asserted its leading position (+7.5% compared to 2005). TNT (+10.9%) comes
second, while FedEx (6.7%) finishes third. From this it can be seen that not just one but three
large international providers outperform the other providers. Upward climber of the year is
Rhenus Logistics (+14.5%) and Deutsche Bahn no longer occupies the last position. DPD as
second incumbent (subsidiary of La Poste in France) is found at the 10th position, and both DHL
(a subsidiary of DPWN) and GLS (a subsidiary of the Royal Mail) only rank 15th respectively
16th out of 50 logistics providers. Interestingly, only UPS, DHL, and Schenker achieved name
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recognition of 100%; there are obviously still logistics experts that do not know DPD (98%),
TNT (97%) or FedEx (92%).
Almost half of the people interviewed (48%) would not purchase logistics services from a
provider, which they do not know. Another 37.7% expressed reservations on using such a provider
(see figure 7.3). The results for the same questions are more explicit concerning image: 87%
of decisions makers would not purchase from providers with a bad reputation. This figure
underlines the importance of name recognition and especially image, a fact denied by many of
the author’s interview partners. If recognition and especially image are so important, this should
have implications on whether and how a logistics provider will be recommended. Figure 7.4
shows the considerable differences between selected providers from the sample.
Figure 7.3: Importance of brand recognition (Logistik Inside, 2006: 21)
Another interesting fact is that the three large international players UPS, TNT, and FedEx
occupy the top positions. DPD and DHL are above average, while traditional logistics providers
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Figure 7.4: Recommendation of logistics provider (own analysis, following Logistik Inside, 2006)
are more often only recommended with reservations. By far the most named reason is the fact
that the interviewee does not know the provider well enough, certainly a direct consequence of
problems with name recognition and a lack of value being supported by the brand. Asked how
name recognition could be increased, most interviewees mentioned the creation of an up-to-date
and informative website, followed by a stand at exhibitions and congresses as well as taking out
ads in trade magazines (see figure 7.5).
Let us now draw conclusions for postal incumbents, which want to diversify into logistics, and
identify options for their brand strategies. The analysis of the image ranking has shown the
importance of name recognition and especially of a faultless image. Logistics touches too much
the core of the operations of a firm to consider putting a provider with a damaged image in
charge of handling its logistics. Logistics providers with a postal-affine background tend to be
better known than traditional providers. Furthermore, customers would rather recommend one
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Figure 7.5: Measures to increase brand recognition (Logistik Inside, 2006: 137)
of the large international express providers because they are well known and better established.
In addition, an increase in brand recognition seems to be quite difficult, so that new providers
will find it a challenge to introduce a new brand. For postal operators, this means that their
postal brand is a tremendous asset because it is already well recognised and trusted, two very
important factors in the logistics industry. However, newly diversified players will be tasked
with building brands that represent the full reach of their portfolio. This is not easy because the
existing name recognition and the values with which it is associated must be balanced against
the requirements of a new industry with new customers and new competitors.
Deutsche Post, as an example, was not known outside Germany, but DHL was a well-known
logistics brand worldwide. So DPWN bundled its express and logistics business to use the DHL
brand. By doing so, DPWN extended the DHL brand from an express provider to a worldwide
logistics brand. Additionally, they added yellow and red as DPWN’s colours to the former white
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and red logo of DHL (see interviews #3 and #6). The same applies to TNT, which was a much
stronger international brand than the one of the Dutch incumbent (see interview #7).
In 2007, Finland Post officially dropped the word “post” from its name and re-branded to
“Itella” as part of its ongoing diversification and expansion into new markets. A wider range of
logistics and information logistics services supplements the traditional postal business, so that
management wanted to find a new brand that covered this new portfolio. In addition to Finland,
Itella operates in eight European countries where it already generates a quarter of its turnover.
Its subsidiaries adopted the new brand and re-branded to “Itella Logistics” respectively “Itella
Information”. The traditional brand “Posti” remains for the domestic Finnish postal business
(similar to DPWN which uses “Deutsche Post” for its mail business in Germany).
Wilson Logistics was acquired by TNT Group in 2004 and re-branded to TNT Freight Management. In line with the merger of TNT Freight Management and Geodis Overseas, its management
has recently (June 2007) relaunched the firm under the name “Geodis Wilson” as a division of
the Geodis Group. Also “Geodis Overseas”, the existing air and sea freight subsidiary, will be
rebranded to “Geodis Wilson” to ensure an integrated appearance.
Generically speaking, a postal incumbent has four options at his disposal for branding the
logistics business. Each alternative has of course pros and cons that must be balanced against
each other on an individual basis:
The decision as to which option is best for a postal incumbent will depend upon two factors: 1)
the desired geographic coverage and 2) the integration of the logistics business into the existing
portfolio. The more internationally the incumbent wants to operate, the more a disengagement
from the postal brand seems to be a good option. This brand is normally strongly tied to the
home market and is of no use abroad or may even be seen as negative because it is linked too
much to the incumbent national market. If the acquired firm already possesses a strong brand
(e.g. TNT, DHL), the postal incumbent is better off in adopting the brand and subsuming his
logistics services under this brand. If diversification is not carried out by an acquisition or if
the acquired brand does not fit, the creation of a new brand is an eligible option. Then the
incumbent must chose whether this new brand should be close to the existing postal brand (e.g.
Switzerland: PostLogistics) or whether a completely new brand (e.g. Finland: Itella Logistics)
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Table 7.3: Options for branding a postal incumbents logistics business (own analysis)
Option
Postal brand
Acquired brand
New brand (close to existing brand)
New brand
Pros
High name recognition,
synonymous for quality
and trust, no investments
in brand building necessary
Already established in the
logistics industry, no rebranding
Image transfer from the
postal brand, less investment in brand building
necessary
No negative connotations,
independent from home
market and postal business
Cons
Negative
connotations
(e.g.
state-run, stolid,
slowly, and expensive),
linked to home market
Examples
Denmark,
Norway
No positive image transfer, maybe re-branding in
home market necessary
No positioning,
lower
brand
equity,
maybe
confusions with existing
brand
Investments
in
brand
building necessary, no
positive image transfer
DPWN,
TNT
Switzerland
Finland
is more appropriate. If the incumbent pursues a strategy of offering its customers an integrated
service portfolio (one-stop-shopping), it is recommended to stick to the postal brand and maybe
to adapt it slightly to the logistics industry. He will however run the risk of having to re-brand
the traditional postal services such as parcels and express if they should be in the same business
unit and under the same brand as the new logistics services.
7.6 Ownership Strategies
Due to the evolution towards liberalisation in the postal sector, the question of ownership of
postal incumbents has become more important in recent years. Discussions about corporatising
and privatising the incumbent operators (at least partially) are ongoing throughout Europe,
not only in the postal sector, but as well across all network related industries. This section4
analyses the effects of different ownership forms and types of shareholders of postal incumbents
on diversification strategies and the consequent influence on diversification into logistics.
4
This chapter is based on a paper presented by the author at the Annual Conference of the Strategic Management
Society 2006 in Vienna. The author refrains from repeating the extensive literature on ownership and principalagent theory.
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A variety of ownership types can be observed throughout Europe. These different approaches
result from the asymmetric market development (see chapter 3.2) by which some incumbents
(together with their governments) were forced earlier than others to take strategic actions to
meet the challenges stemming from the opening of the market. At the time of writing, only the
Dutch postal incumbent has been fully privatised. The Netherlands government no longer holds
shares in TNT, but sold all of its ordinary shares as well as giving back the one special (“golden”)
share5 to TNT for free. The German government sold all its shares in the Deutsche Post AG
to a state-controlled bank. CVC Capital Partners acquired a 22% position in Post Denmark
from the Danish State and an additional 3% of the shares were offered to the employees. The
Belgian State and a consortium composed of Post Denmark and CVC Capital Partners and De
Post-La Poste closed a transaction to realise a strategic partnership for the incumbent where
the consortium acquired 50 % minus one share of the capital stock. In Austria, the state-run
Österreichische Industrie-Aktiengesellschaft (ÖIAG) as the legal owner of the postal incumbent
took the IPO route and privatised it by selling 49% of the capital stock. Greece (planning to sell
25% of Hellenic Post), Portugal (planning a 30% partial privatisation of CTT Correios), Romania
(selling 25%), Hungary, and also Slovakia are looking for partners. Taking a contrary position,
the British government has recently (August 2007) denied to having any plans to transform
Royal Mail into a corporation.
Table 7.4: Types of ownership and examples (own analysis)
Type of Ownership
Government Entity
State-owned Enterprise
Corporatisation (100% state-owned)
Corporatisation (mixed ownership)
Privatisation (> 50% private)
Examples
Cyprus
France, Spain, Switzerland, Czech Republic
Great Britain, Sweden, Norway, Portugal, Finland
Denmark, Belgium, Italy, Austria, Malta
Netherlands, Germany
Let us now have a closer look at the different types of ownership6 . Types 1) to 3) refer to
changes in the organisation, while types 4) and 5) additionally characterise a change in ownership:
5
The golden share gave the State of the Netherlands the right to approve decisions that lead to fundamental
changes in TNT’s structure. The European Court of Justice however ruled that this special share is in
contravention of EU law.
6
Other authors use slightly different classifications (e.g. Ecorys, 2005; Christensen/Pallesen, 2001), often not
differentiating between state enterprises (with special laws) and corporatised incumbents that are 100% stateowned.
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1. Government entities: this was the starting point in every country because postal services
were considered an essential service for the growth and functioning of both their society
and the economy. Governments nationalised postal services as part of the creation of
modern nation-states in the 18th and 19th century. The reasons for doing this were: a)
aspects of technical efficiency, b) military, state and integrationist motives, c) the demand
for state resource ‘expropriation rights’ and fiscal motives, d) correction of the market
failure of organisations at the time and issues of public control, e) guarantee of wide-spread
supply and finally f) democracy-political, legal and environmentalist considera-tions (see
Schneider/Jäger, 2003: 115). Postal operators were therefore an integral part of government
administration. In Europe, only the Cyprus Post is still a traditional government entity.
2. State-owned Enterprise: Parallel to the initial steps towards liberalisation, governments
autonomise operators from public administration and create a state enterprise with a distinct legal status. This special law usually defines both the organisation of the incumbent
and the definition and requirement for universal postal service. Most governments use this
form to guarantee and exert their influence since major decisions still need their approval.
3. Corporatisation (100% state-owned): government entities or state-owned enterprise are
corporatised as a public limited company (under private law), but remain exclusively stateowned. This internal corporate restructuring allows for changes in the way organisations are
managed, moving from an extension of government to a private corporation with profitability goals. “A corporate company gives more power and independence to the organisation’s
management to run the postal services, while in addition to the regulatory authority the
government maintains (certain) shareholder influence over the business decisions of the
company” (Ecorys, 2005: 121).
4. Corporatisation (mixed ownership): once a postal incumbent has been corporatised, the
government has the possibility to open ownership to both companies and individuals by
selling a certain number of shares, which leads to mixed ownership.
5. Privatisation (> 50% private): this more dramatic stage, the move from corporatisation
to privatisation by selling all or the majority of shares to the private sector, is far less
common, and many countries have no intention of (fully) privatising their national postal
operators.
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Having analysed the existing types of ownership, we can now proceed to the even more important question concerning the type of shareholder. By looking at the European postal market
and adding two theoretical possibilities, the authors distinguish the following categories of shareholders:
1. State: this type of shareholder corresponds with the “corporatisation (100% state-owned)”,
where the incumbent is legally transformed into a public limited company, but the state
retains all shares. The author concludes that in this case it strategically does not matter
whether the incumbent is actually corporatised or if it is turned into a “corporate look-alike”
state-owned enterprise.
2. Postal or Logistics Operator: as part of their internationalisation strategies, postal operators (both incumbent and private) seek opportunities to take shares in partly privatised
incumbents. An example is the Danish Post that took a share in the Belgian Post. One
constellation we have not yet seen (but maybe soon become a reality) is the situation where
a logistics operator takes a share of a postal incumbent.
3. Player from an adjacent industry: this would be where a player from an adjacent industry
becomes a shareholder (e.g. mail order company, publishing house).
4. Institutional Investor: after an IPO, institutional investors such as banks, mutual funds, or
pension funds are an important group of possible shareholders. This category has gained
some significance since CVC Capital Partners, a British investment group, took shares
not only in the Danish but also the Belgian Post and has also made public statements
concerning its interest in buying shares of DPWN.
5. Individuals: together with the general population employees can also be considered as
individual shareholders.
7.6.1 Effects on Strategic Decisions and Diversification Strategies
Extensive empirical research in the postal sector, carried out by the consulting firm Ecorys (2005:
121f.), came to the following insights (extract):
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• Incorporated postal companies have been more successful in implementing new business
strategies than state-owned enterprises;
• Incorporated postal companies show improved operational and financial results;
• Incorporation is a step taken to establish independence from government budgets and generally motivates postal management to improve both their quality of service and financial
results. If business results are good, the postal company has more opportunities to invest
abroad;
• Privatised postal companies have moved even faster in (new) business development and in
strategic alliances/joint ventures.
As mentioned above, corporatisation attempts are, in most cases, triggered by and accelerated
by the incumbent’s management because they seek more independence from government. Christensen/Pallesen (2001: 286) use the existence of a board of directors with sufficient managerial
authority as a distinctive feature to differentiate between state enterprises and “corporate lookalikes” (i.e.: corporatised incumbents). However, as the competitive environment becomes ever
more challenging and incumbents must adapt quickly to these changes, the design and the degree of this operational freedom becomes an important factor of corporatisation. Postal managers
need to make far-reaching decisions concerning operations as well as investments and strategies.
In most countries, the size of the postal network (especially the number of retail outlets) has
been defined by politics mainly taking into account regional policies and the issue of universal
service. The obligation to maintain and retain such an extensive network imposes a significant
burden on a postal operator. Most incumbents could provide their services with a much smaller
and optimised network but do not have the freedom to make these adjustments. New investments (e.g. in sorting centres or information technology) are often subject to approval by the
ministry. The same applies to adjustments in products, services, quality and particularly tariffs.
The latter are closely monitored, as politicians are under pressure to ensure the affordability
of postal services as part of the universal service. In a nutshell, “incorporation and increasing
levels of privatisation will continue to be important as the postal companies need to increase investments in (new) business development, new (sorting) technologies, new IT systems and other
supporting systems, alliances and joint ventures, in response to increasing competitive pressures
and stagnating core markets. These investments are both considerable in size and take a number
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of years of preparation and implementation. As EU legislation forbids continuous state subsidies
postal enterprises have to look to expand their market position by attracting investment capital
from the private sector" (Ecorys, 2005: 121f.).
The cardinal question is: what benefits shall be realised by these transformations? The consultants at NERA (2004: 39) name the following drawbacks of the legal status as a state-owned
postal operator: “The legal status of operators may impose constraints on the adoption of the
most cost effective or profit maximising strategy. For example, in some cases state-owned companies may be unable to invest in private companies or enter into associations or consortia, they
may have very tightly controlled rules over their business activities and may be constrained from
raising capital or undertaking investment. They may also face severe constraints on their ability
to reduce staffing levels.” So, basically, the benefit of corporatisation and privatisation is the
elimination of these constraints and drawbacks and thereby creating:
1. Operational freedom, e.g. in terms7 of
• New products and services
• Quality and prices
• Infrastructure
• Social policy and wages and working conditions
2. (Legal) ability to acquire companies or to enter joint ventures and alliances
3. Access to capital
Corporatisation and at least partial privatisation therefore change the incumbents’ mission
from being an extensions of the government to being similar to private companies with profitability goals. However, listed companies are subject to the capital market disciplines of take-over,
bank monitoring of debt, and bankruptcy. Within the focus of this dissertation, the influence of
these different ownership types on the incumbent’s diversification into logistics is of particular
interest. If the advantages mentioned above of corporatisation and diversification can also be
7
See also Ecorys, 2005: 121f.
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applied to the research question, they must support the incumbent’s management to successfully
pursue a diversification strategy:
Operational freedom: as long as ministries - that in turn depend on political decisions - govern
postal operators, strategic decisions are always subject to compromise and attempts at risk
reduction. The state’s ultimate ambition is to ensure a good quality provision of universal postal
services and not to develop new markets. Conservative and socialist parties normally focus on for
both the risks and the quality and coverage of universal service, while liberal parties do not want
the state to compete with the private sector. These trade-offs often result in a lot of reluctance
when it comes to aggressive diversification (or globalisation) strategies. A look at the two early
adopters, DPWN and TNT, confirms that they only intensified their diversification strategies
once the first privatisation step had taken place. On the one hand, this can be explained by
increased managerial authority. On the other hand, there is additional shareholder pressure
coming from outside shareholders to improve cost efficiency and financial results.
Legal ability to acquire companies: diversification into the logistics market furthermore requires high investment in infrastructure which causes high fixed-asset network costs: logistics
(as with the postal business) is a very scale-intensive business that can only be operated successfully if fixed infrastructure costs and low margins can be compensated for by high volumes.
New entrants have to quickly obtain a significant market share in order to fully ulitise their
full infrastructure capacity. Economies of scale as entry barrier have therefore to be considered
as high. Following on from this, entry into the logistics market has to be done fast and on a
rather grand scale. History has shown (and present developments still do) that heavy merger
and acquisition activities are the preferred mode of expansion in order to diversify effectively (see
also chapter 7.4). By this means, incumbents are able to acquire the needed know-how, infrastructure, technology, and – sometimes more importantly – market share. Through acquisition
of an existing logistics operator, a postal operator moreover gains access to an existing, mostly
international logistics network.
Access to capital stock: looking at a few of the acquisitions made in the past few years, one
becomes aware of the dimensions of this activity. The total value of transactions is estimated to
be around e 20 billion and the largest players have invested approximately e 35 billion in the
past five years in acquisitions. DPWN, for example, paid e5.6 billion for the takeover of Exel.
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Quite obviously, such transactions cannot be financed out of operating revenue and the need for
capital becomes apparent. The most feasible way to get access to capital is therefore a share
listing (IPO) or an increase in stock. This process can only happen through corporatisation
and at least partial privatisation. “For structural alliances (. . . ) or mergers to take place, the
government of the acquired firm will need to be prepared to sell some or all of its shares in the
operator. In addition, listed operators will find it easier to acquire other firms since they can
fund the acquisitions with their own shares (NERA, 2004: 44).” If not, the cash needed can only
come from the state treasury.
It is important to note that all three factors have to be fulfilled cumulatively: the corporatisation and access to capital are not sufficient if managers do not have the authority to pursue
a diversification strategy because politics exerts some influence. On the contrary, managerial
freedom and corporatisation without sufficient capital does also not lead to a successful diversification strategy.
7.6.2 Influence of Different Types of Shareholders on Diversification
After having outlined how corporatisation and privatisation benefit diversification into logistics,
this section assesses whether and how different shareholders can influence the diversification
of an incumbent postal operator. For this purpose, we again make use of the classification
introduced previously, namely state, postal or logistics operator, player from an adjacent industry,
institutional investor, and individuals. We evaluate the relevant characteristics of each of them
and then assess whether they will hinder or support diversification. The analysis shall thereby
be considered as hypotheses stemming from an intensive monitoring of the market, because this
phenomenon is too recent for quantitative analyses. To simplify matters, we do not distinguish
between various levels of shareholding (minor, major or even takeover) and assume that the
shareholder aims at exerting influence on strategic decisions. If not, the shareholder can be
treated as neutral and is therefore not of interest. Any questions about how this influence is
exerted and controlled (e.g. principal-agent theory) are also not addressed here. The state as
owner or major shareholder has already been evaluated in the previous chapter and it was argued
how it may prevent attempts at diversification. A minor shareholding by a government without
additional steering mechanisms can not be evaluated within this framework, as its influence on
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strategic decisions would depend upon the actual circumstances. Individuals and employees will
also be discounted in their role as shareholders because they do not normally exert influence on
strategic decisions.
When another postal or logistics operator takes a substantial share in an incumbent, this operator is expected to pursue the strategy of a portfolio extension. This can either be a geographical
expansion or the widening of the product and service portfolio, in other words a classical diversification. However, this marks diversification by the buyer, not by the incumbent. It is assumed
that the new shareholder will also approve diversification plans of the incumbent because he is
interested in its growth and success. Additionally a shareholder from the same industry can
foster diversification a) if he sees synergy potential to improve its own business or b) if he uses
the incumbent to enter a market that he himself is not (yet) willing to develop. The smart
use of synergies can significantly enable and accelerate the diversification as the incumbent can
for instance build on existing infrastructures, know-how, and customer base, factors that have
been defined as important barriers to market entry. The shareholder, however, will always try
to design this diversification as complementing its own strategy as far as possible. Although
some risks can thereby be reduced, the postal incumbent risks loosing its strategic autonomy
and becoming somewhat the instrument of its owner. Another postal or logistics provider as
owner is also likely to disapprove of diversification strategies that would create a new competitor
in his own field of activity. Additionally, a shareholding from within the industry bears the risk
that the company is only interested in the revenues of the incumbent’s domestic mail business
protected by the monopoly. Last but not least, taking a share in an incumbent postal operator
is also always a way to control an actual or potential competitor, something that would of course
have negative effects on a diversification strategy.
As players from an adjacent industry we consider firms such as mail order companies or
publishing houses that show a vertical or horizontal relation to the postal incumbent’s value
chain. For mail order companies and publishing houses, logistics operations, and in particular
distribution logistics, are a core process and a major cost driver but also a distinguishing feature.
Similarly to logistics operators, their core operations are based on sorting and distribution centres.
The increasing importance of e-business helped these companies to establish new sales channels,
but at the same time enabled the emergence of countless new competitors that rely solely on this
virtual sales channel. As a consequence, utilisation of the logistics infrastructure is decreasing
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and leads to negative economies of scale. A player from an adjacent industry can therefore be
expected to use his shareholding to improve his own operations. It will support diversification
that goes along with its own interests or at least does not run contrary to them. Similar to the
postal or logistics provider, this shareholder will probably not approve diversification along the
value chain (vertical or horizontal) when these new business activities would compete with its
own product or service portfolio.
In the future, institutional investors will play an ever more important role as the examples of the
Danish and Belgian incumbents show. In general, an institutional investor will boost cost effective
or profit maximising strategies, which in turn increases the incumbent’s competitiveness. As this
kind of shareholder will challenge diversification strategies by comparing the projected results
with financial benchmarks from other firms or even other industries, it can be concluded that
any diversification (and consequent acquisitions) will be more thoroughly scrutinised, particularly
from a financial point of view. On the downside, an institutional investor can be more critical of
diversification that is operationally reasonable but financially unattractive. A diversification into
logistics could therefore be prevented from happening as this industry (in general) only produces
low margins. If an institutional investor has taken a share in a number of different postal or
logistics operators, he will also optimise the strategic alignment of his investment portfolio and
will therefore probably wish to exert some influence on the particular diversification strategy.
CVC Capital Partners will, for example8 , not favour an entry in the Belgian letter market by
the Danish incumbent as this will lead to a price battle that eventually reduces the value of both
investments.
7.6.3 Implications for Diversifying Postal Incumbents
Letting public enterprises such as postal operators into private ownership enables them to successfully adapt to changing market demands. In doing so, they benefit from operational freedom
and access to the financial benefits of the stock market. Combined with the legal ability to
acquire companies and enter alliances, this enables them to pursue a diversification strategy and
conquer the entry barriers of the logistics market. The author also pointed out that the state’s
8
The Danish Post itself will probably not make this strategic move, as it is also a shareholder of the Belgian
incumbent.
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ultimate ambition is to ensure an affordable, good quality universal postal service and not to have
to manage a diversified company. The form of ownership, in our case the corporatisation and at
least a partial privatisation, has therefore a significant influence on the diversification strategy.
This assessment corresponds to the recommendations given by Campbell (2004: 213): “[We] encourage member states to pursue corporatisation of public operators. Public operators that have
been transformed into private companies (including those that have been partly privatized) have
contributed more to the competitiveness of the sector while preserving or increasing the level of
universal service. In an increasingly competitive environment, universal service providers are in
need of enhanced managerial freedom to respond to customer needs and to enhance their market performance.” Furthermore, the author analysed different types of shareholders such as the
state, postal or logistics operators, players from adjacent industries, institutional investors, and
individuals. Although private ownership favours the competitiveness of a postal incumbent and
its diversification into logistics, many challenges arise because the influence of the new owners
on strategic decisions varies depending on their own strategies and whether they pursue an own,
sometimes hidden agenda.
Top management and governments agree that an incumbent postal operator should be run
like a normal business. Furthermore, diversification and/or globalisation strategies require a lot
of cash and management know-how and bear significant risks. It is perfectly legitimate to ask
why states should assume these risks and what their benefits might be. The ultimate goal is
the provision of a good quality universal postal service. However, this is no longer a sustainable
business model. In the end, governments have to decide whether they want to continue to
maintain a state-run and state-owned postal service or whether they withdraw from the market
as a postal service provider. In the first case, they must come to terms with the fact that
the incumbent has to be subsidised sooner or later. In the second case, restructuring has to
be executed as fast as possible in order to not waste time that could be used to prepare the
incumbent for a full market opening. The German and Dutch governments were very quick to
adapt their incumbents to the changing business environment, thereby gaining lead-time and
making use of an early mover advantage.
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7.7 Risk Analysis
Strategic analyses and expert interviews have also shown significant risks: the strategies for
successful diversification into logistics must therefore not only focus on exploiting resource-based
assets and on creating synergies, but they must also take into account these risks and counteract
them. The first step for analysing risks is identifying relevant threats, in this case for a successful
diversification into logistics. Risks can arise from various threats, such as:
• Operational risks: interruption of supply chains due to network frictions, failures in distribution
• Political risks: (new) decisions and restrictions preventing strategic moves
• Financial risks: business failure, lay-offs
• Human risks: missing know-how, lack of motivation, missing management attention
• Reputational risks: damage to reputation and customer confidence, loss of customers
Those five types of risk must be analysed for each postal incumbent on an individual basis,
since the assessment will vary depending on the specific situation. One may have full political
support and must primarily focus on supply chain management issues, while others must keep
an eye on their image in public in order to keep customers and politicians satisfied. However,
based on the various interviews and the strategic analyses, we can also conclude a set of risks
that basically apply to all postal incumbents that diversify into logistics and which will therefore
be outlined here in greater detail:
1. Lack of synergies: there is a massive discrepancy between identifying potential for synergies and realising these potentials respectively achieving competitive advantages and/or
saving costs. Most synergies identified remain theoretical or soon become absorbed by new
inefficiencies.
2. "Stuck-in-the-middle": postal incumbents come from a highly standardised bulk business,
whereas logistics requires flexible, industry-specific solutions. At the same time, incumbents
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deal with high fixed costs at an already high level of cost. Any postal incumbent that
therefore fails to differentiate itself from traditional logistics providers or to offer cheaper
logistics services, runs the risk of being "stuck in the middle". This is due to the lack
of competitive advantage which results in a lower than average financial performance.
The incumbent will compete at a disadvantage because the cost leader, differentiators, or
focusers among the other providers will be better positioned (see Porter, 1985).
3. Dissipating energies: as with every product or geographic diversification, entry into the
logistics market requires financial and human resources, especially management attention.
Critics complain therefore that postal incumbents should concentrate their forces on the
further development of their core business instead of trying to enter new markets. Due
to the decline of revenues from mail business, this is probably not a sustainable strategy.
Postal management must however be aware that financial and human resources as well as
management attention will be unavailable for strategic projects in other business units.
Furthermore, some postal incumbents diversifying into several businesses at the same time
(e.g. international mail, logistics, direct marketing) will be fighting on numerous fronts.
4. Entry only via MA: the interviews have clearly shown that diversification into logistics is
only possible via mergers and acquisitions. Organic growth takes too long and the necessary
know-how must in any case be bought-in. However, MA activities harbour specific risks
including takeover costs, a difficult post-merger process, as well as the fact that, despite
due diligence, disagreeable surprises may well appear after the acquisition. This strategic
option furthermore adds to the danger of dissipating energies and the risk of overestimating
synergies.
5. No acquisition targets: as we have seen in the logistics industry analysis (chapter 5), the
industry is to a large extent consolidated, and the more attractive targets have already been
acquired by first-movers. These new conglomerates would be very expensive to acquire
and the remaining providers are probably not attractive enough. Furthermore, most firms
available for acquisition are simple transportation providers and warehousing operators
whereby a postal incumbent is not primarily interested in acquiring assets and customer
contacts (see more on this question in chapter 7.4).
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7.8 Conclusions
On the basis of the strategic analyses of the dissertation so far, this chapter assessed diversification
into logistics as a strategic move for European postal operators. It then identified and outlined
possible strategies by taking into account the requirements of the logistics industry and its
customers and matching them with the strengths of postal incumbents. The author is convinced
that these types of strategies are really the essential ones that a postal incumbent has at its
disposal. It is however important to note that this set of strategies provides only the basis for
future research. For each of these types of diversification strategy, additional research is required
to fully develop all the details and to carry out the necessary strategic analyses. Nor has it
been possible to scrutinise every postal incumbent in order to formulate suggestions as to which
strategy he could or should pursue and which individual initiatives are necessary to arrive at
the desired position. The author tried to do so on the basis of annual reports, websites, and
interviews, but did not achieve the necessary depth of information. The incumbent’s management
must assess the outlined strategies in respect of the incumbent’s vision, mission, and overall goals.
Within the specific type of strategy, there is plenty of room for further differentiation, such as
focusing on a certain industry or becoming a low-cost carrier. The future success of postal
incumbents in the logistics market will depend to a large extent upon their ability to establish a
distinctive and unique position.
Next we assessed different modes of expansion as an important issue within every diversification strategy. We outlined advantages and drawbacks of acquisitions versus endogenous growth
and presented alliances as an appropriate alternative. However, diversifying incumbents will
imperatively have to deal with this question and decide how they want to achieve the strategic
goal of growth. We have then looked at brand strategies and outlined various options for postal
incumbents. If diversification is pursued by means of acquisition, the acquired brand is probably
more powerful and better known so that all logistics operations should be subsumed under this
brand. If the incumbent aims at becoming the national logistics hero, keeping the traditional
postal brand or introducing a new brand close to it is recommended. Last but not least, we
assessed aspects of different types of ownership and concluded that letting incumbents into private ownership seems to benefit competitiveness and therefore also facilitate diversification into
logistics.
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This last chapter summarises the main findings, draws conclusions, and retrospectively appraises
the work from an academic point of view. The chapter also includes self-criticism to be found
in the methodology as well as in the analyses and the conclusions drawn. The dissertation ends
with an outlook for the diversifying postal incumbents on the one hand and for future research
on the other.
8.1 Main Findings and Conclusions
8.1.1 Summary of Methodology and Main Findings
The aim of this dissertation was to analyse and assess the trend among European postal incumbents to diversify into the logistics business. This was done both from an academic and
from a practitioner oriented approach: the methodology used consisted of the application of
theoretical concepts to the research question and a consequent crosschecking of the findings with
expert interviews and the current economic reality. The dissertation identified regulatory and
institutional development (mainly liberalisation and corporatisation) as main strategic drivers,
together with industry and market developments, such as a decline in mail volume, changing
customer demands. and globalisation, as well as new technologies. The competitive analysis of
postal incumbents revealed the resulting challenges for incumbent operators, namely coping with
new competition and changing customer needs, defining the level and financing of the universal
service obligation, as well as the issues associated with entering into alliances and partnerships.
We further identified asymmetric market developments, types of ownership, the size of the home
market, and the degree of diversification as the crucial factors shaping today’s competition in
the postal sector. The resulting competitive landscape shows global players, specialised players,
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defensive players, and national state-owned or developing operators. We then analysed current
offensive moves with a special focus on diversification and defensive capabilities.
In a next step, the dissertation provided a theoretical foundation for diversification, outlined
motivation and motives for diversification, the competitive advantage being pursued as well as
taking a look at the risks and cost of diversification. As far as performance is concerned, the
literature analysis showed mixed and inconsistent results, but tended towards a slightly negative
business impact. We then applied these concepts to the postal industry and identified the vicious
circle triggered by the decline in mail volume as the reason for diversification. By analysing the
traditional postal value chain, the author provided a list of potential areas of diversification, e.g.
mail preparation and printing solutions, but also mailroom management and electronic services.
We then compared the revenue and profit distribution of European postal incumbents and in the
process discovered that a large percentage of revenue already stems from other business areas,
but that incumbents still very much depend upon the profits generated from the mail business.
The logistics industry as one of the most important areas for diversification and the focus of this
dissertation was then scrutinised by carrying out an industry analysis. The history of logistics
was outlined and the relevant markets and their segments were defined, before market facts and
figures were presented. Based on this, Porter’s five forces were examined. The logistics industry
is characterised by countless small and medium-sized enterprises, most of them family owned.
However, the entry barriers preventing the establishment of at minimum a countrywide logistics
network are high due to the investment in infrastructure required. This initially causes step cost
but with small profit margins, leading to a need for large volumes to better utilise the network.
Larger operators try to evolve their business model towards more consulting and the support
of logistics operations by using information technology. The rationale behind this strategy is
to reduce fixed costs, to outsource asset-based operations to other operators, and therefore to
increase profitability.
After having analysed both the postal and the logistics industry as well as the concept of
diversification, the next chapter addressed in detail the issue of strategic analyses for diversifying postal incumbents. It started with critical success factors and assessed the attractiveness of
the logistics industry, the cost of entry and possible synergies which could accrue to the postal
business. The results showed that the logistics industry is sufficiently attractive, that the cost
of entry is sufficiently low, and that postal incumbents can profit from relatedness with their
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historic business to potentially be better positioned than traditional players to succeed in the
business. Relatedness can be found in sharing infrastructure and technology (product relatedness), in network management skills (managerial relatedness), as well as in marketing and sales
(customer relatedness). We then further identified information technology, network and supply
chain management skills, customer and market know-how, area coverage and density, as well as
brand/trust as specific critical success factors as being relevant for postal incumbents to successfully enter the logistics industry. Within the framework of a SWOT analysis, the following
dimensions were tested whether they form strengths or weaknesses for postal incumbents in the
logistics industry, i.e. products and services, infrastructure, organisation and structure, human
resources, and financial performance. Most strengths are valuable resources, but not rare and
also imitable or substitutable (resource-based view). Postal incumbents should focus on the
quality of their products and services, customer confidence and loyalty as well as opportunities
for economies of scale in order to outperform traditional logistics operators. The author then
identified dimensions for mapping postal and logistics operators into strategic groups. The European postal incumbents were grouped by how their logistics business is positioned and by the
share of their logistics turnover compared with total turnover. Both maps showed comparable
groups with DHL as the only global player that also operates its logistics businesses completely
independently from the core business. Another strategic group includes mainly Nordic postal
incumbents that operate on a regional level (the Nordics) through an independent logistics business unit and also generating more than 15% of their turnover from logistics. Smaller, nationally
operating incumbents often add logistics around their core services (mainly letters) whereby the
turnover from logistics accounts for 10-15% of total company turnover.
The final chapter then synthesised the preceding work and provided the following set of generic
strategies for European postal incumbents aiming at a diversification into logistics:
• National Hero
• Selective Geographic Expansion
• European Network
• International Player
• Lead Logistics Provider
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Furthermore, the author also outlined modes of expansion, brand strategies, and ownership
strategies for all of the above-mentioned strategic options.
8.1.2 Personal Conclusions
Overall, the author comes to the conclusion that logistics is indeed a promising area of diversification for postal incumbents. It seems nevertheless too narrow to conclude that this strategy
would fit all postal incumbents and would result in positive profits for all of them. The logistics
industry is highly competitive, with very low margins and has not revealed lucrative niches,
which could be quickly covered by postal incumbents. Although the market is growing steadily
and following approximately the GDP, there are not that many innovations or significant dynamics that would trigger convergence or create new business opportunities for new entrants. The
local up to national business is primarily covered by small and medium-sized, often family-owned
firms, which operate with very different cost structures than large conglomerates. International
transport requires high investment in infrastructure to benefit from economies of scale and high
geographic coverage in order to satisfy customers demands. To sum up, the logistics industry
has not waited for postal incumbents to enter the market and they must fight for market share
in order to establish a position among existing players.
New opportunities arise from the application of new technologies, especially information technologies. Such technologies lead to a shift by successful operators towards more consulting
services and network management, while basic logistics services such as transportation and
warehousing are outsourced to local operators. Due to their bulk business background, postal
incumbents run the risk of remaining within these unattractive basic areas, while specialised,
non-diversified operators win and retain the more lucrative parts of the customer contract. And
having operated nationally for decades, they are (generally speaking) too large and too inflexible
to compete with national logistics operators. But they are also too small and too inexperienced
to enter the logistics market on at least a regional scale. The dangerous consequence is a "stuck
in the middle" position, where incumbents have no unique selling propositions (USP) to offer
because there us an abundance of more specialised or cheaper operators.
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From a different point of view, we can certainly conclude that postal incumbents are better
positioned for diversification into logistics than most other firms. They possess unique network
management skills and have a broad, highly loyal customer base because of the quality of service
they already provide. Marketing and sales as well as back-office functions are also areas of
potential synergy between these two businesses. On the operations level, few synergies can be
found. If synergies exist they tend to be on a local level.
Incumbents with limited financial resources will find that logistics will therefore probably not
be a priority area into which to invest. In his personal opinion, the author is convinced that
postal incumbents just starting the process of diversifying into logistics will not be better off in
the long run than incumbents, focusing on other business opportunities. There are apparently
more lucrative alternatives which also serve the need to open up new revenue streams and reduce
dependency on the mail business. Some relevant areas include foreign domestic letter market
(cherry-picking), direct marketing, additional financial services, and government related services.
Regardless which area of diversification is chosen, the post’s strategists should not neglect the
component of time: diversifications should be done rather quickly, as long as incumbents can
use the cash flow generated by the mail business to execute these strategic moves. Once the
lucrative revenue streams from the monopoly based mail business ceases and prices come under
increasing pressure, it will be difficult to make the necessary investments.
"Many firms lost sight of competitive advantage in their scramble for growth and pursuit of
diversification", Michael Porter states in his famous book about competitive advantage (Porter,
1985: XXI (Preface)). Postal incumbents in particular must be careful that they do not diversify
just for the sake of diversification and in the process neglect their core business. At the end of the
day, diversification is just one possible strategy in the portfolio of strategic measures and does
not on its own solve all business problems. Posts must also master the challenges in their core
business, such as globalisation, product innovation, as well as process optimisation, and continue
to press home their specific competitive advantages in order to prevail in the competition with
private postal operators. And this is, in the end, a question, which can only be answered at the
level of an individual incumbent and with specific inside knowledge.
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8.2 Retrospect and Appraisal
Understanding strategies in general and specifically diversification is only a snapshot and difficult
to fully comprehend, as the sudden and unexpected divestments by TNT have shown. These
issues are intangible, difficult to fully capture, and furthermore so firm specific, that he whole
dissertation was a balancing act between scientific demands and practical relevance. The more
methodologically correct and abstract the analyses became, the more significance they seemed to
lose. So the author constantly ran the risk of executing an analysis and of drawing conclusions
that were either too abstract and therefore of limited use for individual incumbents or too specific
and practice-oriented so that they no longer satisfied scientific requirements.
Although the research question and the methodology seemed clear and fairly simple, the
author soon encountered serious problems with the data basis which was available and on which
he planned to build his analyses. There is insufficient basic research covering both the postal
and logistics industries, as far as markets, players, and competitive issues are concerned. There
are numerous postal studies on economic issues, the definition of the universal service obligation
and its financing. However, when it comes to managerial topics, monopolistic postal incumbents
seem not (yet) to be attractive enough for academics. The same applies to the logistics industry,
which has seen much research around technical and logistics optimisation, but has been neglected
as far as business development and marketing are concerned. As a consequence, it was difficult
for the author to base his analyses on solid ground and the work resembled more an assembling
of mosaic stones where the individual pieces did not always fit together and where new gaps were
always appearing.
The ultimate goal of firms is to generate profit and diversification must add to this goal. Most
studies of diversification therefore use financial data for their analyses. This approach proved
to be very difficult because the different postal incumbents do not operate in the same markets
and financial data are therefore not comparable. Due to their governmental background, postal
incumbents often apply different accounting standards and inconsistent structures or levels of
detail to their figures. Especially as far as diversification strategies are concerned, it was very
difficult to obtain the required data.
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Despite these challenges, the dissertation was an important experience for the author and
enabled him to acquire an in-depth understanding of the postal sector as a very essential sector
of our economy as well as insight into how diversification is an ubiquitous strategic move. It also
opened up the opportunity to meet fascinating industry experts and have profound discussions
on research topics on a very high level. All stakeholders around this dissertation consistently
confirmed the importance of the research question and it was satisfying to have the possibility
to pursue the question separately from the daily business, but nevertheless at a time when the
whole sector is fast developing.
The dissertation is the first of its kind (as far as the author knows), bringing together all
relevant aspects of diversification into logistics by European postal incumbents. Besides applying
academic frameworks to the research question, the author attached a great deal of importance to
the broad support he received from industry experts based on conducting extensive interviews.
This dyadic approach encompassing research and practice enabled the merging of academic
concepts such as diversification, resource-based view, SWOT analysis, and critical success factors
with the economic reality, success stories, market facts, and customer needs. This dissertation is
one of the first academic contributions to an extensive competitive analysis of the postal industry
in Europe and the assessment of the incumbents’ logistics strategies. The research further aims
at raising the awareness of managerial topics in this industry and to pave the way for follow-up
research in the field of competitive analyses of the postal sector. The dissertation also revealed
various issues which could not be covered within the frame of this work (see outlook later). It
therefore provides the groundwork for further research on special topics, but should also serve
as a valuable basis for strategic discussions at postal incumbents. The work and the respective
experiences contribute to strategy theory by identifying the advantages and shortcomings of
standard concepts when it comes to their application in practice in general, and in the postal
sector in particular. More precisely, the author discovers the limits of analytical diversification
frameworks if they cannot rely on financial data and should provide qualitative statements for
future strategic alignments of organisations. The PhD project therefore opens up the ground
for additional research in the field of strategy theory in general and diversification strategies in
particular.
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8.3 Possible Criticism and Limitation of Frameworks
Due to the challenges mentioned above occurring during work of preparing this dissertation,
the author is aware of a possible criticism: one may argue that the dissertation is not grounded
enough on theory and that the methodology is a collection of various frameworks and approaches.
The starting point was however to take a practical issue with high relevance for the postal
sector, which the author should analyse and assess through research and the application of
well-established concepts. The focus was therefore on answering the research question and the
structure and the concepts applied were chosen based on their contribution to this goal. From
a practitioner’s perspective, the dissertation probably does not provide the desired recipes and
answers to the specific challenges of an individual operator. This was however never the intention,
nor would an academic dissertation be the right framework for such an undertaking.
Academics may further criticise these concepts as being too basic and outdated by more
recent research. But then, both the postal and logistics industry are not yet well researched
and analysed. Thus it was deemed necessary to apply rather standard economic concepts, which
are well established and where there are no additional problems due to a lack of experience
in their application. The author however admits that he faced certain limitations of the used
methodology: First of all, there does not exist a universally applicable method of analysing and
assessing diversification. Most of the academic work and studies focus on diversifications that
date back decades and where a lot of data material such as stock exchange quotations exists. By
contrast, diversification in the postal sector is still a recent phenomenon and there are virtually
no measurable data for quantitative analyses. As a consequence, the author searched for widely
accepted frameworks in order to assess various aspects of the incumbents’ diversification into
logistics. Those frameworks are however not specifically designed for analysing diversification
and show various limitations: Porter’s industry analysis is a very useful and systematic approach
but is also only a static view and therefore a snapshot of the industry. Diversification, on the
other hand, is characterised by dynamics, the entering into new industries and changes in existing
strategies. In order to capture the strategic move of diversification, one would have to carry out
two industry analyses, one before and one after the diversification has taken place. But then, it
still neglects the essential move from one to the other industry. The author therefore applied the
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industry analysis only for analysing and assessing the logistics industry as the target industry
for postal incumbents.
Another stretch was made by applying the SWOT framework for assessing strengths and
weaknesses of all postal incumbents at once. It is quite obvious that not all factors apply to
all incumbents, at least not to the same extent or in the same priority: since some strengths
apply only for a certain groups of incumbents or are even a weakness for another group, drawing
conclusions became difficult and deducing generally applicable opportunities and threats was
virtually impossible. Despite those limitations, the framework proved helpful to focus on and
include all relevant strengths and weaknesses.
8.4 Outlook
As far as the postal sector is concerned, the author expects a further increase in change and
a sustainable split into two groups of incumbents: those which have managed to adapt to the
changing environment and are well positioned for future competition, and another group which
struggles to finance their universal service obligation and eventually will need state subsidies or
be integrated into a global player. The degree of diversification or success in new business areas
will however not decide whether an incumbent belongs to one or the other group. However,
these strategic moves influence the profitability of successful incumbents, as well as in the end
the success of competing private operators in the respective country or region. Time will tell as
to which of the diversification attempts really creates value for the incumbent and enables him
to uphold and finance a universal postal service.
Future research in this field must encompass more scenario analyses. Today these scenarios
are not clear enough to be able to make profound statements. Academics interested in the topic
should establish scenarios and formulate corresponding hypotheses. In few years, it will then be
possible to analyse (financial) data as a measure of the success of diversification and therefore
to verify or falsify those hypotheses. One can – for example – think of following hypotheses for
the next 5 years: 1) Postal operators continue to diversify into logistics, but will be successful
only on a national level. 2) In each region, one postal incumbent dominates the market for
logistics services. 3) Several smaller incumbents join forces, aligning their logistics networks and
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provide logistics services across Europe. 4) Large operators like DPWN, Fedex, UPS, but also
Kühne+Nagel and PO acquire national postal incumbents in order to get access to national
distribution networks. 5) Financial investors like CVC Capital Partners acquire national postal
incumbents and establish conglomerates that offer a wide range of postal and logistics services.
6) Diversified postal incumbents outperform traditional logistics provider due to synergy effects
with the postal business. 7) Postal incumbents divest their logistics business and focus again on
mail and CEP services due to higher returns on investment. 8) In 5 years, the effects triggered
by asymmetric market liberalisation are still a critical factor shaping competition.
The analysis of logistics as part of total turnover as well as part of EBIT over longer periods
of time is a further area, which will add to the understanding of diversification in the postal
sector. These conclusions could then be crosschecked with parallel analyses of other fields of
diversification to eventually be able to deduce where incumbents benefit most from their resources
when diversifying. If diversification into logistics is taken as a premise, researchers could go
more in-depth with various logistics segments and probably discover the necessary requirements
per segment and therefore construct specific strategies for individual postal incumbents. An
important issue could arise from regulatory aspects of diversification: while incumbents are
currently criticised for subsidising their diversification strategies with the revenues from their
mail business, the situation could be quite the opposite in the long run. The role of international
postal organisations such as UPU, IPC and PostEurop, the traditional postal businesses and
their right to exist and their value for highly diversified incumbents, also present interesting
future research opportunities.
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9 Annex
9.1 Glossary
3PL
Third Party Logistics Provider
4PL
Fourth Party Logistics Provider
CAGR
Compounded Annual Growth Rate
CAPM
Capital Assets Pricing Model
CEE
Central and Eastern Europe
CEP
Courier, Express and Parcel
Corporatisation
Corporatisation is the process of giving postal administrations an independent legal status and subjecting them to
the same legal requirements as private firms (UPU, 2002c:
69).
CRP
Continuous Replenishment
CSF
Critical Success Factors
Deregulation
Deregulation literally means the removal of regulation. However, in the context of postal reform it is often loosely used
to denote the reduction in, or the abolition of, legislated reserved services (monopolies) (UPU, 2002c: 72).
DPWN
Deutsche Post World Net
EC
European Community
e.g.
For instance
EPFL
Ecole Polytechnique Fédérale de Lausanne
est.
estimated
EU
European Union
FMO
Full Market Opening
258
9 Annex
FTL
Full Truck Load
GDP
Gross Domestic Product
GNP
Gross National Product
ICT
Information and Communication Technologies
Intermodal transport
The use of more than one form of transport
IPC
International Post Corporation
IPO
Initial Public Offering
IT
Information Technology
JIT
Just-in-Time
KPI
Key Performance Indicators (or Indices)
KSF
Key Success Factors (see also: CSF)
LSP
Logistics Service Providers
M&A
Merger & Acquisitions
MIR
Chair Management des Industries de Réseau (Management
of Network Industries) at EPFL
NRA
National Regulatory Authority
NPV
Net Present Value
PostReg
Swiss Postal Regulatory Authority
PostWatch
UK Postal Regulatory Authority
RBV
Resource based view
R&D
Research and Development
RFID
Radio Frequency Identification
ROI
Return on Investment
SCM
Supply Chain Management
SME
Small and Medium Enterprise(s)
SPI
Swiss Post International
tkm
Tonne kilometre
TNT
Tommy’s Nationwide Transports, founded 1943 in Australia
with a fleet consisting of a single truck
TPG
TNT Postal Group
259
9 Annex
UPU
Universal Postal Union: UN organisation as a interconnected network of over 650’000 permanent post office facilities, staffed by some 5.5 million workers
USO
Universal Service Obligation (“service public”)
USP
Universal Service Provider (incumbent)
USPS
United States Postal Services
Value Added Logistics
A range of additional services that a provider can offer its
(VAL)
client. Usually offered as an attractive and cost effective
alternative to in-house or competitor equivalents.
260
9 Annex
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273
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Logistikmarkt.ch (2006d): Studie “Strategie 2030”: Maritime Wirtschaft und Transportlogistik,
October 24, 2006
Logistikmarkt.ch (2006e): Alternativen zum klassischen Outsourcing in der Logistik, October
16, 2006
Logistikmarkt.ch (2007a): Logistics World Alliance startet durch, March 13, 2007
Logistikmarkt.ch (2007b): Versandhandelstochter bietet Fulfillment-Dienstleistungen, May 10,
2007
Logistikmarkt.ch (2007c): Verkehrsverlagerung von der Strasse auf Wasserwege scheitert an
Unwissenheit und Komplexität, June 12, 2007
POSTAL TECHNOLOGY INTERNATIONAL (2006): Mergers might be the way forward, but
small posts may need band together to survive, p. 16, September 2006
PRISM (2005): A User’s Guide to Successful M&As, Arthur D. Little, Vol. 2, pp. 35-51, 2005
Reuters (2007): EU states agree on postal liberalisation plan, October 1, 2007
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9.3 Questionnaire
Interview Guidelines „Diversification into Logistics“
Patrick Mollet, PhD Candidate, Swiss Federal Institute of Technology
Logistics Market
Q1)
How do you group logistics operators?
Q2)
How do you segment the European logistics market (if not identical with Q1)?
Q3)
What are the interesting segments for a logistics operator? Why?
Q4)
What are the interesting customer groups or industries for a logistics operator? Why?
Q5)
What kind of different strategies do you observe today?
Q6)
Which of them seem promising to you? Why?
Q7)
What are the Critical Success Factors? Why?
Q8)
What are the commonalities, respectively the differences, between the postal and the logistics
market?
Diversification of Postal Operators
Q9)
Why do postal operators diversify into logistics?
Q10) What kind of diversification strategies do you observe today?
Q11) Which postal operators pursue a successful diversification strategy? Why?
Q12) Is there an evolution that every diversifying postal operator has to pass?
Q13) How did these strategies evolve over time?
Q14) Which postal operators could diversify into logistics in the near future? Why?
Q15) What are the strengths of a postal logistics operator, and what the corresponding opportunities?
Q16) What are the weaknesses of a postal logistics operator, and what the corresponding threats?
Q17) Where do postal operators have shortcomings, if they want to become a player in the logistics
market?
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Q18) How can they overcome these shortcomings?
Q19) Where do you see synergies between the postal and the logistics operational business?
Q20) Where do you see synergies in technology, respectively their use?
Q21) Where do you see synergies in marketing and sales?
Q22) What kind of products and services that combine the postal and the logistics business are imaginable?
Q23) Is there a minimal range or depth of products and services that a postal operator must offer in
order to be successful in the logistics market?
Q24) Should postal operators confine themselves to distribution logistics, due to their background of
courier, express, and parcels?
Q25) To what extent can a postal operator really offer “one-stop-shopping”?
Q26) Is there a minimal geographic coverage that a postal operator needs in order to be successful?
Q27) The postal business is a standardised bulk business, while logistics develops to a customised solution business: Chance or threat for a diversifying postal operator?
Customers / Industries
Q28) What type of customers or industries benefits most from a combined portfolio of both postal and
logistics products and services? Why?
Q29) What type of customers or industries is especially interesting from the perspective of a postal
operator diversifying into logistics?
Focus: Diversified Postal Operators
Q30) In which industries do postal operators diversify?
Q31) What are a postal operator’s strategic goals in the logistics market?
Q32) How important is the logistics market for a postal operator?
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Q33) Equal to letter and parcel post?
Q34) How will this importance change?
Q35) What were/are the reasons for the diversification into logistics?
Q36) Which new resources does a postal operator need to build up: infrastructure, know-how, partner
etc.?
Q37) Do they build up these resources on their own or do they buy them in?
Q38) What does the ideal portfolio of a diversified postal operator look like?
Q39) Which logistics products and services should a postal operator first offer, which ones later? Why?
Q40) How is the logistics department typically integrated in a postal operator’s company? Equal to
letter and parcel post?
Q41) Representation of the logistics department in the top management?
Focus: Traditional Logistics Operators
Q42) Will competition increase due to diversifying postal operators?
Q43) Which strategic actions of diversifying postal operators do you expect?
Q44) Which strategic counter measure will logistics operator take?
Q45) Is the parcel or maybe the letter market an interesting target market for logistics operators?
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9.4 Expert Interviews
9.4.1 Interview #1
Wie segmentieren Sie den Logistikmarktes bzw. wie grenzen Sie die Logistik-Dienstleister ab?
Keine einfache Frage, strategische Gruppen werden sich mit der Liberalisierung der Postmärkte
erst bilden.
• Klassisches Briefgeschäft, klar abgrenzbar
• Finanzdienstleistungen
• Paketgeschäft, schwieriges Feld
– Residential-Geschäft (C2C, B2C, C2B), in sich geschlossenes Ganzes, private Konsumenten, tiefes Preisniveau, moderate Q-Anforderungen
– B2B-Segment: wird z.T. im gleichen Geschäftsfeld behandelt, führt zu grossen
Schwierigkeiten
– globales Expressgeschäft (UPS, FedEx, DHL, TNT)
• Speditionelles Umfeld, Landtransport, Teilladungen, Stückgut
• See-/Luftfracht
• Kontraktlogistik
B2B vs. C2C: Die Anforderungen sind sehr unterschiedlich und auch die Umsatzpotentiale.
Im B2C-Markt bewegen wir uns im Bereich von EUR 2.00 – 2.50 für ein Standardpaket (Massenversand). Im B2B-Geschäft liegt dieser Preis zwischen EUR 3.00-4.00. Der Hauptunterschied
(nicht aus der Versendersicht, sondern aus der Empfängersicht) liegt aber darin, dass man im
B2B-Bereich Drop-Quoten zwischen 1.5-4, also 1.5 bis 4 Paketen pro Empfänger. Entsprechend
liegen die Erlöse im B2B-Bereich zwischen EUR 6-10 pro Empfänger, im C2C-Geschäft aber
nur bei EUR 2.50 (durchschnittlich 1 Paket pro Empfänger). Ein Marktsegment bei EUR 6-10
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und ein zweites bei EUR 2-3. Im höherwertigen Segment können Sie viel höhere Qualitäten
anbieten, eben sehr hohe Overnight-Zustellquoten, höhere Flexibilität, T&T, Infos etc., während
Sie im B2C-Bereich eine extrem kostengünstige Produktion benötigen. Und da gibt es m.E.
zwei Stellhebel, um die Kosten zu senken: Sie können die Zustellfrequenz reduzieren, von 6 auf
5 oder 3 Tage pro Woche, was im B2C-Geschäft unproblematisch ist. Und/oder sie können
die Zustellung mit anderen Produkten kombinieren, zum Beispiel der Zustellung von Briefen,
insbesondere schweren Briefen wie Katalogen. Oder noch ein dritter Weg, in dem man LowCost-Zustellorganisationen einsetzt, wie dies in den Niederlanden gemacht wurde: Die haben
dort Hausfrauen jeweils 30-40 Pakete zustellen lassen und die typischen Pakete im B2C-Bereich
sind ja auch sehr leichtgewichtige Pakete (< 5 kg, signifikanter Anteil < 2kg). Das heisst, dass
ist ein Geschäft, welches man sehr viel stärker mit dem Briefgeschäft kombinieren kann.
Ich bin mir deshalb nicht sicher, ob die heutigen Abgrenzungen zwischen Mail und Pakete
auch in einem liberalisierten Umfeld noch gültig sein werden. Heute gibt es bereits wieder
Tendenzen, zumindest in Deutschland, wieder in Richtung Verbundzustellung zurückzugehen,
so wie das schon historisch war. 50-60% der Pakete werden in Deutschland bereits wieder in
der Verbundzustellung zugestellt. Das führt dann dazu, dass man im B2B-Bereich weniger
wettbewerbsfähig wird, weil man Laufzeitqualität verliert, weil man sehr viel mehr Zusteller
versorgen muss, werden die Zeitfenster enger. Und wenn ein Zusteller nur 2 oder 3 Pakete
pro Tag zustellt, dann lohnt es sich nicht, ihn mit einem modernen Scanner auszurüsten. Auf
der Seite geht dann die Qualität hinunter. Dies führt dann dazu, dass man entweder im B2BSegment wettbewerbsfähig ist, dann hat man aber hohe Kosten. Oder man optimiert die Kosten
für B2C, dann wird man aber die Wettbewerbsfähigkeit im B2B verlieren. Die Gefahr ist eine
Mischstrategie, welche für beide Segmente nicht optimal ist.
Die klassische Denke war, dass - wenn man die beiden Segmente zusammenpackt - man
Economies of Scale hat, dadurch dass man eine höhere Paketmenge zu verteilen hat und dadurch
steigt die Profitabilität durch die höhere Mengenzahl. Aber das ist meines Erachtens ein Trugschluss.
Welches sind die lukrativen Segmente in der Logistik?
Grundsätzlich halte ich von der Unterscheidung XPL relativ wenig, das ist eine ziemlich akademische Definition. Meines Erachtens sind ein Grossteil des Marktvolumens klassische Transporte.
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Und da ist es von der Tendenz her, dass mit steigendem Gewicht die Gewinnmargen fallen. Im
Briefgeschäft ist die Profitabilität heute bis zu 20%, obwohl man nicht genau sagen kann, wie
das in einem Wettbewerbsumfeld aussieht. Aber ich würde vermuten, dass auch dann die Marktführer noch eine sehr gute Profitabilität haben werden. Im Paketgeschäft hat man ähnlich hohe
Gewinnmöglichkeiten, UPS hat in den USA eine Umsatzrendite von rund 15% und mehr. TNT
hat auch 10% Umsatzrendite im Expressgeschäft. Im speditionellen Umfeld sind die Margen
meist etwas niedriger, so 2-2,5% sind dort die Regel. Aber auch dort gibt es interessante Nischen, wie zum Beispiel das Advanced Trucking, wo durch die Ausnutzung von Netzwerkeffekten
auch bis zu 10% Umsatzrendite generiert werden kann.
Das Problem ist aber in den meisten Segmenten, dass nur der Marktführer solch hohe Renditen verdienen kann. Und da heute die meisten Märkte schon sehr stark konsolidiert sind, ist
es schwierig, dort noch einzusteigen. Bleiben die höhergewichtigen Segmente, aber da ist der
Industrialisierungsgrad noch nicht sehr stark, auch da gibt es noch durchaus Möglichkeiten für
einen Konsolidierer, solche Konsolidierungsgewinne zu machen.
Das Kontraktlogistik-Geschäft ist ein Outsourcing-Geschäft, wie es auch im IT-Umfeld oder in
anderen Feldern Outsourcing-Geschäfte gibt. Und Outsourcing-Geschäfte haben eine sehr eigene
Chancen- und Risiko-Verteilung. Es gibt einen langfristigen Vertrag mit einem Auftraggeber und
es ist im Grunde immer sehr stark abhängig von der Qualität im Vertragsmanagement, ob man
auch in der Kontraktlogistik eine Profitabilität von 5-10% erreichen kann. Und ich habe den
Eindruck, dass die hohen Renditeerwartungen in der Kontraktlogistik erzeugt worden sind durch
eine gewisse Art der Fehlkalkulation: In der Kontraktlogistik weiss ich erst am Ende des Vertrages, ob ich mit diesem Vertrag Geld verdient habe. Denn am Vertragsende fallen erhebliche
Einmalkosten an: Wenn ich keine Vertragsverlängerung erhalte und ich habe eine Halle und
Personal, dann habe ich erhebliche Schliessungskosten. Das heisst, die Ergebnisse die die Kontraktlogistiker in der Jahresrechnung zeigen, können fatal falsch sein: Vielleicht zeige ich 5 Jahre
lang die grossen Gewinne und im sechsten Jahr kommt dann die grosse Abschreibung. Ich mache
auch ein Fragezeichen, ob die Kontraktlogistik auch wirklich ein sehr profitables Geschäftssegment ist. Es kann es nur sein, wenn man das Outsourcing-Geschäft extrem professionell managt.
Und hier sind eher Vergleiche mit der IT-Branche angesagt, auch da gibt es viele Fälle, wo Firmen erheblichen Abschreibungsbedarf haben.
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Und welches die interessanten Kundengruppen / Branchen?
Das ist sehr segmentspezifisch, da gibt es keine allgemeine Aussage über verschieden Logistiksegmente hinweg. Da sind für das Paketgeschäft andere Branchen interessant als für das
internationale Expressgeschäft oder für Kontraktlogistik.
Für internationalen Express ist die High-Tech-Branche ganz wichtig, weil hochwertige Sendungen weltweit verteilt werden müssen.
Welche Strategietypen beobachten Sie im Logistikmarkt?
Globalisierung ist ein ganz grosser Trend für alle Segmente. Wer nicht zumindest eine europaweite, wenn nicht globale Präsenz hat, wird einfach das Wachstum der Märkte nicht nutzen
können. Und da das Wachstum sehr stark auf der langen Distanz erfolgt, verliert man einfach
an Umsatzvolumen und –qualität, wenn man nur lokal arbeitet. Insofern sind alle Logistiker
gezwungen, möglichst schnell international zu expandieren. Die erste Aufgabe jedes Logistikunternehmens ist es deshalb, zuerst die regionalen Wachstumschancen zu nutzen. Und wenn ich
dann diese Chancen wahrgenommen habe, gibt es die zweite Dimension, dass man das Produktportfolio erweitert und/oder in Märkte expandiert, die nahe am eigenen Geschäft sind.
Ein B2C-Paketdienst geht in Richtung Briefsegment, wie z.B. Hermes. Oder ein Postunternehmen engagiert sich dann auch in der Logistik oder in Value Added Services. Das sind alles
nahe liegende Diversifizierungsstrategien.
Aber ich würde hier ganz klar eine Reihenfolge festlegen, zuerst geographisch, das ist typischerweise einfacher und man hat grössere Synergien zum bestehenden Geschäft.
Es gibt eine Tendenz zur Abrundung der horizontalen Expansion, aber einige Logistiker fahren
auch bewusst eine Gegenstrategie: TNT hat sich von der Kontraktlogistiksparte getrennt und
auch Panalpina konzentriert sich ganz auf See- und Luftfracht und hat auch die Kontraktlogistik dort integriert und betreibt das Kontraktlogistikgeschäft ausschliesslich als Add-On für das
Kerngeschäft. Insofern glaube ich, dass es für beide strategische Ausrichtungen Chancen gibt, es
ist mehr eine Frage der Qualität des Managements.
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Welche Diversifizierungsstrategien von Postunternehmen beobachten Sie?
• Internationale Expansion: Das war lange Zeit sehr schwierig, vor allem im Briefgeschäft
unmöglich.
• Horizontale Expansion: In andere Gewichtsstufen, aber im Grunde das gleiche Transportgeschäft (von A nach B).
• Vertikale Diversifizierung: Kontraktlogistik, wenn man nicht mehr von A nach B trans-
portiert, sondern Dienstleistungen anbietet, wie z.B. Warehousing, aber auch im Briefgeschäft
das Mailroom Management oder Lettershop-Leistungen.
Welche Postunternehmen verfolgen erfolgreiche Diversifizierungsstrategien?
TNT ist relativ erfolgreich, DHL ist derzeit einer schwierigen Phase, insbesondere im traditionellen DHL-Expressgeschäft nicht im Freight Forwarding oder der Kontraktlogistik. Und dies
nicht nur wie allgemein bekannt im US-Geschäft (Post-Merger-Situation, tiefer Marktanteil),
sondern auch in Europa: Hier ist man Marktführer und hat eine Profitabilität von 0 und man
wächst nicht. Aber die Hauptwettbewerber haben eine Umsatzrendite von 5-10% und wachsen
auch mit 5-10%. Wenn man das 3-5 Jahre hochrechnet, hat man enorme Wertverluste, deshalb
ist Europa die grössere Herausforderung für DHL Express. Ausserdem liegen in Europa ca. 12
Mrd Umsatz, in den USA nur 4 Mrd.
Ich beobachte die kleineren Postunternehmen zu wenig aufmerksam und kann da nicht sagen,
wo die heute genau stehen. Ich glaube, die kleineren Postunternehmen agieren alle in ihren
angestammten Märkten und dort dominiert das klassische Domestic-Mail-Geschäft. Und da ist
die Frage, wie gut man da die Hausaufgaben gemacht hat, Kostensenkungen, Restrukturierung
des Netzwerkes. Aber letztlich sind es Unternehmen, die nach einer vollständigen Deregulierung
der Märkte entweder Übernahmekandidaten oder müssen sich zusammenschliessen.
Welches sind die Stärken einer Postunternehmung?
Die Übernahmen von DHL und Danzas waren damals Win-of-Opportunities: Es war damals 1995
so, dass die Deutsche Post mit ihrem Paketgeschäft in Deutschland den höchsten Marktanteil in
Europa hatte. Und es war klar, dass, wenn der Binnenmarkt kommt, sich europaweite Netzwerke
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etablieren würden. Und dann war es ein nahe liegender Gedanke, selber als Konsolidierer die
bisherigen nationalen Paketanbieter zu vernetzen und darüber ein europaweites Netzwerk zu
legen. Und damit letztlich dem Kunden einfach eine bessere Qualität bieten zu können, als als
rein nationaler Anbieter. Da war sozusagen einfach die Chance da.
Und die Voraussetzung dafür war sicherlich eine gewisse Kapitalkraft. Das war sicherlich ein
Vorteil, den man 1995 nutzen konnte, der heute nur noch in Randbereichen gegeben ist. Der
andere Vorteil (der auch ein Nachteil ist), Postunternehmen sind zentralistisch geführte Unternehmen, im Gegensatz zu traditionellen Logistikern, welche stark dezentral geführt sind, mit
einer Profit-Center-Struktur und lokaler Verantwortung. Und ich denke, es gibt eine gewisse
Tendenz zu einer stärkeren Zentralisierung und die Postunternehmen kommen aus dieser Tradition: Wenn sie es schaffen, in einer Region über Grenzen hinweg ein einheitliches Geschäft zu
installieren, dann kann das ein grosser Vorteil sein, wie man auch bei den Integratoren UPS und
FedEx sieht. Aber es kann auch ein Nachteil sein, weil man lokales Unternehmertum vor Ort,
wenn man stark zentralistisch führt.
Die Marke und die Reputation sind eher ein Nachteil. Die Marke „Post“ kommt aus dem
Briefmarkt und bringt kein positives Image mit. Nicht nur staatlich und langsam, aber vor allem
wird die Marke stark mit Privatkunden assoziiert. Wobei man sagen muss, dass die Marke in den
Logistik-DL keine dominante Rolle spielt: Wir sprechen hier von einigen tausend potentiellen
Kunden und die wenigsten Logistiker haben eine wirklich starke Marke. Ausnahme ist das
weltweite Expressgeschäft, welches aber eben wieder auch von Privatkunden abhängt.
Man muss sich einfach bewusst sein, dass die Unternehmenskultur einer Postunternehmung
stark zentralistisch ist, und man muss es schaffen, die Vorteile dieser zentralen Steuerung mit den
Vorteilen der lokalen Verantwortung zu kombinieren und das ist eine schwierige Herausforderung.
Wo sehen Sie Synergiepotential in der Logistik?
Ich glaube nicht an grosse Synergien im Tagesgeschäft, diese werden häufig überschätzt. Ich
glaube daran, dass die einzelnen Segmente aus sich heraus funktionieren müssen und es häufig
auch besser ist, die als eigenständige Einheiten aufzustellen, mit relativ begrenzter Nutzung von
gemeinsamen Ressourcen. Das kann im Einzelfall durchaus sinnvoll sein, aber in der Regel führt
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es nur zu erheblichen Abstimmungsaufwänden, die die Vorteile schnell überkompensieren und
die die Flexibilität dann auch sehr stark einschränken.
Am ehesten gibt es Synergien in der Marktbearbeitung, da ich auf etablierte Kontakte zurückgreifen kann, aber das ist relativ begrenzt. Deshalb glaube ich auch, dass sowohl Multi-ProduktUnternehmen wie auch Ein-Produkt-Unternehmen sich nicht gross unterscheiden müssen, was
ihre Marktchancen betrifft. Beides kann funktionieren, es ist mehr eine Frage, wie man die Komplexität von mehreren Geschäftsfeldern bei einem Multi-Produkt-Unternehmen managt. Wenn
man die strategischen Gruppen auch als Organisationsprinzip für die Business Units nutzt, dann
können diese Sparten auch weltweit erfolgreich operieren. Wenn man diese strategischen Gruppen
versucht, zu stark zusammenzulegen versucht, dann führt das eher zu Problemen.
Solange ein Geschäft (z.B. Paket) das Unternehmen völlig dominiert, ist es unschädlich, wenn
man sagt, wir machen jetzt noch ein paar Zusatzgeschäfte wie LKW-Transporte. Aber irgendwann kommt der Punkt, dass es Sinn macht, das Zusatzgeschäft als eigenständiges Geschäft zu
führen. Ein Paketgeschäft hat ein ganz anderes Geschäftsmodell und andere KPI’s als ein LKWTransport. Wenn ich drüber noch eine Holding habe, aber darunter die Geschäfte als Profit
Center eine maximale Eigenständigkeit haben, dann ist das unkritisch.
Gibt es eine Mindesttiefe oder -breite des Produktportfolios?
Man sollte darauf achten, dass man in dem Feld, in dem man expandiert, der regionale oder globale Marktführer werden kann. Wenn eine Briefpost entscheidet, sich in der See-/Luftfracht zu
engagieren und habe dann zwei grosse Geschäftsfelder, dann muss sie auch im neuen Geschäftsfeld mindestens zu den Top 5 gehören können. Woran ich nicht glaube, ist, dass man in 4-5
Geschäftssparten expandieren sollte und dort europäisch nur einer von 10 oder 15 Anbietern
wird. Meines Erachtens sollte man sich fokussieren auf Sparten, wo man Marktführer in einem
geographisch begrenzten Gebiet werden kann, diesen Anspruch muss man haben. Luft- und
Seefracht sowie Express muss zwingend global sein, das Paketgeschäft kann auch europäisch
oder national funktionieren.
Gegentendenz: Die Kunden wollen bewusst nicht One-Stop-Shopping, die wollen diversifizieren, die wollen ihre Risiken streuen: Und da der One-Stop-Shop-Anbieter nicht alle Geschäfte
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quersubventionieren kann, irgendwo muss er ja Geld verdienen, insofern hat kaum Möglichkeiten,
den Kunden an sich zu binden. Insofern gibt es immer gute Chancen für einen spezialisieren Anbieter, der nur ein bestimmtes Marktsegment bedient.
Das One-Stop-Shopping bei der Deutschen Post war stark eine Marketing-Message und es war
der Führungsebene durchaus bewusst, dass die Synergien an der Kundenschnittstelle begrenzt
sind. Und dass die Kunden versuchen werden, Cherry-Picking zu machen.
Sollte sich ein Postunternehmen auf Distributionslogistik konzentrieren?
Die Distributionslogistik ist zwar nahe liegend, aber diese Unterscheidung ist nachgelagert zur
ersten Unterscheidung nach strategischen Gruppen: Je nach Optik des Versenders oder des
Empfängers ist die Unterscheidung anders. Diese Abgrenzung ist für bestimmte IT-Systeme
wichtig, nicht aber für die Logistik. Das ist höchstens für hochspezialisierte Lösungen (z.B.
Beschaffung für die Automobilindustrie) wichtig.
Was ist sinnvoller: Standardisiertes Massengeschäft oder massgeschneiderte Lösungen?
Hängt davon ab, was man als Logistikmarkt definiert. Wenn man sozusagen den Logistikmarkt
so definiert, dass das alle Sendungen über 31.5 kg sind, dann gibt es da auch ganz grosse Segmente, die ganz stark standardisiert sind. Also zum Beispiel das See- und Luftfrachtgeschäft,
die Landtransporte mal mehr, mal weniger. Nur in der Kontraktlogistik spielt die massgeschneiderte Lösung eine bedeutsamere Rolle. Aber ansonsten würde ich sagen, gibt es keine allgemeine
Tendenz, die gewichtsabhängig wäre. Wir können ja Märkte mal nach Gewicht und nach Transportmodi abgrenzen: Bis 2 kg ist es der Brief, bis 31.5 kg ist es das Paket und dann gibt es
noch eine zweite Unterscheidung nach Standardqualität und Express. Und dann gibt es eben die
logistischen Märkte über 31.5 kg in Form von Paletten oder Container in den See- und Lufttransporten. Die Massschneiderung ist da angesagt, wo ich rausgehe aus den reinen Transporten, rein
in die Value Added Services und da habe ich massgeschneiderte Lösungen, die ich brauche ich
der klassischen industriellen Kontraktlogistik. Das Massschneidern ist mehr eine Frage, bewege
ich mich im Bereich der Mehrwertservices oder bewege ich mich im klassischen Transportmarkt.
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Gibt es eine Gegentendenz: Diversifizierung von Logistikanbietern ins Postgeschäft?
Ich halte es für unwahrscheinlich, denn die grossen Logistiker werden sich darauf konzentrieren,
den globalen Marktanteil in den klassischen Märkten zu steigern, und die haben damit genug zu
tun, um die wachsenden Märkte in Asien, aber auch in Südamerika und eventuell mal in Afrika
gut abzudecken. Insofern sehe ich eigentlich eher das Diversifizieren ins Briefgeschäft durch zwei
Gruppen: Zum einen Briefunternehmen selber, die international expandieren und die Deregulierung der Briefmärkte nutzen, das ist die Hauptstossrichtung. Und zum anderen sind da die
lokalen Start-Ups und zumindest in Deutschland die Zeitungsverlage, die das als Geschäftsfeld
für sich entdeckt haben. Insofern glaube ich, dass sich die klassischen Logistiker aus dieser Entwicklung zurückhalten werden.
Wie beurteilen Sie die Chancen für Kooperationen von kleineren Postunternehmen?
Ich glaube, dass das Landtransportgeschäft schon heute, aber in Zukunft noch stärker, ein europäisches Geschäft ist. Also wenn man Landtransporte mit dem LKW machen will, dann muss
man in europaweites Netz aufbauen oder akquirieren. Also ich glaube eher, dass es sich für
kleinere Postunternehmen es durchaus Sinn machen kann, sich zusammenzuschliessen. Es kann
Sinn machen, in einzelnen Ländern ins Briefgeschäft zu expandieren. Aber ich glaube, das man,
um wettbewerbsfähig zu sein im Landtransportgeschäft, muss man eine europaweite Präsenz
haben. Und um wettbewerbsfähig zu sein im See-/Luftfrachtgeschäft, muss ich eine globale
Präsenz haben.
Zwei Gründe sprechen gegen den Erfolg von Kooperationen: Sie kriegen in einer Kooperation
nie die Qualität hin, vor allem auf der IT-Seite, wie ein integrierter Anbieter. Im Augenblick
geht es noch einigermassen, weil die wenigsten europäischen Netzwerke sind wirklich integriert
IT-mässig und auch prozessmässig. Aber irgendwann werden sie es schaffen. Und dann habe
ich gegenüber einem Schenker, einer DHL oder einem Dachser einen erheblichen Wettbewerbsnachteil. Und das zweite ist natürlich die Instabilität von solchen Kooperationen: Sie wählen
sich einen Kooperationspartner für Frankreich aus und in 3 Jahren wird er durch Kühne + Nagel
gekauft, dann haben sie plötzlich keinen Partner mehr in Frankreich. Kooperationen sind deshalb vielleicht temporär eine sinnvolle und nahe liegende Strategie, aber ich denke nicht, dass
sie dauerhaft trägt. Das ist sozusagen ein Zwischenschritt, aber als strategisches Konzept haben
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sich die Kooperationen als sehr instabil erwiesen. Die halten 15-20 Jahre, aber die sind nicht auf
die Dauer ausgelegt.
Wie sieht die strategische Ausrichtung von UPS und FedEx aus?
UPS und FedEx wollen sich ja fokussieren auf das Paket- und das Expressgeschäft. Für die ist
eigentlich nur ein reiner Paketanbieter interessant und vor allem einer, der im B2B-Geschäft sehr
stark ist. Und insofern gibt’s da 3 Firmen, die für UPS und FedEx wirklich interessant sind:
TNT, mit Abstrichen GLS und DPD, weil die haben europaweite Netzwerke. Und wenn FedEx
jetzt quasi eine Ergänzung ihrer starken Präsenz in den USA machen wollen, dann brauchen
sie einen starken, europaweit aufgestellten Partner. Und dafür ist dann ein nationales Postunternehmen eben auch wieder viel zu klein. Und es wäre zu komplex, jetzt mit 20 Postunternehmen
in Europa eine Kooperation aufzubauen.
Und DPD und GLS?
Auch da gilt, was ich vorher gesagt habe: Diese beiden Unternehmen haben die Herausforderung,
in ihrem klassischen Geschäft noch viel stärker zu wachsen. DPD macht heute in Europa ca. 2.5
Mia EUR Umsatz, der gesamte Paket- und Expressmarkt umfasst 50 Mia EUR, das heisst sie
haben einen Marktanteil von 5%. Deren Hauptherausforderung muss es sein, diesen Marktanteil
auf 10-15-20% zu steigern, dann sind sie wirklich ein grosser europäischer Paketdienst.
Sehen Sie noch andere Chancen für Postunternehmen anstelle einer Diversifizierung in die
Logistik?
Wo es immer noch sehr gute Chancen gibt, ist ein massiver Einstieg ins Briefgeschäft. Aber da
ist es z.B. für Deutschland auch schon fast zu spät, da es jetzt zwei grosse Anbieter gibt. Wobei
es eine Chance wäre, sich bei den Zeitungsverlagen einzukaufen und in das Foreign-DomesticGeschäft einzusteigen. Ich halte es für ein sehr spannendes Geschäft, das Briefgeschäft. Ich
glaube auch, dass wenn ich verantwortlich wäre für eine europäische Post, ich sehr genau prüfen
würde, ob ich nicht in Deutschland oder Holland oder Italien ins Domestic-Briefgeschäft. Weil
das hat einigermassen überschaubare Risiken und beträchtliche Chancen, welches in den nächsten 5-10 Jahren erst entstehen wird. Wahrscheinlich ist es heute nicht sinnvoll, die Strategie
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von anno 1995 nachzubauen, wahrscheinlich müsste man sich heute andere Märkte suchen und
dort stark expandieren.
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9.4.2 Interview #2
Segmentierung Logistikmarkt
Wir haben Logistik in der weiteren Form, da würde ich den gesamten Postbereich darunter sehen. Also DPWN hat Brief, Paket, See, Luft, Strasse und den gesamten Warehousing und Value
Added Services, das ist für mich so der klassische Logistikmarkt. Wenn man ihn enger fasst,
dann würde ich den KEP-Bereich und den Briefmarkt rausnehmen und auf Strasse, See und Luft
konzentrieren, also Paletten und Container und alles, was dazu gehört.
Gruppierung Logistikdienstleister
Strategische würde ich die Anbieter auch entlang dieser Linie gruppieren: Da sind diejenigen,
mit denen wir im Wettbewerb sind im Briefbereich. Dann die klassischen Paketanbieter, wobei
Brief und Paket immer dichter aneinander rückt. Und dann eben Luft, See und Kontraktlogistikmarkt. So würde ich sie gruppieren. Es gibt allerdings nur einige wenige Komplettanbieter.
Interessante Segmente
Ich glaube, dass es im Moment relativ einfach ist, die Briefmärkte zu attackieren, insbesondere die
geschützten. Das spüren wir auch überall. Es ist relativ einfach, mit Cherry Picking irgendwelche
Ortsposten aufzumachen. Ich glaube, da dieser Bereich in vielen Ländern Europas relativ lange
geschützt war, hat man da noch relativ wenig Konkurrenz und kann da noch einsteigen.
Wo ich definitiv nicht reingehen würde, ist ein Strassennetz. Die Margen sind ausgelutscht,
da kann man noch ein weiteres Netzwerk über Europa legen, aber das ist hochriskant, da relativ
hohe Fixkosten entstehen, wenn man Qualität bieten will. Hier können sie nur wenig gewinnen,
aber viel verlieren.
Eigene Assets, eigene Netzwerke
Es stellt sich die Frage, was braucht man an Assets, um eigene Netzwerke zu betreiben. Aus
meiner Sicht ist es das Schöne an einem Netzwerk, dass man viele Dinge outsourcen kann, ohne
dass man Gefahr läuft, dass die Subcontractor das Geschäft übernehmen können. Wenn man
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jemanden hat, der die Linien fährt, hat der keine Chance, den Kunden zu übernehmen. Nur weil
er eine Linie fährt, hat er noch keine Abholung, keine Zustellung, keine Hubs. Also kann man das
schick outsourcen und einkaufen, weshalb ich kein Netz mit eigenen Assets aufbauen würde. Was
sind die Kernkompetenzen? Man kann genauso gut auch die Hubs outsourcen, auch das geht.
In aller Regel ist so ein Hub so spezialisiert, dass es wenige geben wird, die das selber anbieten
wollen als Dienstleister. Insofern gehe ich davon aus, dass in Netzwerken die Hubs immer selbst
gemacht werden. Die Ideen, die Technik, die drin steht, die Optimierung der Prozesse, die ich
in-house machen muss. Die Netzwerkplanung, die Prozessflüsse, die Informationsflüsse, all die
Dinge muss man selber tun.
Strategien von Logistikdienstleistern
Was man sehr stark sieht, dass in aller Regel die Transportleistungen outgesourced sind. Was
mehr und mehr um sich greift ist, dass die Hubs in vielen Fällen gemietet statt gekauft werden.
Je nach dem wie man es betrachtet, ist man eher asset-light. Kapitalisiert man die Mieten, ist
man doch wieder nicht so asset-light, das hat mit der Definition zu tun. In aller Regel verlangen
die Leute 10-Jahres-Kontrakte oder wenn man glücklich ist 5 plus 5. Das ist das, wo man relativ
light rein kann. Schwieriger wird es bei den Investitionen in die Systeme, die der Logistikunternehmer selber tragen muss.
Interessante Kundengruppen
Wenn man die Presse verfolgt hat, hat man gesehen, dass wir einen grösseren Abschluss mit
der englischen Health Insurance hatten. Also noch weitere Logistikservices zu bieten, die über
Transport und Lagerei hinausgehen und diese Elemente zusammenfassen. Und ich glaube, dass
in dem Bereich durchaus noch grössere Abschlüsse in Zukunft zu erwarten sind.
Kritische Erfolgsfaktoren
Peoples und Systems! Was muss ich haben? Ich muss vernünftige Systeme haben, das sind
IT-Systeme, das sind aber auch Prozessabläufe. Und man muss gute Leute haben.
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In vielen Fällen kommt auch noch eine überregionale Präsenz dazu, weil die Grosskunden oft
ein Problem für die ganze Region outsourcen wollen. Und da muss man einfach anbieten können,
sei es aus eigener Hand oder mit Partnern.
Ein Logistikanbieter muss sich überlegen, ob er der Qualitätsanbieter ist, und danach muss
er seine Organisation aufbauen. Und er muss das konsequent verfolgen. Als kleiner Anbieter,
denke ich, sollte man einfach auch mal über Nischen nachdenken, in die man sich begeben kann.
Wenn ich schon da bin, als Postanbieter, dann würde ich mir überlegen, welche Tätigkeiten kann
ich ausüben, um meine bestehenden Assets zu nutzen. Und ich habe ja auch schon Kunden,
deshalb würde ich stark ins Cross-Selling gehen. Ich würde mir meine grössten Kunden anschauen und mir überlegen, welches sind die Logistikleistungen, die diese nutzen können, und
würde mir überlegen, ob ich dafür eine Lösung habe. Also ich würde nicht aufbauen wie wild
und dann die Kunden suchen. Jeder kennt mich als Postunternehmen, ich habe einen grossen
Vertrauensvorschuss, insofern würde ich bei den bestehenden Kunden anfangen.
Interessante Nischen
Speziallogistik wie Kühllogistik, Gefahrgut etc.. Kundenmässig würde ich nicht eine Nischenstrategie fahren, aber ich wüsste, wo anfangen, nämlich bei meinen eigenen Kunden. Zum
Beispiel Sortierleistungen, ein Klassiker für die Post: Die einfachste Art für eine Post, sich weiterzuentwickeln, ist irgendwelche Sortier- und Fullfilment-Leistungen mitanzubieten. Weiter in
die Logistik vorzustossen, also zum Beispiel Transportleistungen, will gut überlegt sein. Immer
einfach ist das Modell „Sofa-Spediteur“, wo ich kein eigenes Netzwerk brauche, sondern nur ein
Telefon und Kontakte im Markt. Das ist eine Sache, wo ich mit wenigen Investitionen anfangen
kann.
Gemeinsamkeiten Post- und Logistikmarkt
Die grösste Gemeinsamkeit ist der Prozess: Abholung – Linie – Zustellung. Die Abholung
beim Brief- Paketbereich wird häufig bei den Filialen gemacht. aber der eigentliche Prozess ist
identisch. Ob man das mit Paketen macht oder mit Paletten und Containern, spielt keine Rolle.
Die meisten Synergien sind aus meiner Sicht im Bereich der Linie, weil die Abholfahrzeuge
doch recht unterschiedlich aussehen. Es sei denn, man hat ein paar Grosskunden, wo man
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dann alles mitnehmen kann in einem Stopp. Ansonsten ist es aus meiner Sicht sogar relativ
schwer, Synergien zu finden. Es sieht so gut aus, aber wenn man ins Detail geht, findet man
nicht viel. Wenn man sich ganz konkret den Briefträger anschaut, der ist zu Fuss oder mit
dem Fahrrad unterwegs, dem kann ich schlecht eine Palette mitgeben. Derjenige, der mit einer
Palette unterwegs ist, der kann nicht an jeder Tür stoppen, um einen Brief einzuwerfen. Also
die gemeinsame Zustellung funktioniert nicht.
Ich sehe da schon eher Potential in der Informationstechnologie. Und das grosse Thema ist
die Kundenansprache, das One-Stop-Shopping. Das ist allerdings nur gegenüber dem Kunden
ein Versprechen, die eigentliche Produktion wird doch in unterschiedlichen Hallen stattfinden
müssen. Aus 10’000 m2 Paket und 10’000 m2 Crossdocking kann ich nämlich nicht 10’000 m2
gemeinschaftliche Nutzung machen, weil bei Paket steht ein Sortierer drin und dort kann ich mit
meinen Paletten nicht durchfahren. Der interessante Teil kommt aber, wenn ich die 10’000 m2
Paket und 10’000 m2 Logistik nebeneinander baue und die Linien gemeinsam nutzen kann. Dies
ist auch eine logische Schlussfolgerung, denn wann immer man die Linien gemeinsam nutzen will
und die beiden Hubs stehen zu weit auseinander, dann kriegen sie ein Problem mit den Zeitfenstern. Es macht also Sinn, diese Hubs am gleichen Ort zu bauen, aber das führt zu keiner
Reduzierung der Quadratmeter-Zahl.
Synergien im Marketing & Verkauf
Wenn man sich Versandhändler anschaut, dann haben die die verschiedensten Dinge: Die haben
zum einen ihre Regionalläger, also Logistik. Zweitens müssen diese Läger gefüllt werden, also
Logistik. Die Regionalläger gehen auf teilweise noch auf lokale Filialen, also Logistik, und gehen
dann zum Endkunden, also Paket. Den Versandhändler würde ich also als Klassiker betrachten.
Alles was mit Filialen zu tun hat, könnte von kombinierten Angeboten profitieren, da da nicht
gleich jeder palettenweise bestellt. Eine andere klassische Kombination ist Lager und Paket,
man stellt sich zum Beispiel Importkunden vor: Ein neuer Kunde kommt ins Land und will Fuss
fassen. Er wird in seinem Ursprungsland produzieren, baut sich einen sagenhaften Vertrieb auf
und sourced den Rest out. Und der Versand kann dann je nach Grösse Paket oder Palette sein,
da sehe ich also auch noch Synergien.
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Diversifizierung von DPD und GLS
Ich denke eher, dass die in die Kontraktlogistik und ins Warehousing einsteigen, als dass sie
Strassentransporte anbieten werden.
Stärken einer Post
Zum einen kann man da nur dem Herrn Zumwinkel für seine Weitsichtigkeit danken. Der Postmarkt unterliegt ja einem Wandel und der war absehbar. Aber schaut man in die Vergangenheit,
was ist die Post gewesen? Man hat Briefe in der Gegend herumgefahren, aber es gab auch
Postkutschen, sprich die Kombination mit dem Personentransport. Und es gibt auch heute noch
einige, die Postbusse haben, dieser Sektor hat sich also lange gehalten. Irgendwann kam dann
der Moment, als man sah, das ist nicht mehr der Bereich, wo wir drin sein wollen und hat
sich auf das Kerngeschäft konzentriert. Aber dann hat man gesehen, dass Post mehr ist als
der Transport von Briefen, da man Netzwerke und Linien hat, welche man für alles Mögliche
nutzen kann. Dazu hat man eigentlich noch weitere Vorteile: Man hat einen Namen, man hat
Kunden und man bewegt sich in einem Umfeld, das relativ dicht dran ist. Und von daher war es
logisch zu sagen, dass man sich bei einem Angriff auf den Briefmarkt verteidigt, indem man sich
auf breitere Füsse stellt. Herr Zumwinkel hätte natürlich jetzt auch sagen können, er beginne,
Gummibärchen zu produzieren oder eben er gehe ich artverwandte Gebiete.
Schwächen einer Post
Die meisten sind Staatsbetriebe, welche weit höhere Löhne bezahlen als die Konkurrenten. Ich
sage nicht, dass ein Postbote zuviel Geld verdient, aber es ist ein Problem, dass einer, der heute
auf der grünen Wiese startet, nur die Hälfte zahlt. In diesen alten Strukturen sehe ich die
Hauptschwierigkeiten. Und die Bereitschaft zu Änderungen zu haben.
Mindestbreite oder –tiefe
So schnell wachsen wie die Deutsche Post, das kann man nur durch Zukäufe. Man kann sich
auch ein nationales Netz zukaufen, indem man sich die Standorte kauft. Das ist vergleichsweise
billiger, als das alles selber aufzubauen. Alles was mit Kontraktlogistik zu tun hat, würde ich
jedoch nicht kaufen. Wir haben das jetzt gerade mit Exel getan, aber das hat mit Ausdehnung
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zu tun, aber ich als kleines Postunternehmen in diesem Kontraktgeschäft mir selber eine Position
aufbauen. Ein Netz kriege ich in dieser Geschwindigkeit nicht gefüllt, das kann ich nur aufbauen
durch Zukäufe. Punkt-zu-Punkt-Speditionen ginge auch noch zum selber aufbauen.
Knowhow / Personal
Ich würde mischen zwischen interner Aus- und Weiterbildung sowie Zukäufen, wie das Zumwinkel
auch gemacht hat. Nur mit Schulen geht nicht, aber wenn man eine durchmischte Gemeinschaft hat, dann kriegt man die insgesamt richtig ausgerichtet. Es muss also nicht die gesamte
Mannschaft ausgetauscht werden, aber ich würde schon so 10-20% der „denkenden“ Struktur
austauschen.
Das eine ist, trainiere ich die Leute richtig, um sie auf die neue Aufgabe auszurichten. Das
andere ist, in aller Regel sind Postunternehmen schlecht im Marketing. Man kennt zwar seine
Kunden, aber so richtig den Kunden bearbeiten zu müssen, ist ein wesentlicher Punkt, den die
Postmitarbeiter noch lernen müssen und wo frisches Blut rein muss.
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9.4.3 Interview #3
Segmentierung des Logistikmarktes1
• Mail
• Express: time-definite, solange man es noch tragen kann und keinen Hubstapler benötigt.
• Road: Tiefe Eintrittsbarrieren, grosse Konkurrenz aus Billiglohnländern
• Air
• Sea
• Kontraktlogistik: Von Value Added Services bis hin zum kompletten Outsourcing, nicht
überschneidungsfrei mit den anderen Segmenten.
Pakete werden auf Grund der Gewichtsklasse normalerweise dem Express-Segment zugeordnet. Eigentlich aber ziemliche Unterschiede: Express ist fast nur B2B, Pakete sehr viel B2C
(Versandhändler) und C2C (eBay etc.).
Jedes Segment ist interessant, in jedem Segment kann gutes Geld verdient werden. Hängt immer
stark von der Strategie und den eigenen Ressourcen ab.
Unterschiedliche Strategien
Einige wenige weltweite Logistikdienstleister mit der gesamten Palette.
• DPWN: Einziger Player, der wirklich alle Segmente abdeckt.
• UPS: Sehr stark in den USA, Konzentration in Europa auf Express und Road, immer
stärker in der Kontraktlogistik. Hat angekündigt, in den Mail-Markt einzusteigen, ist aber
derzeit eher unwahrscheinlich.
1
Transcription based on written notes
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• FedEx: Stark im weltweiten Express
• TNT: Mail und Express, Rückzug aus dem Logistikgeschäft
• „Kühne&Nagel’s dieser Welt“: Fokussierung auf eines oder mehrere Segmente, zumeist
regional beschränkt.
Grundsätzlich sehr segmentabhängig.
• Express: Schnelligkeit, Qualität und Zuverlässigkeit
• Road/Air/Sea: Kontrolle über das Netz (falls Subkontraktoren) ansonsten Kapital für
Investitionen in Assets (Fahrzeuge, Lager etc.), Marktanteile, Economies of Scope
• Kontraktlogistik: Extremes Branchen-Knowhow, massgeschneiderte Lösungen
• Mail: Engmaschiges Netz, Kostenführerschaft
• International: Starkes Management-Team
Gemeinsamkeiten bzw. die Unterschiede zwischen dem Post- und dem Logistikmarkt sowie
Synergien zwischen dem Post- und dem Logistikgeschäft im operativen Betrieb
Nicht allzu viele Gemeinsamkeiten, unterschiedliche Logistikanforderungen, andere Management
Skills, unterschiedliche Marktbearbeitung, unterschiedliche Distribution. Mail und Express/Pakete
haben in der Annahme und in der Zustellung noch am meisten Gemeinsamkeiten. Express und
Fracht allenfalls in der Marktbearbeitung.
Linehaul-Synergien sind nur sehr begrenzt möglich: Express hat andere Laufzeiten und andere
Volumina als Fracht. Ausserdem werden die meisten Frachttransporte mit Subunternehmern
durchgeführt, während Express mit eigenen Assets durchgeführt wird. Schwierige Koordination.
Marktbearbeitung benötigt andere Fähigkeiten: Kunden von Mail und Paketen sind eher
Marketing- und Verkaufsleute, die Kunden von Frachtleistungen sind Logistiker (insbesondere
für Kontraktlogistik), entsprechend sind eine unterschiedliche Ansprache und unterschiedliche
Fähigkeiten nötig.
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Aber im Rahmen von Job Enrichment/Rotation werden Angestellte zwischen den verschiedenen Bereichen ausgetauscht. Insbesondere Mail-Spezialisten helfen beim Aufbau und der Strukturierung von Express-Netzen.
Welche Postunternehmen könnten in Zukunft ebenfalls in die Logistik diversifizieren?
• Französische Post: Hängt von der Aufrechterhaltung des Monopols ab, gut gefüllte Kriegskasse,
weitere Investitionen dürfen erwartet werden.
• Schweizerische Post: Ist daran, aber zaghaft und regional sehr begrenzt, wird Probleme
mit dem Lohnniveau haben
• Österreichische Post: Vielversprechende Ostexpansion
Stärken einer Postunternehmung
• Zentrales Management ist überall dort wichtig, wo Assets und Investitionen vorhanden
sind. DPWN arbeitet im Frachtbereich vor allem über Subunternehmer, nicht zwingend
ein zentrales Management nötig.
• Brand ist unwichtig, kaum Transfer von Image und Reputation
• Präzision und Qualitätsbewusstsein der Mitarbeiter
• Strukturen, Optimierungen, Netzkontrolle ist im Mail-Umfeld sehr wichtig und steckt in
der Logistik noch in den Kinderschuhen.
Schwächen einer Postunternehmung
Staatliche Kontrolle und hohe Löhne
Minimale geographische Abdeckung
Hängt von der Liga ab, in welcher man spielen will und welche Kunden man erreichen will:
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Grosse weltweite Kunden verlangen heute für die gesamte Welt einen einzigen Logistikpartner.
Kunden, welche nur national oder regional tätig sind, werden auch regional oder national tätige
Logistikdienstleister in Erwägung ziehen.
Netzwerke als Chance für nationale Postunternehmungen
Netzwerke sind kurzfristig eine Option, mittel- bis langfristig aber immer instabil und deshalb nicht verlässlich. Sobald ein besserer Kooperationspartner gefunden wird, der das Gebiet
besser/günstiger/etc. abdeckt, ändert sich die Netzstruktur. Siehe aktuell IDS.
Welche neuen Ressourcen haben Sie benötigt: Infrastruktur, Know-how, Partner etc.? Haben
Sie die benötigten Ressourcen eingekauft oder selber aufgebaut?
Es reicht nicht, einzelne Spezialitäten von anderen Unternehmen abzuziehen und langsam eine
eigene Infrastruktur aufzubauen. Entsprechend kann die Diversifizierung nur via M&A geschehen.
Strategische Gegenmassnahmen von Logistikdienstleistern
Ein Eintritt ins Mail-Geschäft ist unwahrscheinlich, da rückgängige Volumina, zu aufwändig,
keine Synergien vorhanden.
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9.4.4 Interview #4
Da gibt es 95 Standpunkte in der Welt. . . Wir segmentieren zuerst einmal geographisch, das
heisst, Siemens kennt Nordamerika, kennt Europa und kennt Rest of World, das ist die geographische Segmentierung. Dann wenn ich es prozessmässig segmentiere, dann kennen wir im
Endeffekt die Transportseite, dort zählen wir dazu Umschlagzentren, dann die Lagerseite, also
jeglicher Couleur, und wenn Sie wollen, dann gibt es auch noch Hubs, die entweder das eine
oder das andere sein können. Man könnte es weiter unterteilen nach logistikorientiertem oder
industrieorientiertem Gewerbe. Ein Lager kann natürlich zum Logistiker gehören oder aber zum
Industriebetrieb. Wir bei Siemens sind da jedoch ziemliche Opportunisten und segmentieren
nicht immer ganz exakt.
Trends im Logistikmarkt
Wir sehen natürlich die allgemeine Ausweitung der Post in das allgemeine Logistikgeschäft durch
3PL-, zum Teil auch 4PL-Leistungen. Diese Leistungen können Sie wiederum in generische
und Branchenlösungen unterteilen. Das ist also ein interessanter Trend. Das ganze Thema
Globalisierung und Deregulierung ist schon fast keins mehr, das war vor ein paar Jahren ein
ganz heisses Thema. Ein anderer Trend ist das ganze Tracking&Tracing und RFID, wo man
im Endeffekt die ganze Prozesskette überdenken muss und der Logistik ein neues Paradigma
aufdrücken kann. Das sind so Megatrends aus meiner Sicht.
Die Bereitschaft der Verlader, immer mehr Aufgaben auszulagern, die über die klassischen
logistischen Leistungen herausgehen, wird immer grösser. Der Trend geht aber meines Erachtens
noch nicht dahin, dass man nur noch 4PL-Dienstleister beauftragt, das ist eigentlich noch gar
kein Trend. Das gibt es auch und jeder der 3PL ist, macht heute auch etwas 4PL, kommt aber
dann ganz schnell an seine Grenzen. Der reine non-asset-based 4PL, da gibt es wenige Beispiele.
Die Internationalisierung der Logistikdienstleister spielt natürlich auch eine grosse Rolle, weil
die Logistikketten heute fast immer über die Landesgrenzen hinausgehen. Heute müssen Sie mindestens innerhalb der EU ein lückenloses Track&Tracing anbieten können und das beherrschen
Sie nur, wenn Sie mit Partnern zusammen. Wenn Sie in die Ersatzteillogistik gehen, das ist ja
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ein ganz interessantes Segment auch, dann müssen Sie verschiedene Responsezeiten gewährleisten können. Sie können nicht ab einem zentralen Lager in 5-6 Stunden die nötigen Ersatzteile in
ganz Europa vor Ort haben, also müssen Sie mit dezentralen Lagern arbeiten. Und dann sind
Sie schon international tätig. Das sind alles internationale Logistiksysteme.
Wichtigkeit des eigenen Netzes/Kontrolle
Meiner persönlichen Meinung nach können Sie solche Partnernetzwerke durchaus effektiv aufziehen,
aber auf jeden Fall auf der IT-Seite mächtige Investitionen tätigen, um dieses Netz kontrollieren
zu können. Und deshalb müssen solche Netze auch zwingend langfristig angelegt werden. Ich
denke, dass Sie als Postunternehmung bei der internationalen Expansion nicht einfach in ein
Land gehen können und aus einer kurzfristigen Optik eine Partnerschaft eingehen können, wie
das 3PLer normalerweise machen, also 1-2 Jahre. Dann werden Sie die IT-Investitionen, die Sie
tätigen müssen, nicht in den Griff bekommen. Sie müssen die Partner also langfristig binden. Und
das ist ein Grund, weshalb zum Beispiel die Deutsche Post in vielen Ländern Firmen zugekauft
und diese Netze aufgekauft hat.
Chancen für rein nationale Logistiker
Gerade in kleineren Märkten wie der Schweiz ist es schwierig, rein national tätig zu sein, da die
meisten Kunden internationale Kunden haben. Solange man sich auf Inbound konzentriert, ist es
noch möglich, nur innerhalb der Landesgrenzen tätig zu sein und zum Beispiel für einen Kunden
ein Verteillager zu betreiben und die Enddistribution vorzunehmen. Sobald man aber als 3PL
für einen Kunden im Outbound tätig sein will und zum Beispiel im Ausland Lager aufbauen
will, dann klappt das nicht mehr, dann müssen Sie sich wohl oder übel an ein paar Logistikunternehmen im Ausland beteiligen müssen.
Also IT und Internationalisierung haben wir ja schon andiskutiert. Ein Logistiker muss sicher
eine Marke haben und da sind die Postunternehmen sicher im Vorteil. Es braucht hier eine
vertrauenswürdige Marke. Deshalb hat die Deutsche Post als Beispiel ihren Euroexpress in DHL
umbenannt, da DHL weltweit viel die bekanntere und vertrauenswürdigere Marke ist. Eine
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Marke zu repräsentieren, ist wichtig. Und dann natürlich das Thema Partnerschaften und Kooperationen im Ausland, ohne die geht es nicht.
Es ist beides im Grunde ein Stückgutverkehr. Wenn wir zum Beispiel das Track&Trace eines
Stückgutanbieters anschauen, dann hat das sehr viel Ähnlichkeiten mit dem Track&Trace einer
Postunternehmung oder auch eines privaten Paketanbieters. Oder bei der Post gibt es heute viele
sogenannte Value-Added-Services, die führen zum Beispiel Sendungen zusammen. Das machen
aber die Frachtzentren in Deutschland seit 5-6 Jahren auch schon. Wenn Sie also heute einen
PC bestellen bei Karstadt/Quelle, dann wird der Monitor in Ungarn gebaut, die CPU kommt
aus den östlichen Bundesländern und die Maus kommt aus Italien. Sie aber als Besteller werden
ja verrückt, wenn Sie jetzt 3 Pakete erhalten, eventuell an unterschiedlichen Tagen und vielleicht
liegt eine Woche zwischen der Lieferung der Maus und dem Rest. Also sorgt die Post im Sinne
von merge&transit für die Zusammenführung dieser drei Pakete. Das ist aber natürlich auch eine
klassische Aufgabe einer Spedition, das kann ein Logistiker genau so. Und da sehe ich, dass die
Posten in der Vergangenheit diese Value-Added-Services mal mehr, mal weniger angeboten. Hier
in Zürich-Mülligen ist eine Druckerei, die druckt alles, bis hin zu Zeitungen. Die werden dann
gleich gebündelt und hier über das Briefzentrum verschickt. Das kommt auf der einen Seite also
so Druckschriftengeschäft und das wandert in das klassische Postgeschäft rein. Auf der anderen
Seite begreift die Post aber, dass sie nicht alles machen kann mit den Einrichtungen, die sie hat,
da sie auf Massen ausgerichtet ist und nicht auf individuelle Lösungen. Und damit denke ich,
dass es massiv mit dem Logistikbereich zusammenwächst, wo man dann Aufgaben, die man auch
noch wahrnehmen könnte, aber nicht will, rüberschiebt. Es ist also nebst allen Gemeinsamkeiten
auch eine Ergänzung der beiden Dienste, ein näher Zusammenwachsen.
Wenn Sie zum Beispiel hier in Zürich-Mülligen schauen, da gibt es Behälterlager mit 80’000
Behältern. Und das ist eigentlich auch ein 3PL-Lager, da ist die gleiche Maxime dahinter. Diese
Behälter werden eingelagert, irgendwann abgerufen und dann versandt. Jetzt kann man sich
fragen, sind Druckschriften Logistik? Der Vorteil ist natürlich, dass wenn man einen Behälter
voller Druckschriften einlagert, dass man den auch sortieren kann, wenn man will. Da kann man
eine Adresse draufdrucken und verschicken. Da gibt es absolute Analogien.
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Das einzige one-stop-shopping, das ich bislang erlebt habe, war immer irgendwie im Druckschriftenumfeld: Einer macht den Entwurf der Broschüre, druckt die und versendet diese am Schluss oder
sorgen dafür, dass sie zugestellt wird. Und das ist one-stop-shopping. Auf der Paketseite habe
ich das bisher noch nie so erlebt, sondern das ist ein reines Marketingthema, man will es anbieten
können, wird aber nicht wirklich verlangt.
Der Preis spielt natürlich immer eine Rolle, viele Firmen nehmen einfach denjenigen, der am
billigsten ist. Das one-stop-shopping ist für mich so ein 4PL-Thema. Wenn Sie eine BMW
anschauen, der seine Motoren zum Teil in die USA fliegen lässt, damit sie dort eingebaut werden. Diese riesig komplexe Logistik haben die voll an irgendeine Firma outgesourcet und die
managen das für BMW. Das ist dann wirklich one-stop-shopping. Da macht das auch Sinn.
Das ist in der Regel aber immer sehr lösungs- oder produktspezifisch, so dass jede Post mit
ihren Standardlösungen ins Hintertreffen gerät. Die verstehen einfach von Just-in-Time-Logistik
und Produktionsdesign zuwenig. Eine DHL versucht hier natürlich, solche Lösungen anzubieten
und sich zu positionieren, aber inwieweit das dann wirklich funktioniert, kann ich nicht sagen.
Das ist ein Knowhow-Thema: Schauen Sie mal, wer im Endeffekt diese Aufträge erhält, das
sind welche, die in diesem Umfeld eine langjährige Erfahrung haben und da ist fast immer das
Prozess-Knowhow entscheidend. Logistik-Knowhow müssen Sie haben, das ist klar, das ist Standard, aber da gehört mehr dazu.
Überwindung der Defizite
Wahrscheinlich fast nur durch Zukauf eines Spezialisten und dadurch durch Zukauf des Knowhows.
Ansonsten sehe ich keine spezifischen Risiken für eine Postunternehmung, die in den Logistikmarkt diversifiziert: Es handelt sich dabei um eine Marktausweitung und da treten die üblichen
Risiken auf, allerdings für alle Firmen.
Die Post ist aber natürlich aus dem Monopol herausgewachsen, denen mangelt es an Flexibilität, da ist noch zu fest die Behördenmentalität vorhanden. Das ist natürlich nicht förderlich.
TNT hat auch so ein Druckhaus, ähnlich wie die Schweizer Post mit Document Services, und da
haben wir von Siemens gedacht, dass es toll ist, wenn TNT via IT quasi seine Mail direkt in die
Post rein tracken kann und dann die Auslieferung auch noch überwachen kann. Aber die wollten
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nichts davon wissen, denn er ist ein kleines, flexibles Unternehmen. Und wenn er Schnittstellen
in die Prozesse der Post aufbaut, muss er fünf Mann abstellen, die drei Jahre lang mit der Post
rumstreiten. Diese eingeschwungenen, manchmal höchst komplexen Geschäftsprozesse, die eine
Post hat, sind sicher ein Hinderungsgrund.
Die Postunternehmen haben nämlich auch bereits Probleme, sich strategisch auszurichten,
und die landen dann im Graben, wenn sie den ersten Kunden haben. Wenn Sie beispielsweise
die Postlogistik hier in der Schweiz ansehen, dann hat die Post 2-3 Firmen zugekauft und alles
Mögliche. Jetzt überlegen sie, ob sie RFID-Technik einführen wollen, um ihre Prozesse zu kontrollieren. Aber das funktioniert nicht so bottom-up von der Technik her, das muss top-down
geschehen: Ich muss mir zuerst einmal ein Prozessmodell über all die Firmen hinweg geben, aber
das schaffen sie nicht. Da kämpfen sie noch und wir hoffen, dass da was draus wird. Wenn
Sie immer nur in einem bestimmen Monopolgebiet drin waren, dann fehlt Ihnen die Erfahrung,
dann müssen Sie mal Leute und damit Erfahrung einkaufen. Für mich ist irgendwo klar, dass
RFID und so eine gute Sache sind, aber oben drüber fehlt einfach der gesamte prozessmässige
Überbau. Man diskutiert jetzt auch ERP-Systeme, aber die sollte man erst implementieren,
wenn die grundlegenden Prozesse klar sind.
Das sind also mehr interne Hindernisse als jetzt negative Faktoren auf dem Markt. Es ist nicht
so, dass der Markt die Post nicht will, ganz im Gegenteil, aber die Post muss noch sehr viel tun,
bis sie reif für den Markt ist.
Vorteile einer Postunternehmung
Das ist klar, die haben ein ausgesprochenes Logistiknetzwerk, ein ausgebautes Hub-Netzwerk.
Und dann natürlich auch die Möglichkeit, den Endkunden zu erreichen, also die „last mile“. Alle
Stückgut-Spediteure würden ja pleite gehen, wenn sie ein ähnlich dichtes Netz anbieten müssten.
Auch ein UPS kann die „last mile“ eigentlich nicht bedienen, sie machen es zwar, aber überhaupt
nicht gerne. Das ist für mich die grosse Stärke einer Post.
Wenn Sie mit den Kunden ins 3PL-Geschäft gehen, zum Beispiel in die End-ConsumerLogistik, dann hat die Post natürlich die Stärke, diese Kunden zu erreichen, was eigentlich
alle anderen Logistiker nicht können. In Deutschland versucht Hermes, dies aufzubauen, aber
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eine Durchdringung wie die Deutsche Post werden die nie hinbekommen. Das Hub-Netzwerk
ist also vor allem im Paketbereich sehr nützlich. Die logische Konsequenz ist, dass sich eine
Post bei der Diversifizierung unbedingt mal auf die End-Consumer-Seite konzentrieren sollte.
Und dem End-Consumer-Modell ähnlich ist das Ersatzteilgeschäft, das sind auch kleine Pakete,
die verschickt werden. Dort wo es um grosse Ladungen geht, wird die Sache schon kritischer,
weil da in der Regel kein Sortiervorgang im klassischen Sinn mehr vorgesehen ist und damit
Sie im klassischen Speditionsgeschäft sind. Und dort haben die Postunternehmen meiner Meinung nach keinen Vorteil mehr. Ausser natürlich, aber das schaffen sie nicht, sie könnten ihre
Zustellfahrzeuge und ihre Zustellkette da miteinbinden. Das sind einfach andere Prozesse. Die
Postzustellung ist knallhart optimiert und wenn der Postbote noch 2 Paletten mitnehmen muss,
dann ist einerseits das Fahrzeug zu klein und andererseits hat er schlicht keine Zeit oder die
ganze Tour wird aufgesprengt. Wenn also eine Post in diesen Bereich will, dann kauft sie sich
normalerweise Speditionen zu, dann sind aber keine eigentlichen Synergien mehr vorhanden.
Wichtigkeit der Marke
Eine Marke ist sehr wichtig, die schafft Vertrauen. Ich sehe da eigentlich nur positive Aspekte
und denke nicht, dass die Marke mit Schwerfälligkeit oder Langsamkeit assoziiert wird.
Welches sind ideale Kunden für eine diversifizierte Postunternehmung?
Sicher Kunden mit einem hohen Paketaufkommen wie die Versandhändler. Dort können sicher
am meisten Synergien geschaffen werden. Ich denke da aber zum Beispiel auch an die Ersatzteillogistik. Weniger geeignet sind Kunden, deren Bedürfnisse mit speziellen logistischen Dienstleistungen erfüllt werden müssen: Hängende Kleider, Nahrungsmittel, generell Kühltransporte. . .
Welche Ressourcen (Infrastruktur, IT, Knowhow, Partner etc.) muss eine Postunternehmung
zusätzlich haben? Endogen oder M&A?
Das hängt vom Umfang der Logistikdienstleistungen ab: Wenn eine Post nur ein paar Lager für
einen Kunden baut, kann das problemlos mit eigenen Mitteln, eigenem Personal und endogen
passieren. Sobald es aber um komplexe, kundenspezifische Lösungen geht, muss eine Post zwingend externes Knowhow und evt. sogar Infrastruktur einkaufen, da sonst zuviel Zeit vergeht, bis
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alles aufgebaut ist.
Wie sieht die Logistiklandschaft in 5-10 Jahren aus, wird die Konkurrenz durch diversifizierte
Postunternehmen zunehmen?
Im Bereich der Paketdienste wird sicher in diesem Zeitraum viel passieren, insbesondere die
französische Post mit DPD und die englische Post mit GLS werden stärken werden. Inwieweit
Postunternehmen in der Zukunft des Logistikmarkts eine Rolle spielen, kann ich heute nicht
beurteilen.
Gibt es einen Gegentrend, dass die traditionellen Logistikanbieter in den Postmarkt diversifizieren?
Das glaube ich weniger, da es sich um ein völlig unterschiedliches und zudem unattraktives
Geschäft handelt. Wenn man nicht nur Rosinen picken will, benötigt der Eintritt in den Briefmarkt ungeheure Investitionen, da ein flächendeckendes Netz aufgebaut werden müsste, wenn
man nicht nur B2B, sondern auch B2C-Sendungen anbieten will. Ausserdem sind ganz klar ein
Mengenrückgang und eine Preiserosion feststellbar. Da das Paketvolumen weiterhin leicht steigt,
könnte ich mir hingegen vorstellen, dass die Logistikdienstleister künftig auch tiefergewichtige
Pakete ins Portfolio aufnehmen werden. Allerdings werden sie sich klar auf B2B-Sendungen
fokussieren.
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9.4.5 Interview #5
Ich habe gerade wieder ganz aktuell diese Frage beantworten müssen, als eine der Strategiefragen bei Arthur D. Little. Und was wir gemacht haben, ist einfach mal zu schauen, was das
statistische Material hergibt. Und wenn man da drauf schaut, kommt man sehr schnell an diese
Segmentierungsvorschläge, die Sie da machen. Wir haben Graubereich und der dreht sich rund
um diese Abgrenzung, die beim 3PL’er beginnt, geht bis zum 4PL’er, dann haben wir den Lead
Logistics Provider und nun gehen die Meinungen auseinander. Was gehört wo rein? Und dort
würden wir segmentieren mit dem Blick auf das Unternehmen, das wir gerade beraten, was macht
für die Sinn? Wie viele eigene Steuerungsleistungen haben die zum Beispiel in ihrem derzeitigen
Portfolio schon drin, können die sich heute schon Lead Logistics Provider nennen, nennen sie sich
auch schon so? Wenn ja, dann werden wir die Grenzen anders ziehen als bei einem Unternehmen,
das beispielsweise rein in der Logistiksoftware tätig ist. Ich kann Ihnen kein goldenes Muster
liefern, wir haben mal so eine Einschätzung gemacht, es gibt so den Einser, den Zweier, den
Dreier, den Vierer, dem folgen wir, aber es ist im Wesentlichen orientiert an den Kunden. Also
wenn Sie nach einer allgemeinen Segmentierung fragen, dann ist das was, was 80% kompatibel
ist mit den Aussagen von Prof. Klaus vom Fraunhofer Institut in Nürnberg. Obwohl diese Abgrenzung oft als zu akademisch angesehen wir, muss man hier den Kontext sehen: Weil wir dort
strategische Beurteilungen anstellen, die sehr stark das 4PL-Konzept wieder aufkommen lassen,
aus dem Grunde weil man von der Terminologie her mit dem noch nicht so vertraut war. Natürlich müssen Sie sich auch immer Gedanken zu den Produkten und Kunden machen, wenn Sie
irgendwo reingehen, aber strategisch müssen Sie sich weitergehende Gedanken machen. Wenn Sie
zum Beispiel Kühne + Nagel nehmen und sehen sich den See- und Luftbereich an und legen dann
die Wettbewerber rein, das können Sie machen. Das ist eine andere Frage, von einer anderen
Qualität, als wenn Sie sagen, jetzt schauen wir mal eure Entwicklung an, die ihr gemacht habt,
dann erkennen wir Kontraktlogistik, Lead Logistics Player, das betrifft automatisch die gesamte
Entwicklung des gesamten Unternehmens, das ist eine andere Qualität von strategischer Aussage.
Gruppen von Strategien von Logistikdienstleistern
Die gibt es sicherlich, ja. Da kann man zum Beispiel die Reichweite abgrenzen, also wo bin ich
tätig: Da sehen wir den regional fokussierten Player, den europäischen Player und den global
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Player. Was uns auffällt in dieser Hinsicht, dass diese klassische Einteilung auch vermischt. Da
wollen jetzt plötzlich alle runter nach Dubai, da sie sehen, dass die grossen alle ihre Standbeine
dort aufgestellt haben, das sind Hubs, die dort entstehen. Und deswegen ist einer, der nur
Landverkehr in UK macht, der macht jetzt eine Dualstrategie, er konzentriert sich auf 2 oder 3
Regionen, ohne dass er ein globaler Spieler wird. Ich weiss nicht, ob’s funktioniert, das wird sich
zeigen. Aber das ist so etwas, was wir erkennen, wenn wir die Landschaft anschauen, und wie
man Anbieter unterscheiden kann.
Wenn man von der Reichweite weg geht und den Scope, was biete ich, anschaut, dann gibt
es die Spezialisten und die, die ein breiteres Sortiment haben, das ist normal. Wo wir erwarten,
dass sich die Speziallogistik weiter entwickeln werden, getrieben durch die Abnehmerbranchen,
zum Beispiel die Pharmalogistik. Diese Branche ist noch jung, wird aber kommen, und da stellen
sich jetzt viele Anbieter drauf ein. Und deswegen werden jetzt ganz viele Läden von grösseren
Spielern aufgekauft. Das ist ein Muster, Speziallogistik getrieben von Abnehmern.
Chancen für rein nationale Anbieter
Wenn man es auf die Schweiz bezieht, ist es sicher sehr limitiert. Wenn ich wachsen will und
ich mich national beschränken muss, dann muss ich zum Beispiel Zeitungen drucken, dann muss
ich mir andere Leistungen einfallen lassen, dann reden wir eigentlich nicht über Logistik. Wenn
ich über den Logistikmarkt spreche, dann kann ich mich in einem Verdrängungsmarkt bewegen.
Oder ich springe ganz früh, nehmen wir den Biotechbereich, auf junge Abnehmerbranchen auf,
werde dort bevorzugter Partner. Zum Beispiel die Firma Actelion, die hat so was gemacht, das
nennen wir ein Huckepack-Modell, die arbeiten mit dem Worldkurier, der mit denen so richtig
gewachsen ist. Wenn Sie in der Lage sind, mit denen mitzugehen, mitzuwachsen, weil diese Firma
im Biotechbereich, diese haben nur einen globalen Anspruch, da können Sie den nationalen
Markt gleich vergessen. Was bietet Ihnen hier also national diese Wachstumsphantasien im
Logistikbereich? Ich denke, es ist sehr begrenzt. Und deshalb sehen wir in diesem ganzen PostTelecom-SBB-Bereich die Bemühungen, auf eine clevere Art und Weise das Ausland, wenn auch
das nahe Ausland, miteinzubeziehen. Also ich glaube, es ist eine Frage der Zeit, aus meiner
Sicht, aber letztendlich ist es kein nationales Spiel.
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Aber es gibt durchaus Chancen, auch für ehemalige Staatsbetriebe, hier in jungen Abnehmerbranchen aktiv zu werden, ich gebe Ihnen ein konkretes Beispiel: Wir haben in Skandinavien
eine Due Dilligence Prüfung für ein KEP-Unternehmen gemacht, was mittlerweilen wunderbar
sich bewegt, absolut privatwirtschaftlich, das hätte man nie gedacht, wird aber auch aus Kundensicht gewürdigt. Ich gebe Ihnen ein anderes Beispiel: Wir sind in Deutschland unterwegs,
prüfen die Situation im kleineren Mittelstand in verschiedenen Abnehmerbranchen – und was
hören wir? Die sagen alle, die Deutsche Post, die ist so gross, die ist so arrogant, und verbinden
deshalb mit anderen Spielern viel positivere Attribute, die sind flexibler, die sind agiler, die sind
wahrscheinlich neutraler, da kommen die typischen Attribute, die sie nutzen können. Das ist
kein geschlossenes Spiel.
Das ist natürlich sehr breit, aber ich gebe Ihnen mal ein aktuelles Beispiel: Bei unseren Gesprächen
mit allen grossen Spielern wird deutlich, dass die IT-Kompetenz ganz entscheidend ist. Also auch
Komplexititätsbeherrschung, nicht nur die Kompexitätsreduzierung, sondern auch der Umgang
mit Komplexität ist entscheidend, zum Beispiel bei der Ausgestaltung des gesamten Netzwerks.
Das sind eigentlich Sachen, die immer wieder kommen von denen.
Gemeinsamkeiten zwischen Post- und Logistikmarkt
Das ist eine gute Frage, ich würde mal sagen, die Erfahrung im Umgang mit Netzwerken, die
haben sie. Wenn Sie ein guter Postzusteller sind und jetzt nicht mehr rein aus der monopolistischen Sicht schauen und einen kundenorientierten Ansatz wählen, und dann eben diese Netzwerkkompetenz mit der Kundenorientierung verbinden, die sicher noch zunehmen wird, dann ist
das etwas, was Sie transportieren können. Kommt natürlich drauf an, was Sie alles unter Postbereich verstehen, da ist es sicher im Mailbereich anders als im Zahlungsbereich. Viele dieser
Unternehmen haben im Zahlungsbereich enorme Erfahrungen im Billing aufgebaut, was sie im
Logistikmarkt hervorragend nutzen können. Dort ist der Logistikmarkt aus meiner Sicht noch
viel zu klassisch, wenn Sie sich da die Pricingmodelle anschauen und mit anderen Branchen vergleichen, dann ist das richtig langweilig. Da kommt noch viel und da kann ich mir vorstellen,
dass man einiges aus dem Postbereich übernehmen könnte.
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Andere Kompetenzen aus dem Postbereich, die man unmittelbar übertragen kann: Sie haben
natürlich immer diese physische Transportleistung, Sie müssen auch Wertsachen transportieren.
Das nehme ich einem schon ab, dass er dort mittlerweilen entsprechende Kompetenzen aufgebaut
hat, auch Gefahrengut, alles so was. Also die Kompetenz im hohen qualitativen Umgang mit
solchen Transportflüssen.
Stärken einer Postunternehmung im Logistikmarkt
Wenn wir die Marke anschauen, dann sehen wir, dass die meisten Postunternehmen massiv in
die eigene Marke und auch in die Submarken investieren, zum Beispiel die Schweizerische Post
in die Marke PostLogistics. Und wenn Sie intern mit denen sprechen und zwar ganz ehrlich,
dann sehen Sie, die sind noch lange nicht dort. Strategisch gibt es zwei Möglichkeiten: Sie bauen
zuerst alles auf und legen am Schluss noch das Gelb darüber. Oder Sie nutzen die Marke und
geben die Richtung vor, was die Schweizerische Post jetzt tut, und ziehen das andere hinten
dementsprechend schneller nach. Das ist von der Change Perspektive her sicher das richtige
Vorgehen. Und das haben andere vorgemacht, zum Beispiel DHL, massiv, deutlich. Das wichtige
ist, das ist nicht mehr die Marke, die man mit der traditionellen, alten Post verbindet, die
geben sich einen neuen Anstrich, ganz bewusst. Jetzt müsste man sich überlegen, ob z.B. die
Schweizerische Post einen Markenvorteil gegenüber DHL hat, da sie näher bei ihrer Dachmarke
bleiben. Ich glaube aber, dass im gesamten Logistikbereich die Marke viel, viel wichtiger wird
und Sie brauchen Qualitätsmarken. Und letztendlich müssen Sie eine gewisse Glaubwürdigkeit
mitbringen, wenn Sie für ein Unternehmen etwas Globales auf die Beine stellen wollen. Für
den ehemaligen Staatsbetrieb spricht eine gewisse Zuverlässigkeit, eine gewisse Qualität. Ich
würde die allerdings herausfordern und sagen, seid mal nicht zu zuverlässig, nicht zu qualitativ
hochwertig, bewegen sie sich, seid schnell, seid mal aktiv, geht mit dem Preis runter. Das heisst,
Sie müssen im Grunde genommen das nutzen, was da die positiven Assoziationen sind, so wie
wir die vorhergehende Frage diskutiert haben.
Aber – und da kommen wir zu einer interessanten Frage – die Postunternehmen sind kein
reiner Logistikspieler, sie haben immer noch dieses komische Post-Ding hinter dran. Und diesen
Nutzenvorteil müssen sie nutzen, den müssen sie nutzen, aber das fällt ihnen immer noch sehr
schwer. Dies können sie machen, wenn sie den Link machen zwischen Güterverkehr und einem
KEP-Bereich. In jeder Post schwingt ja dieser KEP-Bereich noch mit. Wir haben aber auch
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separate KEP-Spieler: Wie verkaufen die eigentlich ihre Leistung? Dann kommt man so an diese
Nutzenargumentation heran. Wie verkaufe ich meine Leistung? Was will ich alles verkaufen,
was will ich nicht verkaufen? Will ich die anderen Postbereiche auch mit verkaufen? Wozu
brauche ich diese anderen Dinge, erklär’s mir, sagt da der Kunde. Denken wir doch knallhart
privatwirtschaftlich: Wir wissen, wo wir herkommen, wir können das nicht einfach wegstreichen.
Aber es bringt dem Kunden wahrscheinlich nichts. Was die Schweizerische Post und das ist ein
genereller Trend, nämlich hin zur Lösungsorientierung. Man möchte Lösungen anbieten. Wenn
ich es jetzt schaffe, diesen Postgedanken in irgendeiner Art und Weise hereinzubringen, so dass
in meiner klassischen Logistikdienstleistung eine Postlösung mitintegriert ist, zum Beispiel eine
Billing-Lösung, dann haben Sie die Nutzenorientierung, dann hat der Kunde was davon. Da
können Sie sich differenzieren, das kann ein Kühne + Nagel nicht.
Lösungsgeschäft vs. Standardgeschäft: Chance oder Risiko für ein Postunternehmen?
Der Stretch im Kompetenzbereich ist natürlich enorm: Die Post kommt aus dem hoch standardisierten Bereich und ist getrimmt auf Effizienz und nun müssen sie plötzlich massgeschneiderte
Lösungen anbieten. Auf der anderen Seite gibt es bestimmte Dinge, die das vielleicht möglich
machen. Wie lange diskutieren wir diesen 4PL-Ansatz schon? Und jetzt gibt es ein paar Unternehmen, die hier erfolgreich sind und das hätte niemand gedacht. Ansonsten geht aus den
Studien heraus, dass die Spieler vom klassischen Logistik- und Transportgeschäft wachsen und
dann irgendwann die Steuerungskomponente hinzufügen und dann wir es auch margenmässig
interessanter. So läuft das Spiel normalerweise. Sie haben aber das Problem, dass die Kunden
keine Lust auf 42 Track’n’Trace-System haben. Wenn wir mit DHL sprechen, dann wollen die,
dass die Kunden ihr System verwenden, da sie ja die Kontrolle wollen. Da gibt es gewisse Parallelen zu Schlachtfeldern, die wir schon gesehen haben, und es ist eine Frage der Zeit, bis sich so
was durchsetzt. Wenn Sie einen Blick auf die grossen Häuser werfen, was machen die, die basteln
sich intern ihre eigenen Überblicksinstrumente. Und wenn ich das nicht mehr will und ich habe
einen Partner, der mit dem Markt so gut verknüpft ist, dann sehe ich da schon ein Potential,
was aber auch seine Zeit braucht, bis der Markt reif ist.
Das könnte eben auch eine Chance sein für eine Postunternehmung, die eine gewisse Marktmacht hat und dann ein solches System durchsetzen kann. Momentan sind da noch viele Bastlerbuden aktiv, die haben eine Softwarelösung, die setzen sich da rein und dann ist es gut. Wenn ich
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jetzt aber als Post mich hinsetze und den Sprung mache, ich höre dem Kunden zu und der Kunde
sagt mir, dass er keine 42 Track’n’Trace-Systeme haben will. Der Kunde sagt mir, er möchte
da ein einziges System haben, er will nichts damit zu tun haben, er braucht nur einen guten
Report, damit er seine Steuerungen machen und seine Entscheidungen treffen kann, er möchte
ein End-to-End-Lösung haben. Jetzt stelle ich als Postunternehmung 3 Leute zur Verfügung,
welche sich 3 Monate neben den Kunden setzen und sein Problem lösen. Was glauben Sie, mit
wem der arbeiten wird? Aber da stellen sich dann praktische Fragen: Hat die Post, diese Leute,
haben die die nötigen Skills? Schwierig... Wie schnell kann das gehen?
Und da wird oft zu schnell mit M&A-Aktivitäten geantwortet, um diesen Stretch zu überwinden. Das ist eine Frage, die sich Zumwinkel jetzt stellen muss. Oder schauen Sie mal ins
Portfolio der Schweizer Post, was da alles drin ist. Erklären Sie mir bitte die strategische Logik!
Das ist ja ein Gemischtwarenladen. Man hätte wahrscheinlich nicht erwartet, dass die Schweizer
Post so ein PostLogistics aufzieht. Man hätte in bestimmten Bereichen nicht erwartet, z.B. im
Zahlungsbereich, dass sie durch die eingegangenen Partnerschaften so eine Rolle spielen könnte.
Und da gibt es ganz unterschiedliche Stretchs, die sie zu bewältigen haben. Also auch rein politisch, wie man sich bewegen kann und darf, und da habe ich einen grossen Respekt. Und da sehe
ich auch das Potential, wenn man sich weiterhin so clever bewegt und so kleine Sachen macht,
Stichwort Zeitungsdruck, das zeugt von einer hohen Bereitschaft, sich auf innovative Dinge einzulassen. Diese müssen im gesetzlichen Rahmen bleiben, aber sie haben keine andere Möglichkeit,
als agil vorne dran zu bleiben. Das sind aber natürlich oft ganz kleine Dinge. Reicht das aus,
um insgesamt wettbewerbsfähig zu bleiben?
Geographische Präsenz
Wir haben mal die strategische Fragestellung aufgeworfen, was denn mit einer Art „Star Alliance“
für Europäische Postunternehmen wäre? Im Briefgeschäft machen sie ja so was schon, jedoch
noch nicht im Logistikbereich. Jetzt gehen die alle in Richtung, auf jeden Fall die meisten, einige
verabschieden sich schon wieder. Jetzt findet doch mal ein intelligentes Netzwerk, schmeisst
alles zusammen und dann habt ihr eine richtige Marktpower. Das ist ein Gedanke, der für
die noch viel zu weit weg ist. Das hat ja früher mit dem Weltpostverein perfekt funktioniert
und da stellt sich die Frage, weshalb das für die Logistik nicht auch funktionieren sollte. Auf
der einen Seite müssen die Postunternehmen die Eigenständigkeit lernen, auf der anderen Seite
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haben sie noch nicht so den Partnering-Gedanken. Das ist ein langer Prozess, die haben noch
so den Verbandsgedanken, man ist in einem Verband organisiert, da ist alles fest reguliert, aber
es ist nicht dieser Kooperationsgedanken. Man hat gleich wieder Angst, da man sich in eine
Abhängigkeit begibt.
Diese Netzwerke sind natürlich nicht mehr gleich stabil wie früher, als diese fast von Gesetzes
wegen stabil sein mussten. Aber das ist wahrscheinlich heute ein Charakteristikum des Marktes.
Die guten Netzwerke unterscheiden sich von den schlechten Netzwerken, dass sie relativ stabile
Achsen haben und dass sie an den Rändern flexibel bleiben und Änderungen vornehmen können. Früher war wahrscheinlich das Vertrauen unter diesen Postunternehmen grösser, da man
keine Konkurrenz fürchten musste. Ich kann heute mit einem Unternehmen mich in einer Ecke
konkurrenzieren und in der anderen Ecke arbeite ich mit ihm zusammen, das nennt man heute
„coopetition“, aber man mit dem muss man zurechtkommen.
Unterschiedliche Diversifizierungsstrategien
Wenn Sie jetzt mal TNT aussen vor lassen, dann sehen wir bei allen Postunternehmen, mit
denen wir diskutieren, dass sich alle Gedanken machen über neue Geschäftsmöglichkeiten. Der
Diversifizierungsgedanke als solcher ist für mich jedoch ein gefährlicher Gedanke, wenn man
ihn so versteht, wie man ihn in den 80er Jahren verstanden hat. Also klassisch, jetzt mache
ich plötzlich Schokoladenriegel, also etwas völlig anderes. Wenn wir eine „related diversification“
haben, eine fähigkeitenbezogene, verbundene Diversifikation haben, wenn es also eine Anküpfung
an das gibt, was ich heute schon tue, dann haben Sie eine Chance, eine erfolgreiche Diversifikation
zu machen. Und das ist unser Strategieverständnis. Und ansonsten, wenn ich einfach mal etwas
dazukaufe und ein Mischkonzern werde, damit ich mehrere Eier in einem Korb habe, dann fehlen
die „parenting advantages“, die Vorteile einer Konzernsteuerung für die einzelnen Einheiten und
das hat keinen strategischen Wert.
Sie müssen also mit dem Diversifizierungsgedanken vorsichtig umgehen. Wenn wir das auf
Ihre Arbeit übertragen, dann kommen wir genau zu der Frage, die wir vorhin schon diskutiert
haben: Wo ist der Anküpfungspunkt „Logistik“ für die Post? Nur wenn wir den finden, dann
können wir über die Diversifizierung diskutieren. Und der kann unterschiedlich ausfallen für unterschiedliche Postunternehmen. Weil die Fähigkeiten auch immer unterschiedlich gelagert sind.
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Ich denke, es gibt die Qualifyer und die Differentiator: Sie müssen gewisse Punkte erfüllen, um
in diesem Spiel mitzuspielen, und in gewissen Punkten unterscheiden sie sich. Wenn Sie zum
Beispiel die Kriterien Neutralität und Qualität nehmen, dann hat das für die Schweizerische Post
ein höheres Gewicht als für eine Österreichische Post. Was wir dort sehen also, wir sprechen mit
allen unseren Kunden die Logistik an, aber wir testen auch die Randbereiche, wir fragen darüber
hinaus, indem wir zum Beispiel über die Abnehmerbranchen sprechen. Nehmen wir als Beispiel
den Gesundheitsmarkt: Das ist einer der Märkte, da geht richtig was ab. Welchen Einfluss wird
das haben auf die Logistik? Jetzt muss ich die ganze Kette bilden: Ich bin mal im Spital, bin
der Endkunde also, benötige Medikamente, wie weit geht das ganze Spiel? Kann ich heute als
Postunternehmen ein ganzes Spital logistisch betreuen? Komplett? Ansätze sehen wir, auch bei
der Schweizerischen Post.
Erfolgsversprechende Strategien
Wir haben gerade momentan eine Arbeit offen, die die verschiedenen Postunternehmen darstellt,
welche wir bewerten wollen. Ich kann Ihnen insofern keine offizielle Meinung sagen, weil wir
auch alle diese Unternehmen auf unserer Kundenliste haben. Privat sage ich Ihnen, dass ich
die alle kaufen würde, die haben alle Entwicklungspotential. Wer ist besser aufgestellt als der
andere? Vor dem Kontext, dass die alle einen nationalen Versorgungsauftrag haben, müssen wir
diesem Aspekt gerecht werden. Da können Sie jetzt bei den gesetzlichen Rahmenbedingungen
beginnen, wie weit ist man mit der Liberalisierung, wie sieht es mit der Fortschrittlichkeit aus.
Da sind sicher einige Unternehmen weiter als andere. Das äussert sich insofern, dass wir zum
Beispiel eine TNT haben, die ihren Logistikbereich wieder abstösst. Die denken nicht mehr an
Diversifizierung, sondern bereits wieder an Devestition. Wenn wir heute die Deutsche Post ganz
kritisch anschauen, dann ist ja alles schön und gut, was Zumwinkel da zusammengekauft hat,
aber verdient er denn wirklich Geld? Bis wann sollen diese Zukäufe im Logistikbereich wirklich Geld abwerfen, wann kriegt er da den Hebel rum? Ist er wirklich gut aufgestellt? Diese
Fragen sind alle nicht beantwortet. Er ist ja schon wieder zum Manager des Jahres gewählt
worden, das macht es natürlich schwer, da ein abschliessendes Urteil zu fällen. Ich würd’s anders
bewerten, ich würde fragen: Wer ist momentan agil, wer beantwortet welche Art von Fragen?
Und wenn man dann die strategischen Fragen nimmt und die Intensität und die Geschwindigkeit
anschaut und die strategische Qualität der Diskussion anschaut, dann ist die Deutsche Post sehr
weit vorne. Die Schweizerische Post fängt an und sie stellt schon sehr gute Fragen. Aber die
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haben erst vor etwa 1,5 Jahren begonnen, neue Geschäftsmöglichkeiten zu diskutieren, das ist
noch nicht so lange her. Ziehen Sie mal den Vergleich zu einem sehr gut aufgestellten Spieler in
einem sehr kompetitiven Markt, nehmen Sie mal eine Holcim in der Schweiz, die wirklich topp
ist in ihrer Industrie, die sehr gut gesteuert ist. Welche Art von Fragen beantwortet die und
wie sind die in der Umsetzung? Die beantwortet alle die strategisch relevanten Fragen und die
beantwortet die sehr schnell und machen ein hervorragendes Projektmanagement. Und dann
vergleichen Sie das mal mit einem Postunternehmen und dann kriegen Sie wahrscheinlich eine
Abfolge der Unternehmen hin. Da merken Sie schon, dass die Fortschrittlichkeit generell schon
höher ist, wenn der Liberalisierungsgrad höher ist. Da würde ich ansetzen.
Vorteile einer Postunternehmung gegenüber eines Logistikanbieters
Wenn eine Post die Erfahrungen und Fähigkeiten ihrer anderen Geschäftseinheiten nutzen kann,
dann verschafft sie sich effektive und nachhaltige Vorteile gegenüber einem klassischen Logistiker.
Zum Beispiel Direct Marketing, Kommunikation im Generellen, da sind sie sicher gut. Wenn Sie
jetzt den 4PL-Ansatz nehmen und von der benötigten IT- und Online-Kompetenz ausgehen,
die bei der Post vorhanden ist, siehe yellowworld der Schweizerischen Post, und diese auf den
Logistikmarkt übertragen, dann sind sie im Vorteil gegenüber einem traditionellen Logistiker,
der nur Box Moving macht.
Aber jetzt erzählen Sie mir mal, dass Sie als Postvertreter der Marketingfachmann sind, was
machen Sie dann? Können Sie jetzt nur den Brief dahinschicken oder können Sie wirklich die
Marketingansprache machen? Trauen Sie sich das zu? Grosses Fragezeichen. Und dann müssen
Sie sich bewusst sein, dass sie einmal mit der Marketingabteilung sprechen, einmal mit der Logistik und Spedition, das sind unterschiedliche Ansprechpartner. Und das sehen wir immer wieder
im Lösungsgeschäft, dass das noch nicht richtig sortiert ist, wer spricht mit wem. Da gibt es
momentan noch Schwierigkeiten, selbst wenn sie die Kompetenzen haben, irgendwo, dann ist
die Ansprache noch nicht richtig. Da verlangen sie dann vom Logistikdesigner, der das in irgendeiner Art und Weise bastelt, dass der den Kunden richtig liest. Da ist man noch nicht richtig
aufgestellt, da hat man auch den Teamgedanken noch nicht richtig implementiert.
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Also bei fast allen Kundenbefragungen, die Sie machen, dann ist One-Stop-Shopping immer
ein hohes Bedürfnis. Also ja, in den meisten Abnehmerbranchen sehen wir das Bedürfnis nach
One-Stop-Shopping, dass sie Lösungen aus einer Hand wollen. Wenn wir Marketing & Verkauf
beurteilen wollen, dann gibt es wohl unterschiedlichste Erfahrungen. Die Schweizerische Post
hat mit LeShop etwas gefunden, was eigentlich ein kleines Erfolgsmodell ist. Wenn Sie die ganze
Diskussion rund um die Filialausstattung anschauen, was ich da alles verkaufen kann, und die
Parallelen ziehen zu Tankstellen, dann sage ich, dass wir immer noch in einer Testphase sind. Wir
wissen noch nicht richtig, was wirklich gut funktioniert. Das Bedürfnis, was ich in mir rumtrage,
und das Angebot, was eine Filiale mir bietet, das passt noch nicht richtig zusammen. Wir sehen
das ja auch an den verschiedenen Versuchen, mal kann ich Bücher kaufen, mal Schreibwaren, sie
wissen einfach noch nicht so richtig, was dann wirklich funktionieren wird. Der Kunde wurde
noch nicht richtig getroffen.
Synergien im operativen Betrieb
Ich sage Ihnen, es ist ganz hart, Synergien zu finden, diese zu rechnen und vor allem diese
dann auch zu realisieren. Die müssen dort ganz auf der vorsichtigen Seite sein. Die Synergien
beruhen meistens auf einer qualitativen Argumentation und das ist schwierig. Das ist dann Kundenansprache in irgendeiner Weise, vielleicht in Mailings. Aber rechnen tun sich diese Synergien
nicht. Man verkauft heute sehr schnell alles als Lösungsgeschichte, aber welche Lösung will der
Kunde haben? Da werde ich als Logistiker ganz schnell zum Berater. Da muss ich zum Kunden
hin und fragen, was ist eigentlich dein Problem. Da sage ich meinen Leuten immer, umschreibt
doch mal mit der Sprache des Kunden seine Problemstellung. Und dann sag mir, warum das
eine marketingrelevante Problemstellung sein soll. Das sind die wenigsten.
Gegenmassnahmen von traditionellen Logistikdienstleistern
Wenn Sie die Grossen nehmen, FedEx und UPS beispielsweise, in diesem postnahen Bereich,
die kümmert das nicht gross. Die schauen sich die nationalen Märkte an, gehen rein und sind
vielleicht ein bisschen aggressiver. Gewisse Dinge können sie den nationalen Postunternehmen
wegnehmen, gewisse nicht. Aber da gibt es meines Wissens keine expliziten Strategien, die sich
gegen nationale Postunternehmen richten. Die grossen Player sind heute viel näher an den lo-
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gistischen Bedürfnissen von morgen dran, die haben schon einen solchen Vorteil gegenüber den
traditionellen Postunternehmen, welche zumeist intern so sehr mit sich selbst beschäftigt sind.
Die Logistikdienstleister haben heute den Kunden ganz anders verstanden und das versetzt diese
in eine komfortable Lage.
Ist das Briefgeschäft interessant für Logistikdienstleister?
Ich sehe da die neuen Spieler, die dann entstehen und das sind alles Start-Ups. Das sind keine
Logistikdienstleister, die in diesen Bereich reingehen, sondern das sind sehr fokussierte BriefPlayer. Also insofern würde ich sagen, wird man sich darüber schon Gedanken gemacht haben,
aber zu einem negativen Entscheid gekommen sein.
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9.4.6 Interview #6
Wir haben einmal den internationalen Teil, alles was international geht, also See- und Luftfracht.
Dann haben wir den reinen Logistikteil, wo Warehousing und Distribution drin ist. Und dann
haben wir noch andere Aktivitäten, welche Sie dem Geschäftsbericht entnehmen können.
Ganz klar im internationalen Bereich. Die Hauptzuwächse sind im Grunde genommen alle da.
Da haben wir teilweise Zuwächse von 30-40%, obwohl wir da schon Marktführer sind.
Internationale Lösungen zwingend?
Ohne internationale Lösungen ist ein Logistiker in meinen Augen gar kein Logistiker, denn die
Logistik selber ist international. Durch die heutige weltweite Arbeitsteilung kann man Logistik
gar nicht lokal betreiben. Klar kommt es auch darauf an, wie Sie die Logistik definieren. Ein
rein national sourcendes Unternehmen gibt es quasi gar nicht mehr, das ist vielleicht noch eine
lokale Käserei, die ihre Milch nur aus der Umgebung bezieht. Aber jedes andere mittelständische,
produzierende Unternehmen ist heute abhängig vom Import und Export, manche bis zu 90%.
Deswegen muss der Fokus da ganz klar auf dem internationalen Bereich liegen.
Beobachtbare Strategien
Die Internationalisierung der Logistiker bzw. ihrer Lösungen ist eine sehr offensichtliche Strategie. Dann kann sich ein Logistiker irgendwo in eine Nische rein verkriechen und sich dort stark
machen. Diese sind dann in der Nische auch bis zu einem gewissen Grad geschützt, aber sie
können natürlich da nicht wachsen, da sie eigentlich auch gefangen sind.
3PL/4PL-Konzepte
Ich glaube, dass ein grosses Unternehmen seine Logistik nur outsourced, wenn der Logistikdienstleister auch eigene Assets hat. Die Werte, die da betreut werden, die sind im 100-Millionen-
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Bereich, z.B. im Elektronikbereich. Da müssen Sie spezielle Anlagen bauen, zum Beispiel für
Hewlett-Packard, da müssen Sie sogar amerikanische Sprinkleranlagen drin haben, damit Sie
punktgenau die Ware löschen können und nicht am Schluss das ganze Lager unter Wasser haben
und Ware im Wert von 150 Millionen zerstört ist. Und deswegen gehören nebst dem Kundenfokus
auch das Knowhow und vor allem die Assets dazu. Ich glaube deshalb nicht, dass der 4PLer
grosse Chancen hat in Zukunft, er hat’s bis heute nicht bewiesen, dass er sich grosse Marktanteile
aneignen könne. Der 3PLer eher, 4PL nicht.
Internationale Lösungen und eigene Assets: Das bedingt aber natürlich auch, dass die Logistikdienstleister ein gewisses Kapital im Rücken haben. Sie können es natürlich auch über Leasingfirmen kaufen und benötigen weniger Kapital, aber das gehört dazu. Die andere Sache ist
sicher das Personal, sie benötigen ein hoch qualifiziertes Personal, die die Supply Chains bzw.
die Logistik managen. Sonst werden sie eine Bauchlandung machen. Das Personal und deren
Qualifikation ist meines Erachtens einer der Schlüsselfaktoren, um Logistik betreiben zu können. Auch ständige Weiterbildung ist ein absolutes Muss. Eine weitere Sache, natürlich auch
abhängig vom Personal, ist die Qualität. Wenn sie nicht eine bessere Qualität herstellen als
das produzieren Unternehmen, das die Logistik vielleicht outsourcen möchte, dann wird es nicht
funktionieren. Sie müssen kostenmässig billiger und qualitätsmässig besser sein, nur dann haben
sie eine Chance, sich durchzusetzen.
Wichtigkeit eines eigenen (internationalen) Netzwerks
Ich glaube, dass ein eigenes internationales Netzwerk der Winning Point ist: Wenn Sie kein
eigenes Netzwerk haben, dann müssen Sie immer mit Partnern arbeiten, der Koordinationsaufwand ist riesig, es gibt Schnittstellenprobleme bei der IT, Sie haben keine Sendungsverfolgung, jeder Partner will am gleichen Kunden verdienen, das treibt die Kosten in die Höhe. Wenn
Sie mit einem eigenen Netzwerk arbeiten, dann verdienen Sie einmal am Kunden und müssen ihm
auch nur einmal eine Marge draufschlagen. Im Grunde genommen ist das wahrscheinlich auch
der Erfolg der grossen Netzwerkbetreiber, wie Kühne + Nagel, Schenker, Deutsche Post, warum
die in den letzten Jahren so gross und erfolgreich geworden sind: Weil sie im Grunde genommen
bereits ein Netzwerk haben und für einen Late-Comer der Einstieg in die Globalisierung extrem
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schwierig ist, weil die Eingangshürde extrem hoch ist. Der Markt ist extrem konsolidiert. Das
kommt einfach daher, wenn Sie so eine Landesgesellschaft, selbst nur eine kleine, eröffnen wollen,
dann müssen Sie einfach mindestens 5 Leute haben, damit Sie sagen können, wir haben eine
Landesgesellschaft. Da nehmen Sie schnell einmal eine Million in die Hand. Wie viele Länder
gibt’s auf der Welt? 100 Länder, dann haben Sie 100 Millionen, wenn Sie da in jedem Land eine
Niederlassung haben wollen. Da ist die Eintrittsbarriere extrem hoch für einen, der nachträglich
reinkommen will.
Chancen und Vorteile für Postunternehmen im Logistikmarkt
Die Postunternehmen haben es meines Erachtens total verschlafen, die hätten die grössten Chancen aller Zeiten gehabt, weil die Post im Grunde genommen über die UPU die Möglichkeit gehabt
hätte, alle globalen Postunternehmen zu vernetzen. Diese Chance haben die nie wahrgenommen.
Hätten die eine Art Franchisesystem gemacht, mit einer Koordination, einem Marketing, einer
Strategie, mit einer Vernetzung aller Postunternehmen, die ja bald 100 Jahre lang in dieser UPU
organisiert gewesen waren, dann wäre kein anderer an die herangekommen. Ich weiss nicht,
warum die Post diese Chance nie wahrgenommen hat und im Grunde genommen gesagt hat,
wir nehmen die Local Heroes in den jeweiligen Ländern, die Schweizer Post, die Österreichische
Post und so weiter, wenn die sich vernetzt hätten, die wären unschlagbar gewesen. Die haben es
nicht geschafft. Die haben gedacht, sie können ihre Monopole bis zum Sankt-Nimmerleins-Tag
behalten und haben es verschlafen, diese grosse Chance zu nutzen. Und dann kam die asymmetrische Liberalisierung und es entstanden Konkurrenzsituationen und nun ist es zu spät. Die
hätten Kostenvorteile gehabt, die hätten einen Knowhow-Vorsprung gehabt, da sie das ja seit
100 Jahren machen. Die haben Standardisierungen weltweit, wo sie im Grunde genommen hervorragend miteinander hätten arbeiten können. Aber es ist verschlafen worden. Die hätten die
Mengen gehabt und wer die Mengen hat, der hat die Kostenvorteile. Wenn derjenige sich richtig
organisiert, dann hat er die niedrigsten Stückkosten. Nur es gehört natürlich dazu, dass man sich
reorganisiert, und die Paketanbieter haben das den Postunternehmen gezeigt, dass es eben anders
geht. Die Post hat zulange mit der Hand am Arm sortiert und gedacht, dass es für die nächsten
100 Jahre so weitergeht. Und die Privaten haben denen im Grunde genommen gezeigt, dass es
eben auch anders geht. Und haben dadurch einen Kostenvorteil herausgearbeitet. Aber die Post
ist meiner Meinung nach in vielen Ländern mengenmässig der Führer und hätte dadurch plus
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via Synergien, die sie da eindeutig gehabt hätten, eine unangreifbare Position schaffen können.
Synergien zwischen Postmarkt und Logistikmarkt
Die Gemeinsamkeiten liegen einerseits in den Datenflüssen: Es ist im Grunde genommen egal,
ob ich einen Datensatz aufbauen muss für eine kleine Sendung wie ein Paket oder eine grosse
Sendung eine Palette, es ist immer das Gleiche. Dann gibt es Gemeinsamkeiten im Transport
von A nach B über irgendeinen Umschlag, das ist auch noch gleich. Eine weitere Gemeinsamkeit
ist die Tatsache, dass es immer internationaler geworden ist, das ganze Geschäft.
Aber es gibt auch Punkte, wo es nicht passt, und die sind mindestens genau so gross: Unterschiedliche Techniken, die angewendet werden, und da gehen die Synergien in meinen Augen
verloren. Post und Paket, das ist meistens Anlieferung in der Hauptstrasse, frontdoor, und die
Logistik ist meistens Anlieferung im Industriegebiet, backdoor. Das heisst, die Hauptstrasse, die
braucht kleine Fahrzeuge mit Bodennähe, wo man schnell die Ware ein- und ausladen kann. Die
Rampenbelieferung im Industriegebiet braucht ganz andere Fahrzeuge, nämlich Rampenhöhe,
dann viel schwieriges Ein- und Ausladen, Sie müssen meistens beim Pförtner anhalten, erhalten Einlass, wohingegen der in der Hauptstrasse aus dem Fahrzeug raus springt, das Paket in
die Hand nimmt, abliefert und wieder wegfährt. Alles viel schneller. Das sehen Sie auch bei
den Stops, die so ein Paket- oder Kurierdienst macht, das ist zig-faches höher als bei einem
Lkw-Fahrer, der Paletten ausliefert. Also das sind unterschiedliche Produktionen und letztlich
in meinen Augen auch ganz schwer zusammenzubekommen, das sind zwei ganz verschiedene
Bereiche, die zwei verschiedene Produktionstypen darstellen. Beim Paket und bei der Post, da
müssen Sie ein Netzwerk haben, da gilt der Netzwerkgedanke viel mehr, wohingegen bei den
grösseren Waren die Auslastung viel wichtiger ist.
Von one-stop-shopping hat man schon vor zwanzig Jahren gesprochen, aber ich kaufe ja heute
auch nicht alles beim Coop oder in der Migros, ich gehe einmal dorthin und einmal dorthin.
Die werden sich verkalkulieren in dieser Sache, denn es macht keiner one-stop-shopping oder
nur ganz wenige, die im Grunde genommen den Containertransport und die Paketpost und die
Kuriersendungen letztlich alles einem übergeben. Man wird sich vielmehr pro Segment denjenigen aussuchen, der der kostengünstigste ist, der am besten die Leistung erbringen kann und das
ist das, was zählt beim Kunden, also die Leistungsfähigkeit und die Wettbewerbsfähigkeit und
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nicht das one-stop-shopping. Kein Kunde ist bereit, in einem Bereich mehr zu bezahlen, als der
Markt verlangt, nur damit er alles aus einer Hand erhält. Aus diesem Grund ist für mich dieses
one-stop-shopping nur ein Traum.
Die Deutsche Post, wie auch alle anderen Postunternehmen, die haben ihre Expansionsstrategien im Grunde genommen mit Steuergeldern finanziert und bislang hat noch keiner nachgerechnet, ob diese Investitionen unter betriebswirtschaftlichen Gesichtspunkten und in einem vernünftigen Zeitrahmen einen Return on Investment abwerfen würden. Oder ob dies nicht einfach
Quersubventionen aus dem Briefporto sind, die benutzt wurden, um die Post stark zu machen,
da sie gewusst haben, dass das Briefmonopol fallen wird. Bei der Deutschen Post im 2007 und
da hat man vorher noch die Riesengewinne, welche man im Briefgeschäft gemacht hat, dazu
benutzt, um Milliardeninvestitionen zu tätigen, welche unter betriebswirtschaftlichen Aspekten
nicht gemacht worden wären.
Die Postunternehmen werden sich schwer tun, im Logistikgeschäft Fuss zu fassen und anständige
Gewinne zu realisieren. Das Logistikgeschäft oder das Transportgeschäft, das ist ein low-marginbusiness, da liegen die Umsatzrenditen zwischen 0.5 und 2%. Vergleichen Sie das mal mit einer
anderen Branche oder auch dem Briefgeschäft. Da sind sie meilenweit auseinander.
Gründe für Diversifizierung in die Logistik
Sie brauchen ein zweites Standbein, da das Briefmonopol wegfällt. Deswegen müssen sie was
anderes suchen und Logistik ist nahe liegend. Sie transportieren ja ihre Pakete auch von einem
Ort zum andern, von dem her haben sie eigene logistische Erfahrungen. Die Logistik ist also
ein Bereich, der in der Nähe des früheren Kerngeschäfts liegt, aber „Schuster bleib bei deinen
Leisten“, kann ich da nur sagen. Die Spediteure gehen ja auch nichts ins Carrier-Geschäft, weil
das ein ganz anderes Geschäft ist.
Stärken einer Postunternehmung im Logistikmarkt
Wenn Sie mich da nach Stärken oder Vorteilen fragen, dann muss ich lange nachdenken. . . Weil
es sind Staatsbetriebe, die sind träge, die haben veraltete Strukturen, sie sind nicht flexibel, also
Vorteile haben die in meinen Augen überhaupt gar keine. Wenn ich das Management dieser
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Postunternehmen anschaue, dann muss ich ganz ehrlich sagen, das ist die zweite Liga. Wenn
ich das Management von Kühne+Nagel mit demjenigen von der Post vergleiche, da spielen
wir in der Bundesliga und da spielt die Post in der dritten Liga. Schauen Sie mal bei den
Postunternehmen, viele Leute sprechen gar nicht Englisch. Das ganze internationale Geschäft
ist aber englisch. Bei uns im Haus sind alle Leute multilingual, die haben Auslanderfahrungen.
Hier in Schindellegi ist keiner in einer Führungsfunktion, kein Direktor oder kein Vorstand, der
nicht jahrelang im Ausland gearbeitet hat. Das sind Erfahrungen, die kann ein Lokaler gar nicht
haben, die Postunternehmen sind lokal geprägt, die kochen im eigenen Saft.
Deshalb geschehen diese Expansionen ja auch via Zukäufe, denn die Postunternehmen müssen
die Leute, das Knowhow und die Assets kaufen, die haben das nicht. Eine andere Strategie ist
nicht möglich, denn die sind in ihren nationalen Grenzen gefangen, die Diversifikation innerhalb
des eigenen Landes ist fast unmöglich. Aber wer global mitspielen möchte, der kann nicht erst
jetzt mit Zukäufen beginnen. Die Welt hat 226 Länder, davon sind etwa 100 industrialisiert und
haben auch ein hoch entwickeltes Transportsystem und entsprechende Bedürfnisse. Aber bis Sie
sich in 100 Ländern oder schon nur in Europa eingekauft haben, da vergeht lange Zeit. Und der
Markt ist konsolidiert, da sind keine grossen Sprünge mehr möglich.
Standard- vs. Lösungsgeschäft
Ich denke nicht unbedingt, dass dies ein Nachteil für eine Postunternehmung ist. Wer Prozesse
beherrscht, und die Post beweist ja das durch die Standardisierung und die hohe Qualität, kann
dann individuelle Lösungen darauf aufsetzen. Aber dafür ist immer zuerst ein Prozessmanagement nötig. Das sind dann zwar andere Prozesse, aber wer das Prozessmanagement beherrscht,
für den sollte das ein kleines sein, da Ausnahmen zu machen. Aber nicht jede Ausnahme zulassen, es muss immer noch im Standard drin sein. Auch grosse Unternehmen wie Kühne+Nagel
standardisieren mehr und mehr ihre Prozesse. Wir können auch nicht für jeden Kunden noch mal
eine neue Lösung stricken, sondern wir nehmen einen grossen Teil an standardisierten Leistungen
und bilden dann Individuallösungen drum herum, so dass es nachher tailor-made ausschaut.
Interessante Kundengruppen
Natürlich diejenigen Kunden, die ein gewisses Volumen haben, damit es sich auch lohnt, da
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vernünftige Angebote zu machen und damit auch die Mengen stimmen, damit es letztendlich
auch für das Unternehmen Synergien hat. Ein kleines Unternehmen kommt vielleicht von selber,
aber bewerben kann man das nicht. Es braucht eine gewisse Grösse bei einem Unternehmen
das man besucht. Aber da muss natürlich dann auch ein Qualitätsprodukt da sein, wenn das
Produkt nicht da ist, brauche ich gar nicht erst zum Kunden zu gehen.
Dann würde ich Branchen angehen, die einen relativ hohen Warenwert haben, da wird überdurchschnittlich mehr bezahlt als dort, wo der Warenwert niedrig ist. Wenn Sie Kartoffeln oder
Mineralwasser verschicken müssen, dann werden Sie nicht viel Spielraum haben. Da können Sie
auch nicht sehr viel Zusatzleistungen anbieten. Sie können die Kartoffeln waschen und in einen
Sack abpacken, aber das ist dann auch schon alles, was Sie machen können. Bei Waren, die einen
hohen Individualisierungsgrad haben, also Computer, Braunwaren, Weisswaren teilweise, dort
würde ich meine Verkäufer hinschicken, aber natürlich nur, wenn ich das richtige Produkt habe.
Zunahme an Diversifizierungen in die Logistik
Nein, das glaube ich nicht. Da wird ein Konsolidierungsprozess stattfinden. Es wird ein paar
Postunternehmen geben, die sich weltweit behaupten können. Es wird vermutlich ein Verbund
geben, in dem sich verschiedene Postunternehmen zusammenschliessen, so eine Art UPU. Aber
dass es mehr gibt, die global tätig sind, das glaube ich überhaupt nicht. Ich sehe da eigentlich nur
noch die Deutsche Post und die UPS. Die UPS als vergleichbarer Postanbieter wird ein Global
Player sein. Eventuell können da noch die französische Post und die englische Post mitspielen,
aber dann ist schon fertig. Die werden in meinen Augen so eine Strategie fahren, dass sie sich
von unten, von den tieferen langsam in die höheren Gewichtsklassen bewegen werden. Das hat
man bei UPS auch gesehen, die haben früher nur Paketdienste gehabt, 1-Paket-Grössen, heute
haben sie sich geöffnet zu Mehr-Paket-Sendungen, wo sie nicht nur 32.5 kg haben, sondern sie
können 10x 32.5 kg haben. Eine Sendung, die früher auf einer Palette war, die transportiert
heute auch die UPS. Und auf diesem Weg gehen die in die höheren Gewichte rein, selektiv,
das muss über deren Sortieranlage gehen. Alles was nicht über deren Sortieranlage geht, ist
im Grunde genommen ein Geschäft, das zusätzliche Kosten verursacht, da es zwei verschiedene
Produktionssysteme sind. Und wenn sie das beherrschen, dann können sie auch mehr Paletten
machen. Alles was drüber ist und nicht automatisch sortiert werden kann, da benötigen die
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komplett neue Systeme. Und UPS wird auch weiter hinzukaufen.
In welchem Zeitraum könnten DPD und GLS im Logistikmarkt ernst zu nehmende Konkurrenten
werden?
In circa 5 Jahren.
Wird es eine Gegentendenz geben, dass Logistikanbieter in den Postmarkt diversifizieren?
Meiner Ansicht nach klar nein. Es handelt sich beim Postgeschäft um einen völlig anderen
Markt, der normalerweise stark durch X2C-Beziehungen geprägt ist. Da müsste soviel Knowhow
und Infrastruktur aufgebaut werden, dass sich das niemals rechnet, zumal der Postmarkt auch
nicht sehr lukrativ ist. Ich gehe deshalb nicht davon aus, dass irgendwelche Logistiker in den
Postmarkt eintreten.
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9.4.7 Interview #7
Market Segmentation
That’s almost impossible. Internally, we have four different types of businesses: Mail, Express,
Contract Logistics and Freight Management. And that’s generally also how we look at the
industry. So we see those as relatively separate industries where contract logistics and freight
management are probably the most connected.
When we look at the world, which our competitors are, there are different competitors in each
of this segments: In mail, there are mostly the incumbents, although they are not really competitors, because it’s mostly a monopolised market. So in the Netherlands, we do have competitors in
mail, but only small start-ups. In express, it is the three other integrators. In contract logistics,
it’s very fragmented, DHL, Exel, the biggest ones, but lots of others. In freight management,
it’s sort of medium consolidated, But then we have a lot of adjacent industries where we do not
operate ourselves but where we at least keep a close watch like basic land transport, full truck
load, less than truck load.
Types of strategies of logistics providers
When you mean logistics in the wider sense and neglect mail, then you sure see big differences:
We at TNT have announced a year ago the sale of our contract logistics division. Where especially
Deutsche Post and to a far lesser extent also UPS are still very interested. FedEx has never even
moved into logistics, so they concentrate purely on express. UPS is mainly interested in logistics
when those activities are able to fill their network. So they are not interested in logistics stand
alone per se but they are interested in the kind of logistics activities that fill their network, so
they typically do things like spare parts distribution because that has a high express component
and high service requirements. And Deutsche Post is, I think, a true believer in the prosperity
and the attractiveness of the logistics industry itself. So you see there are huge differences in
these strategies.
To be honest, we don’t really look at smaller operators, especially in logistics there are so many
small providers. I know their names and in top cases I know a little bit about their strategy.
The companies we follow are predominantly UPS, FedEx and DHL, some of the large mail oper-
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ators like Royal Mail and La Poste, as well as some large freight forwarders like Kühne+Nagel,
Panalpina etc.
That question somehow assumes that you can be successful. And of the conclusions we have
drawn that it is a business where it is at the moment with the current business models virtually
impossible to be successful, because there is a continuous margin squeeze. The simple explanation
for this is that 10-15 years ago most of the contracts were new and it was not difficult to add
value to customers and make money at the same time. Nowadays, 90% of your new contracts
are a renewal of an old contract and in virtually all these cases there is the pressure from the
customer to lower your terms. There are a couple of strategies we have tried in the past to escape
this margin squeeze: One is scale. So if you are able to use scale to make you costs go down
even faster than your revenues go up, then you can remain profitable. But scale in logistics is
very difficult to achieve, because the current business model is more or less running individual
contracts individually. And this is a main dilemma of logistics: On the one hand you need to
customise you services and that’s also your value proposition, you tell your customers ‘whatever
you want, we do it for you’. But at the same time, you have to be able to scale across the
operations because that’s the only way to escape this margin squeeze. The second strategy is
to move away from basic operations to more value added kind of services because this is where
you can probably make a little bit more money. It depends very much on your customer: Some
customers are willing to enter a discussion with you; others keep looking at you as the basic
warehousing and transportation provider, no matter what you do. The third way out would be
massive consolidation because this would mean that you could be actually in the position to tell
your customers ‘no, we can not go away, you can ask us to reduce our prices but we are not going
to do it’. And the fourth way would be to come to a very difficult kind how you are paid for your
services: Today, you are paid on a transactional basis, you do that many pick ups in a warehouse
and this is you term for a pick up, so this is how you get your revenues. It would be great, but
it’s still wishful thinking at the moment, if you could come to a profit sharing mechanism where
you say ‘we contribute 100 millions EUR of value to your business because we reduce inventory
levels and transportation costs and we get 5 or 10 percent of that’.
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If you think of those four strategies, the key factors for success would be: Scale, but that’s very
difficult; being able to offer value added services, but depends on your customer; consolidation;
different value sharing mechanisms.
We tried a lot of things and we made certainly progress but it’s not bringing us enough and
the profitability of our logistics business is simply lower than mail and express. These two have
a different business model because there is scale easy to achieve, the more business you have in
your network, the more money you can make. And that’s definitely not the case in logistics. It
is having tried and being convinced that it’s not going to bring us what we can get in the other
two businesses. But we also came to the conclusion that the kind of capabilities that are required
to run a logistics business successfully is quite different from the kind of capabilities you need to
run a mail and express network successfully.
Reasons for diversifying into logistics
One reason might be that it is an industry where you still can move in. In express, it’s virtually
impossible, there are four big players, so there is nothing to acquire. No postal operator would
dream of moving into express because in terms of competitive environment it is a stable industry.
Logistics is still an industry where it is very easy to move in, there are hundreds of companies
still active in this area and it’s highly fragmented. And that’s frankly also the reason why we
moved in because we thought with growth and acquisitions we could become a number one in
that industry. We made it to the number two, but by that time we realised that this is really a
difficult industry to make money. That’s one reason.
The other reason could be that for most postal operators, the kind of margins you can make
in logistics may seem attractive compared to the margins they can achieve in their mail business.
TNT is extremely profitable in mail, so the benchmark for logistics are mail and express where
we make at least 10% margin. But there are not many postal incumbents that get that kind
of margin out of their mail business. But admittedly, Sweden Post and Norway Post are good
examples of companies where at least one third of their revenues are in non-mail activities. Not
only in logistics, but they also have this data logistics company they acquired earlier this year.
These are also companies that have attractive margins in their mail business but they can not
grow anymore, so they need to diversify in order to be able to grow. And they think probably
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that logistics is most adjacent to our core capabilities.
Commonalities between postal and logistics market
To be honest, we see more differences than commonalities. This is one of the lessons learned in
the last ten years. But both are of course transportation-oriented business, a delivery business
like mail and express.
Synergies in marketing and sales
Very difficult. . . We are very sceptical. Between express and logistics there are some synergies,
depending on the industry you serve there are customers you share. But between mail and
logistics? Mail is to a very large extent still a domestic business. Our biggest customers are
banks and printing companies which typically are not logistics customers. Telecom for example
is an industry which is both a mail and logistics customer but then here in the Netherlands that’s
just one company. We really tried to find customers via a joint key account management but
almost all of that was centred on commonalities between express and logistics. We analysed the
50 largest customers in both divisions what are joint customers but there weren’t that many.
The other part of the exercise was to find out if large customers that are not yet joint customers
were opportunities for cross-selling. Can you sell logistics to express customers and vice versa.
We see very little evidence that ‘one-stop shopping’ is something customers want. Customers
in the end look for the best price/quality. That means that they use their express services from
one or different providers and other providers for their logistics and their mail business. And
most customers are fine with that.
Operational synergies
Again, the synergies are not big, not even between express and logistics; it’s mainly in the line
haul. The pickup and the delivery is very different, you can’t have a mailman also picking up
stuff for a logistics customers. So the only thing in operations that you can share is some line
hauls, maybe some sorting centres between mail and express. And there are a number of backoffice activities like call-centre etc. that you can possibly share. On paper, you can also share
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IT systems but don’t forget that in logistics, most providers use a number of different systems
because that’s what their customers want. We like many older companies have legacy systems,
different systems for mail and logistics. It’s very easy to say on paper we should move to one
system but that’s not something you can realise on very short notice.
Increase in diversification efforts
Let’s say, more advanced postal operators having some diversification efforts. Finland post will
change its name and will re-brand, taking up the name of its IT subsidiary. So they are more
diversifying into IT, mainly mail-related IT, than into logistics. Austrian and Belgium Post will
have some kind of activities in logistics and transportation. But I do not expect any of the others
to diversify to an extent like Deutsche Post has done it.
When we bought TNT, it was predominantly, to over 90%, active in express and only 10% was
logistics. Our entry in logistics came with the acquisition of TNT but once we had it we decided
to grow in this business, mainly through acquisitions. At the beginning of this century, starting
in 1999, we did a lot of acquisitions in logistics, believing that the global presence will be the
platform to build this business on. Which was in that sense successful that by the end of that
period, we did have a global platform but then we discovered that it’s not possible to earn money.
Strengths of a postal operator
We had some strengths as a postal company that we brought with, but more in express than in
logistics. And don’t forget that TNT when we bought it was predominantly an express company.
We worked already together with TNT because TNT had a joint-venture together with 5 postal
companies. TNT owned 50% and the Dutch, the Swedish, the German, the French and the
Canadian postal operators owned the other 50%. And that was a joint-venture to mainly feed
our international mail into the TNT network. We know how to run networks; we know how
to run standardised, large operations with relatively low-skilled labour. And that’s a capability
we have in mail, and that’s a capability we have in express. But I am not sure that we have
huge amount of capabilities as a mail company that we could bring into express and logistics.
TNT was acquired more than 10 years ago and we still have divisional structure, we have a mail
company, an express company, we still have a logistics company, but there are not that many
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overlaps between these divisions. Not even in terms of HR, we don’t have many people that have
cross-divisional careers. You work in mail or you work in express. Sure we tried to encourage
people and it’s not like two different companies. It does happen occasionally, but not a lot.
Importance of the brand
I don’t think that the brand is very important in logistics. It is important in mail and express.
Weaknesses of a postal incumbent
The weaknesses are sort of the reverse of the key success factors. If you are not able to be
successful in some of these areas, than that’s clearly a weakness. But I would not underestimate
the differences between mail and express, it’s a very different business.
Geographic coverage
Again, it’s tempting to say that you need a global platform and I am sure that it helps. So you
have more opportunities to grow if you can show your customers that you are in every geography.
However, the truth of the matter is that 80 or 90% of logistics business is still domestic, so we
don’t have a lot of multi-country contracts. You get General Electric in France because you have
General Electric in Germany. But then, it’s still different operations. It helps in the acquisition
of customers but there aren’t that many companies.
Our three most important industries are automotive, fast moving consumer goods and electronics and two of those three are very local: In automotive, 90% of all components is sourced
locally, it’s only engines and a few very expensive components that are sourced globally. Food
is mainly local, you don’t make cookies in a global factory. But electronics is different, there
you see more and more supply chains lengthening and transports all over the world. And the
question, by the way, is whether logistics companies do that or freight forwarders.
Counteracts of traditional logistics providers
I don’t think that diversification of postal incumbents is a reason for logistics providers to counteract. I don’t see that a massive amount of logistics providers is in the hands of postal companies.
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These are, as I said before, quite different businesses. I wouldn’t be surprised if a company like
UPS at one stage would decide to move into mail. Although, it’s a dying business, so it’s not
very logical.
Strategies of DPD and GLS
No, I don’t think that they could become logistics providers. The questions around companies
like DPD and GLS is whether they can play a role comparable to the low-cost airlines in the
airline industry. Whether they will be at some stage impose a threat to the integrators because
they aim to offer the same kind of products like the regular express companies but at a much
smaller price on a much lower quality level. But are they upgrading their services all the time.
So the question is whether at some stage they can offer almost the same quality as the integrators
but to a much lower price. But I don’t see them moving into logistics.
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9.4.8 Interview #8
Why do postal operators diversify into logistics?
It’s driven by a couple of things: Initially, they were mandated with the letter business, but
historically many of them offered also kind of parcel post type of products, which is more logistics. So, in some cases, they just expanded that offering and it’s just a natural evolution of
their product portfolio. In other cases, it’s a response to what they recognise as their market
in the long term. Being in the letter market is very limited and so they use diversification as a
very strategic product diversification. And now, I think, if you talk to various postal operators
around the world, they see it as their only good alternative to stay in the business. Because they
see many of their other businesses to be under pressure.
Where do you see commonalities between the postal and the logistics market?
Well, the postal incumbents have a natural relationship to network operations, at least on a very
high level. They have a network that moves letters, so the task is to leverage this network to
move logistics products. So that’s a kind of a natural relationship between these to markets.
I think that are a lot of challenges for them in the logistics market, for example to find the
segments that are significant customers for a postal incumbent. I don’t know if its nearly as
natural from a customer orientation point of view, that is clearly the biggest challenge: If you
look at organisations at UPS as the most customer-centric company of the Big Four. They go
to market, thinking about customer solutions and they determine how to use their networks and
partners or various relationships to support the customers. And posts typically look for things
that add volume to the network – what isn’t necessarily what the customer cares about.
Do you see customer segments that would profit from a combined service portfolio?
There is a important for customers that an organisation can offer them logistics services across
the typical portfolio. It certainly depends on the specific customer but you need a pretty intimate
understanding of what your customer is doing and how you can support him in his operations. So
it’s valuable for a customer if you can offer him solutions along his value chain. However, I don’t
know if there is a huge synergy what I consider classic logistics products and the classic letter
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area, from a cost saving point of view. It is much more a question of business understanding or
business partner type of role where the value is generated.
And most customers do cherry-picking: The logistics department has always been cost-driven
and most of the buyer values are based around costs. But more and more businesses stop cherrypicking and search for true value propositions. So I think if you look 5-10 years out into the
future, the low-cost providers will probably not be the most successful organisations. It will
need a more value orientation that includes costs, but primarily reliability and flexibility and
custom-tailored offerings and integration from a technology point of view.
Where do you see operational synergies between these two businesses?
I think there can be synergies but I don’t think that there are that many synergies. This is
more theoretical: You can look at the network of the posts, all the physical buildings, all the
transportation, and all the depot capacities. You can conclude that there is some synergy from a
cost and operation point of view. But executing this has proven to be very difficult, for anybody.
Even if you look at fully integrated operators like TNT and Deutsche Post, they tend to run
separate networks with some limited consolidation. I think if there is an opportunity, the one
big opportunity, that is in the last mile, from the depot to the residents. In my experiences with
some of the logistics operators, if you look at their cost structure to deliver goods to high-density
urban areas or to low-density rural areas, the cost per delivery is outrageous. The posts are going
to hit every resident every day, so I think there is a lot of synergy. From an industry point of
view, it’s a pity that the logistics operators and the posts have not yet begun to work together
to exploit the one big economic advantage. Inevitably, the posts will become the dominant last
mile providers and that is their absolute core capability that will allow them to prosper over a
longer period.
Do you see different types of diversification strategies?
Absolutely! You heard my speech yesterday: If you look not only the successful posts, but all
the posts, it is almost every strategy available. From a geography, to a product or a customer
point of view. It is very unclear right now whether one or some of them are the “right” strategy
for long-term success. To a large extent, I think, the appropriate strategy for an incumbent
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depends on the local market conditions. Although in the long term, they need more product
diversification than they have today. And from a geography point of view, that is a much bigger
question. I am personally not convinced that geographic diversification is the right answer for
a lot of traditional posts. From the vast majority of products, from letters all the way up to
packages and express products, there is primarily a local or national market and there will be
one dominant delivery provider. There may be a handful of networks that move these products
within a country or around the world.
What do you mean with product diversification, what is the range of strategic moves?
If you look at the industry, the definition of product diversification encompasses a wide range
of new products: All the things on the Web, hybrid mail, and then also diversification of the
physical product itself. There are very few advantages for a traditional letter mail to generate
revenue from e-business, so the future will tell whether this will be a profitable business. I do
believe that there are more significant opportunities in the physical product diversification, such
as direct marketing and advertising mail. Today, if you look at the pieces per capita around
the world, it is pretty obvious that there is room for new offerings. Having worked with various
mailers, I know that there understanding of direct marketing and advertising mail is still very
limited. So they can learn a lot by listening to the customers and by trying to add value to them.
And there are third parties that are very profitable in doing this, but there is a lot of room for
postal operators. If you talk with mailers, they have a long of issues and challenges and they
spend most of the time to make it work, instead of spending most of their time trying to find
new ways to help their customers.
What are the critical success factors for an incumbent’s diversification?
To some extent, in line with the discussion we had yesterday, one critical success factor is what
I call “operational excellence”: if you look at the market today and you are an international organisation, trying to move products across several geographies, ranging from express to low-cost
products and you ask yourself, who do I chose as my operator, most of the discussions you will
have today is around cost. Who can do it at the lowest costs? So there is not much differentiation
between the operators, both postal and logistics providers. Most is just marketing. So I think,
the posts must create a brand around what they can do really well, for example for particular
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solutions or particular industries.
How useful is the traditional postal brand in the logistics industry?
It’s somehow difficult to answer on a broad basis... Overall I would say it’s neutral: It’s a powerful brand, has a high-level recognition and awareness. In some countries, it’s perceived as slow
and state-owned. In other countries, it’s viewed as being reliable and trusted. And in some
countries it’s viewed as fairly innovative and aggressive. It does certainly vary by country.
What are the strengths of a postal incumbent who enters the logistics market?
I think the know-how of handling the last mile. You know the local know-how is pretty valuable.
If you go back 5-10 years and talk to postal incumbents, there were a lot of complaints about the
costs associated with carrying a legacy retail network. Today, you hear a lot more about how it
is a competitive advantage. And it pretty much is: Having the ability, in very geography around
the world, even in a very remote corner of Africa or Asia, there is a post where you are able to
send letters or even to do financial transactions. That is a lot of infrastructure that certainly
logistics operators do not have. And so, the ability to provide a dense network of local agents is
a significant strength.
And the corresponding weaknesses?
The weaknesses are, in a lot of cases, a fairly significant legacy cost structure associated with a
lack of flexibility going along with them, such as higher than market labour costs. As well as
legacy networks that are in place that are fairly extensive and only oriented at mail processes.
And then the Universal Service Obligation. Generically, there are a lot of cost burdens that posts
have, that in a lot of cases, are dangerous and destroy competitive advantages, for example in
the logistics markets with its low margins.
Bulk business vs. custom-tailored services: Where are the strengths of a postal incumbent?
The one thing is, I don’t think that the limitation of a post is much around assets and infrastructure. I think it’s more of a mindset or orientation question. I sometimes ask the question, who
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runs the corporation? And pretty much in every organisation, someone runs the corporation:
Sometimes the CFO, sometimes the Head of Sales, sometimes the COO. In postal organisations,
it’s always operations. And at logistics operators, it tends to be the sales organisation. What
that means is that the sales organisation hears from the customers and determines the strategy
and the investments to serve the customers. So that’s the big challenge for the postal incumbent,
to evolve from an operation-driven organisation towards a customer-centric organisation.
When you look at the revenue split of postal incumbents, logistics is still a small part. Will
this share increase in the future?
It’s hard to say... Logistics is a low-margin, very difficult business; it is simply not a profitable
industry. And there is no reason to think that it ever will be become more lucrative. I would
expect the posts to find ways to make it more profitable, because today it is an almost no profit
business. So over time, if they don’t find any lucrative niches, the owners and shareholders will
force them to find other businesses to diversify into. Especially when institutional investors such
as venture capitalists become active in the industry, they will demand higher profit margins. If
they have the chance to invest into a pure mail operator whose market is going to be deregulated,
this is most probably the better option.
So to come back to the initial question, what is then the ultimate motivation for a postal
incumbent to diversify into logistics?
In many cases, it is driven by the perception that they cannot survive in their traditional market. In the last couple of years, the realised that their traditional markets are maybe not as
solid as they thought. But today, there is a wide recognition that the physical mail as one-toone-marketing tool is more powerful than the electronic alternatives or TV advertising. So the
traditional mail market is nowadays perceived far better than in previous years.
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9.4.9 Interview #9
Market Segmentation
I’ll tell you how I group them but you have to remember that this is really some point of view
that focus pretty much exclusively on the parcel and the express/courier side because this is
where we come from. Our core business is parcels: Out of the total revenue of 42 bn Dollars, 6
bn is not parcel. So despite of everything, we are a big parcel company.
In my opinion, and that is not an official UPS statement, you can differentiate between networkbased companies and the rest of the world. As network-based companies you can name UPS,
FedEx, TNT, and DHL. That type of companies has global networks and competitive solutions,
really goes out, build the product and sells it. Versus the kind of companies that sell something
and then go out and fit a provider for it. And the first group of companies are the real competitors
for us. There are of course local, regional and global markets. But globally, there are primarily
FedEx and DHL, and maybe TNT, but they have more regional people in regional companies.
And then, if we go more into the area where your dissertation is going, we compete with Schenker
that generates a great amount of parcels. And we compete with post offices that generate also
a great amount of parcels.
So we view all of them as our competitors and that’s how we group them. But again, we
look from the point of view of someone that is in the parcel and express business. We do have
also cargo offerings that generate about 6 bn Dollars. This is a sizeable offering called Supply
Chain Solutions (SCS) which has been growing gradually because we are doing this already for a
long time, probably far longer than most of our competitors who just started to talk about this
business publicly. We founded this logistics group almost 10 ten years ago and the objective obviously is to insert yourself further upstream in the logistics process. Our core competence where
we became very good at and where we have reached a high market penetration are distribution
and warehousing solutions for the high-tech industry. We have an enormous penetration among
computer manufacturers and high-tech electronics. But also among pharmaceutical companies.
The idea is to develop solutions that include physically managing a warehouse and distributing
over all transport modes such as road, air and sea.
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Interesting segments
If you really count logistics as anything from mail over to truck-loads, the places where people
obviously make a lot of money are in the smaller-weight segments: There are some postal operators that make fantastic margins, for example TNT. Also UPS makes fantastic margins. You
can also make money in the more uglier segments, but the margins are just not the same. The
model of combining parts from the old school forwarding model with the network solution could
be a work of a model.
UPS is therefore very selective and we don’t want to get into the whole range of logistics
services, like for example contract logistics. We want to get into multi-user facilities, really to
try to differentiate us from everyone else by having repeatable models. We don’t want to invent
everything new and first find providers when a customer calls us. We want to be able to maintain
a certain discipline in the products we offer, so these are the things we offer because these are
the assets we have in place. And then we just continue to leverage that. However, we do not
limit the weight of parcels we accept. We basically offer the whole range from international mail
to whole boatloads. Will it be priced in a way that you would use for every need? Probably not.
If you came to us and say ‘I have this huge supply chain and want one person to do all of it’,
we would try to make you an offer so that we can combine our competences and still earn an
acceptable margin. We always say, our goal is not to be the biggest according to sales; our goal
is to be the most successful. If we can be the biggest and the most successful, that’s fine, but we
don’t value sheer size over providing the best solutions and being the most successful financially.
We usually have not own assets to provide these supply chain solutions. In our industry, you
basically find two types of operators: If you look at Schenker, how many trucks do they own?
Probably three. Everything else is outsourced. This applies to every part of the industry, starting at vessel operators to parcel delivery companies. Most of the drivers you see on the street
are not employees of the logistics company they actually drive for.
Strategies
You see certainly a lot of local or regional operators that operate in confined region, possess local
know-how that are capable of offering maybe some insider knowledge, follow historical trading
lines, and so on. If you expand further out from there, you enter a terrain that is a little trick-
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ier. As far as I can see there is not one company in Europe that can offer a real LTL trucking
solution on a regular network basis across the whole of Europe. There is no one, even Schenker
has white spots on the map. The exemption is the parcel industry where every country in the
world is somehow covered in one way or another. So logistics operators are at different levels of
developments. They trend to expand backwards and upstream a little bit.
Well, I think information technology is nowadays probably so important that there isn’t any way
to survive without making use of technology. Particularly in the express industry, the use of IT
is no longer state of the art, it’s just standard, customers want that. And that’s one of the big
challenges: If companies like UPS or some of our competitors can get this right and offer that
type of service to even the uglier type of logistics services, that will have a huge impact.
Secondly, focus on doing things that you can understand what you are doing and what you are
able to manage and control the costs. We at UPS try to be a very focused company but some of
our competitors struggle with their cost controls. This is another key driver. I think sophistication is going to force out some of the historical operators that have not kept up with these trends.
Commonalities between logistics and postal market
Again, that is mostly coming from the parcel and express side, postal companies come with
an incredible asset and that is their distribution network. This is something that we have to
acknowledge today and what we have laughed about in the past. Now we realise, wait a minute,
they go to every address in this country every day. And commerce is shifting to a more personalised model where you can chose the size and colour online and have it shipped to your home.
I think to us this opens up opportunities to work together with them.
Successful diversification strategies
Obviously, the one that has probably the biggest vision is TNT. The decision to get out of the
logistics part of the business shows that to focus on segments that can be more profitable is
more promising. Exploiting synergies between express and the heavier goods, that most people
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assume are just there, seems to be more difficult. There have been some public statements by
the CEO of Exel that are the synergies are less than what people think. On the other side,
most of the companies that expanded into parcel, logistics, forwarding, they seem to me rather
successful. I also think that DPD and Geopost and GLS have built substantial positions in many
key countries that they can leverage. Yes, and obviously DHL. They all have been very successful
on the big scale. On the small scale, companies like Swiss Post are incredibly innovative. They
want to be strong at home but we also do want to offer certain services internationally. And
there are of course many operators that just want to be a big player in their home market, like
for example Poste Italiane or Poste Correo.
Importance of international offerings and networks
Logistics basically does not stop at geographic borders but you have to keep in mind that the vast
majority of goods transported in logistics networks are just domestic. Globalisation is getting a
lot of attention but despite of everything at the end of the day most of the money is spent for
domestic services because the vast, vast majority of trade in most countries is still domestic.
Strengths of postal operators
Their one and only unique strength is their delivery network. No competitor is able to compete
with an incumbent postal operator when it comes to the density and to a lower cost model.
Funny enough, they are not yet equipped to pick up stuff. They have thousands of vehicles on
the road but all they do is delivering stuff. Can they make this transition, should they make it?
I don’t know. Maybe they are better served if they look at innovative solutions that use this
high density. As an example, hybrid mail looks like an area where you can use the traditional
skills of postal incumbents. Should incumbents take the claim to do real logistics? I don’t know
if this is such a logical conclusion.
If you go to a country to build up a new network you realise that the postal incumbent already
has the local knowledge, this dense network, the drivers, so maybe the scenario is that they
should partner more with people. Most of the incumbents have built up something called their
logistics arm. Have you heard any big success stories coming out of this? No. Maybe they are
off partnering with an international player that has the need to provide some kind of in-depth
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service in this specific country. This is how our industry already looks in many places of the world
where the big players are partners of various local players. Especially in remote countries that
are a little off the beaten track, we work with the same partners like most of our competitors.
For every company some country in the world is a remote place. And who is a better partner
for a remote place than a postal operator? Remote does not necessary mean some strange place
in Africa, but take the example of Denmark where DHL operates with the incumbent postal
operator because they already go every household every day. If you go to Denmark and say we
want to build this up ourselves, you must invest a huge amount of money. We make our money
by transporting goods from A to B within our international network. The last mile is not the
part that generates a lot of revenue but that generates a lot of costs. So if you can find a strong
partner, that’s a great option. The mentality on the delivery side is also a bit different: If you
ship something from Germany to me in Denmark, than I am your customer. For UPS, you as
the shipper are the customer; there is the important relationship. I wouldn’t say that we neglect
the last mile, but these are not our primary customers because it has not the same leverage like
the first mile and the network. I have to be honest, UPS does not yet partner anywhere with
an incumbent postal operator, perhaps only somewhere in Iceland or Greenland where you do
not have alternatives. But if we have tomorrow a customer that has 300 packages a day going
to some unusual regional, whom do we go to? We need someone who has the infrastructure and
who is reliable.
Weaknesses
Usually, the parcel and logistics side is very small and runs the risk of being marginalised. If you
are a billion dollar postal company and 200 million dollars comes from logistics, you probably
pay not enough attention to this business. But if you are a customer looking for logistics services,
you want one that has sleepless nights and that really cares about your business. That to me
is a bit of a conflict. It’s basically the same thing in every business if someone branches out in
a pretty unrelated business. How related is it? I don’t know, moving letters versus managing a
whole supply chain?
They have to hire experienced people, they have to find out where the synergies are, they have
to build a strong marketing concept. It is a difficult market for everyone, but especially for postal
operators. If you haven’t it been doing until now, what will you be doing differently than anyone
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else? And they can not grow organically, so they have to acquire companies but the market is
quite consolidated. I assume that any further consolidation will happen on a sub-international
level, e.g. the Spanish incumbent buys a local logistics company. Those incumbents will leave
a footprint in a domestic market and say to its customers, look, here we are and we offer you
the whole range of logistics services. However, do customers really need this? I mean, your mail
often does not come from the same location as you parcels do. If you assume that because you
can sell eggs you can now sell neckties, your strategy will probably fail.
In many countries, the postal operator has a very strong brand with a good reputation and a
high level of trust. For example Austria with their successful IPO. That is certainly something
that has a good value. And they have an extensive address database. So they are further ahead
than someone that just starts a business. But they really have to figure out where the leverage
is and this is maybe only the delivery network and the local knowledge. Another advantage is
the overall feeder network, that’s a plus.
One-stop shopping versus cherry picking
I look at it this way: 15 or 20 years ago, DHL did not offer any domestic services but was the
number 1 in most country for international express. This proves to me that they already had
everything to attract customers; they didn’t need one-stop shopping to be successful. Does a
customer want one-stop shopping? I would doubt it. If you look at the industry, who Exel ships
with. It does not automatically all go to DHL. The last thing customers want, is going to a
clothing store that wants to sell you only their house brand. Sometimes you do but you do not
expect one brand to provide all the products and to satisfy all your needs. Apply this to logistics.
Smaller shippers and less sophisticated customers maybe profit from such an offering from a
national incumbent that has answers to all their questions. They can rely better on such an
operator and trust him more. Also, to be honest, very small customers fall of the radar screen of
larger operators because the model is build on large volumes. And the smaller customers often
provide a very good margin because they are not as obsessive to reach the lowest possible prices.
Maybe this is a aspect that could work for incumbents, to try and find smaller companies with
similar needs and then create synergies.
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Increasing competition from incumbent postal operators
From our point of view, this is not really a topic to extremely worry about. I don’t think that
there is anyone out there now that is going to arise from the current postal world that has not
already stuck his or her heads up, e.g. the French or the British post. But them lack their
international networks, especially for express, they have basically no operations outside of Europe. But that’s something they could add rather quick. I would doubt that anyone else like an
Italian or a Spanish post would suddenly come and say ‘Now I will do the same’. You are either
domestic or international. And if you are international, you can not just offer Spain and Greece,
you have to go out there and set up a network. That is extremely difficult. I would imagine
that you would see further consolidation in the combining of networks of companies like Geopost
with one of the other integrators. I would rather see this scenario than anyone else stepping out
of the nowhere and coming up with a solution for every country in the next couple of years.
Diversification activities by DPD and GLS
I would envision that they would prefer to expand their activities into other countries rather
than to expand their product portfolio. I could envision GLS setting up air express: They are
strong in ground express but the margins are not very attractive because anyone with a truck
can do it.
On the other hand, I would also not expect logistics operator to diversify into the traditional
postal business, especially mail. Incumbent postal operators have their one advantage that is
their enormous density on the ground that no one else can really re-create in the same way. And
I would think you are more like going to see attacks by start-ups that focus on certain segments,
large customers, big cities etc. That would certainly be a way to attack incumbents. But it
is almost impossible for someone to offer countrywide mail services. However, this is not the
danger: When you look at the incumbents, they loose money in 2/3 of the country and will be
attacked for the other 1/3. The model is always to acquire high-density and outbound volumes.
And sad thing for the incumbents, they often have no possibility to prevent from abusing their
network. That’s exactly what we at UPS but also FedEx, DHL and all the other integrators do.
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9.4.10 Interview #10
Definitionen Logistikmarkt
Unterschiedlichste Auffassungen zum Logistikmarkt, keine richtige oder falsche, nur zweckmässige und unzweckmässige. Keine eindeutige Antwort. Je nach Aufgabenstellung unterschiedlich.
Beispielsweise eng fassen, ausrichten an den originären Kernfunktionen „Transport, Umschlag,
Lagerhaltung“. Das wieder einschränken auf Funktionen, die nur von Dienstleistern erbracht
werden.
Selbst aus der Dienstleister-Brille liegt nicht eine einzige Abgrenzung auf der Hand: Ergänzende
Serviceleistungen, Kommissionierung, Fertigung, unterstützende Prozesse (z.B. Verpackung), IT,
IT-Outsourcing.
Hängt von Definition von „interessant“ ab...
Akademisch/Innovation: Kontraktlogistik
Ökonomisch: Oft Kontraktlogistik, bin aber zurückhaltend, viele Unternehmensberichte, welche
zeigen, dass nicht das angestrebte Wachstum erzielt wurde. Aussagen von grossen Unternehmen,
dass die eigentlichen Gewinne aus dem Netzbetrieb erzielt werden. Kontraktlogistik und IT sind
in der Kalkulation nicht vergleichbar mit einem normalen Netzbetrieb.
Kundensegmente
Kein repräsentativer Trend zum totalen Outsourcing / Kontraktlogistik.
Opportunitäten ergeben sich aus dem Verlagern von Standorten, hohe Anforderungen an
Logistik-Dienstleistern (TUL) aufgrund neuer Produktionsstandorten oder Auswahl neuer Lieferanten (Fernost, Osteuropa). Ungleich komplexer, neue Risiken. Nicht nur Transporte, sondern
komplexe Transport-Wertschöpfungsketten (Lagerhaltung, Puffer, Absichern von Beständen,
Haftungsübergänge). Eigentlich klassische Logistikdienstleistung, aber heute viel anspruchsvoller.
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Einige Unternehmen haben bereits Verlagerungsentscheide wieder rückgängig gemacht, da sie
diese Risiken nicht tragen wollten.
Strategien von Logistikdienstleistern
Strategien werden nicht auf der grünen Wiese gebildet, haben historischen Hintergrund (KMU
inhabergeführt, ehemaliger Staatsbetrieb, privatwirtschaftlicher Konzern), muss berücksichtigt
werden.
Eher kleiner Unternehmen werden sich differenzieren, spezifische Leistungen für ausgewählte
Kunden, evt. in einer spezifischen Region oder in einem bestimmten Umfeld, nicht ganze Netzwerke.
Ein bisschen grössere Unternehmen mit eigenen Niederlassungen, Linienverkehre, Netzwerk
ausbauen, sich mit anderen zusammenschliessen (Kooperation / Fusion): Netzwerkstrategie,
Standard-Logistikleistungen, v.a. Transporte, in einem dichteren und/oder umspannenderen
Netz erbringen.
Chancen für rein nationale Anbieter (nicht KMU)
Grenzüberschreitende, internationale Leistungen müssen nicht zwingend selbst erbracht werden,
müssen aber im Angebotsportfolio enthalten sein. Wer diese erbringt, ist aber letztendlich egal.
Postunternehmen im Vorteil, traditionell ganz gute Kontakte und Abkommen mit internationalen
Postunternehmen, nichts Neues. Neu: Eigene Leistungen international zu erbringen. Erfordert
neue Organisation und Struktur, DPWN ist in Deutschland anders organisiert als international.
Erfolgsfaktoren
PIMS-Studie sehr generisch, aber schwierig zu übertragen.
Nebst IT und internationale Kooperationen: Branchenbezogen ausrichten, massgeschneiderte
Lösungen, da sich die Bedürfnisse klar unterscheiden. Erfolgsfaktor: Anpassungsfähigkeit und
Flexibilität
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Dienstleister, welche Standardprodukte anbieten, tun sich eher schwer.
Interessante Kundensegmente
Alles was im weitesten Sinne mit Stückguttransport zu tun hat, ist für Postunternehmen interessant. Grosse Affinität zu den historischen Leistungen.
Einarbeitung in ganz spezifische Branchen ohne Bezug schwierig, z.B. Fahrzeugtransporte,
Gefahrguttransport, da andere Erfolgsfaktoren.
Grenzen zwischen klassischen Postleistungen sind artifiziell, historisch bedingt, aufgrund des
Monopols, nicht logistisch bedingt. Andere Gewichte, andere Grössen, anderes Handling, aber
ansonsten Standard-Logistikprozesse. Fliessender Übergang zwischen den Leistungen. Express
und Pakete sind oft dieselben Produkte, nur andere Zeitanforderung. Palettierte Pakete können
problemlos wie Stückgut behandelt werden. Anforderungen der Kunden und Verlader sind sehr
oft ähnlich.
Aus der Logistiksicht können klassische Postprozesse nicht von Logistikprozessen getrennt
werden. Aber aus der Managementsicht: Postprozesse wurden aus ganz anderen Blickwickeln
geführt, andere Kriterien, reguliert, Beamten, musste nicht zwingend rentieren. Und diese zu
überführen in ein Marktumfeld mit ganz anderen Spielregeln, ist ein langsamer Prozess und dies
sind die effektiven Barrieren, nicht der Netzbetrieb oder die Sendungsgüter.
Stärken eines Post-Logistikers
Erfahrung im Netzbetrieb, Assets, Bekanntheitsgrad, Reputation, Stärke im nationalen Bereich,
Bindung der Mitarbeiter an das Unternehmen
Jeder Entscheidungsträger eines Geschäftskunden ist auch ein Privatkunde, darf nicht unterschätzt werden, evt. gewisse Vorbehalte, aber private Erfahrung wichtig.
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Erfolgreiche Post-Unternehmen
Schwierig, den Erfolg heute zu messen, verfolgen unterschiedliche Wege, sind jetzt unterwegs,
Integration überhaupt nicht abgeschlossen, die Frage kommt zu früh.
M&A zwingend für Diversifizierungsstrategie?
Abhängig von Strategie: Falls umfassender nationaler und internationaler Logistik-Dienstleister
(Vollsortimenter), dann geht es in einer sinnvollen Zeit nur über M&A-Aktivitäten, da das traditionelle Post-Segment zu klein.
Aber falls Konzentration auf nationalen Schwerpunkt oder nur netz-affine Leistungen, dann
M&A-Aktivitäten nicht zwingend.
Mindest-Angebotspalette
Kann mir gut vorstellen, die Diversifizierung schrittweise zu verfolgen, generisches Wachstum,
ohne grosse Akquisitionen. Viele Märkte verlangen nicht das grosse Leistungsangebot, sondern
nur Anreicherung von Standardleistungen, überschaubare Zusatzleistungen. Insbesondere Kunden, für die Logistik ein Erfolgsfaktor ist und nicht viel auslagern wollen.
Konzentration auf Distributionslogistik
Vorsicht mit den Abgrenzungen, sind kundenabhängig. Unterscheidung besser nach B2B und
B2C (oder sogar C2C).
Kundenanforderungen sind völlig unterschiedlich.
Anschliessend Feingliederung nach logistischen Produkten: Eiltransporte, time-definite-Leistungen,
Komplettladungen, Gemischtladungen
Gegenmassnahmen von klassischen Logistik-Dienstleistern
Politische Gegenmassnahmen (z.B. Herr Kühne)
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Wirtschaftliche Gegenmassnahmen: M&A-Aktivitäten auch von privaten Logistikern
Eintritt ins Postgeschäft
Weiss nicht, ob es traditionelle Logistiker sind. Eher neue, fokussierte Nischenanbieter.
Grosse Logistiker tun sich mit ihrer Infrastruktur schwer, plötzlich Briefe zu transportieren.
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Da stellt sich zuerst die Frage, von welchem Markt wir sprechen: Meinen wir den Schweizer
Markt oder den weltweiten Markt? PostLogistics ist hauptsächlich im Schweizer Markt tätig.
Und da haben wir die klassischen postalischen Anbieter und diejenigen, die aus dem Transportgewerbe kommen. Das sind die hauptsächlichen Anbieter. Dazwischen gibt es Nischenanbieter,
die hauptsächlich Mehrwertlogistik anbieten, also spezialisiert für eine Branche oder ein Kundensegment und nicht einfach Feld-Wald-und-Wiesen-Logistiker. Diese drei Gruppen sehe ich.
Daneben gibt es auch noch die Speditionsunternehmen, die klassisch die eigene Wertschöpfung
möglichst klein halten und wenig in Infrastruktur, in Fahrzeuge etc. investieren.
Man kann die Segmentierung auch aus Kundensicht vornehmen und da haben wir verschiedene
Ansätze, die wir verfolgen: Das eine ist der Branchenansatz und das andere ist, man versucht
Bedürfniscluster zu bilden, also Kundengruppen mit ähnlichen Bedürfnissen, die durchaus aus
unterschiedlichen Branchen stammen können. Ich bin der Meinung, dass je mehr man sich
spezialisieren will, desto mehr Gedanken muss man sich zu einer Segmentierung machen. Je
breiter das Angebot ist, desto weniger ist eine genaue Segmentierung notwendig.
Interessante Branchen
Klassisch ist der Versandhandel, womit wir einen wesentlichen Teil des Umsatzes machen. Diejenigen, die einen Direktvertrieb machen, möglichst direkt zum Consumer kommen. Und die anderen
sind vorwiegend Geschäftskunden, die B2B-Belieferungen wollen, als zweites wichtiges Segment.
Und dort sind diejenigen interessant, welche regelmässige Bedürfnisse haben und eine interessante Empfängerstruktur aufweisen.
Gruppen von Strategien
Es gibt auf jeden Fall unterschiedliche Strategien im Schweizer Markt: Es gibt die Allesanbieter
wie ein Planzer, die sehr breit operieren, natürlich ohne den klassischen postalischen Bereich,
aber sie haben die Strategie, dass sie ein breit aufgestellter Transportlogistiker und Warehouser
sind. Alternativ gibt es zum Beispiel Galliker, der sich sehr früh spezialisiert hat und jetzt
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vor allem im Food-Bereich und in den Auto-Transporten einen Schwerpunkt gesetzt hat und
dort auch entsprechende Zusatzdienste anbietet. Also inklusive Bereitstellen von kompletten
Infrastrukturen.
Es gibt schon gewisse Internationalisierungstrends. Wobei man lehrt ja auch immer: Das
wird von den Kunden getrieben und ist zum Teil auch etwas modetrendmässig, dass die Kunden
möglichst wenig Dienstleister haben will. Wenn da eine Firma aus amerikanischen Verhältnissen
kommt, dann kann die nicht verstehen, dass man da in Europa mit 20 verschiedenen Dienstleistern arbeiten soll und dass jedes Land seine Spezifikas hat. Hat natürlich auch einen Zusammenhang mit der EU, wo der Raum zusehends homogenisiert wird. Wenn man dann schaut, wie das
in der Praxis aussieht, dann gilt „business is local“, dann merkt man, dass wohl ein Anbieter ein
multinationales Angebot hat. Aber die Leistungen werden national mit regionalen Dienstleistern
erbracht, was wieder zu aufwändigen Verhältnissen und Dreiecksbeziehungen führt.
Wichtigkeit von internationalen Lösungen
Wenn man als internationaler Anbieter auftreten will, dann stellt sich die Frage, wie glaubwürdig
es ist, wenn man dann die Leistung nur in einem Land erbringt. Wenn wir als Schweizer Post in
ganz Europa für ausgewählte Kunden Dienstleistungsverträge machen wollten, dann glaube ich
nicht, dass wir eine Chance hätten, das auch sinnvoll zu betreiben. Denn dies würde von uns
verlangen, dass wir ein teures Netzwerk aufbauen müssten, um das eben in den Griff zu bekommen. Und das ist auch nicht unser Ansatz, den wir gewählt haben, sondern wir haben Partner,
die es uns erlauben, gemeinsam internationale Angebote einzugeben. Dort sind wir natürlich
nicht in der GU-Rolle, sondern in der Rolle des Vertreters der Schweiz. Das hat den Nachteil,
dass wir Subunternehmer werden, wenn der Kunde nur einen Ansprechpartner will. Und das ist
nicht so angenehm.
Trend zu reinen Logistikdienstleistern ohne Assets
Da gehen die Meinungen auch etwas auseinander: Wie stark geht es in Richtung 4PL? Ich habe
noch keine Firma gefunden, die das echt implementieren konnte und eine gewisse Grösse erreicht
hätte. Man gibt ja dem Kunden ein Commitment zur Qualität, z.B. bezüglich Prozesssicherheit,
ab. Und wie stark kann man das dann selber noch beeinflussen, wenn man komplett alles outge-
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sourcet hat? Und welches Knowhow und welche Kompetenzen man dann tatsächlich selber noch
hat? Es ist für mich ein typischer Trade-Off: Die klassischen Speditionsunternehmen haben sich
ja in diese Richtung entwickelt, wenn man Kühne+Nagel als Beispiel anschaut. Wenn man aber
sieht, wie das abläuft, dann sind z.B. diese Transporte von China hoch standardisiert. Das sind
einfach Schiffe, die hin und her fahren, und dann muss man noch sagen, wie viele Container man
wann wo hat und wo man sie wieder ablädt. Und auf dieser Basis kann man dann den Transport
organisieren. Das ist eigentlich ein triviales Geschäft ohne grossen Added Value, welche sie betreiben. Deshalb ist es auch möglich, als klassisches Speditionsunternehmen dies so zu machen.
Aber wenn man eine echte Mehrwertlogistik anbieten will, dann braucht es schon ein gewisses
Knowhow in den eigenen Reihen.
Aus Sicht des Kunden muss man in seiner eigenen Logistik ein USP werden. Dann wird man
erfolgreich und dann ist auch der Kunde bereit, mehr für die Leistung zu bezahlen und wählt
nicht einfach nur den billigsten Anbieter. Das bedingt, dass man in der Wertschöpfungskette
nicht nur eine Teilfunktion übernimmt, die der Kunde quasi nur outsourcet und damit eine
Auftraggeberrolle spielt, sondern man muss versuchen ihm zu helfen, seine ganze Logistik zu
steuern und zu optimieren, damit er zu bestmöglichen Bedingungen seine Ware an seine Kunden
bringen kann. Das braucht entsprechendes Wissen, aber auch ein gutes Verständnis dafür, wie
sich der Markt verhält, in dem sich der Kunde drin befindet.
Dann kann man noch zwischen Kunden unterscheiden, die nur über den Preis gehen, die primär
die heutige Leistung einfach billiger erhalten wollen. Das muss man einfach wissen, die sind auch
nicht wirklich interessant, und man kann sich dort auch nicht über Mehrwertleistungen profilieren. Da muss man schauen, ob man es zum geforderten Preis anbieten kann oder nicht und
dann lässt man es bleiben. Dort sind meistens auch die zu distribuierenden Produkte relativ
günstig, was zu einem tiefen Warenwert führt. Und dann gibt es die Kunden, welche die heutige
Leistung verbessern wollen und drum einen Partner suchen, aber dafür auch bereit sind, mehr
Geld auszugeben. Bei einem Kunden wie Omega ist der Warenwert viel höher und da wird
nicht über die Logistikkosten gesprochen, dort ist es wichtig, dass die Uhren nicht verloren gehen
auf dem Weg von A nach B und zeitgerecht angeliefert werden. Und wenn in St. Moritz eine
wertvolle Uhr verkauft wird und 3 Stunden später jemand dort jemand dieselbe Uhr will, dann
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muss die 6 Stunden später dort sein. Da kann man auch mit dem Taxi hinauffahren, das spielt
dann in diesem Moment keine Rolle.
Wichtigkeit der IT-Systeme
Für mich nehmen die IT-Systeme ganz klar eine Schlüsselrolle ein. Jetzt ist aber die Frage,
welche IT? Das eine ist mal, dass man IT einsetzt, damit man die eigenen Prozesse beherrscht
und man jederzeit die Prozesskennzahlen zur Verfügung hat, um die Produktivität zu optimieren
und die Kosten tief zu halten. Aber das alleine reicht nicht. Wichtig ist die Verknüpfung der
Informationssysteme mit den Systemen des Kunden. Welche Auskunftsbereitschaft hat man?
Also einmal seitens Auftragsentgegennahme eine einfache Schnittstelle zu haben mit wenig Administration und hoher Sicherheit. Und dann während des Prozesses eine hohe Informationsbereitschaft gegenüber dem Kunden, vor allem im Fehlerfall, dass man reagieren kann, bevor es
der Kunde merkt. Und dann wenn der Auftrag durch ist, in der Fakturierung eine möglichst
einfache Administration gegenüber dem Kunden anbieten zu können. Und das ist nur möglich,
wenn diese Systeme miteinander verknüpft werden.
Da kann man sich heute auch immer noch darüber differenzieren, das ist noch kein Standard geworden, den man einfach erreicht haben muss. Da ist noch etliches Potential vorhanden
und deshalb haben wir auch einige Projekte in diese Richtung gestartet. Da wird viel davon
gesprochen, aber wirklich umgesetzt ist noch wenig. Eine einfache elektronische Entgegennahme
eine Auftrages kann jeder machen, aber eine, die Hand in Hand ohne menschliche Interaktion
läuft, da sind gewisse Anbieter noch Welten davon entfernt. Das braucht natürlich auch eine
gewisse Standardisierung, sonst geht es nicht.
Gründe für Diversifizierung in die Logistik
Da müsste man die Unternehmen einzeln analysieren, denn ich habe nicht das Gefühl, dass
alle aus den gleichen Gründen diversifizieren. Für mich sind die einzelnen Märkte, in denen
die Postunternehmen sich bewegen, auch zu unterschiedlich. Ich kann es also nur bezogen auf
unseren eigenen Markt beantworten: Wir könnten uns auf die klassischen postalischen Leistungen beschränken, so wie das z.B. Schweden auch gemacht hat, das dafür perfektionieren und
alles andere weglassen. Das würde dazu führen, dass man zwingend die Kosten- und Qualitäts-
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führerschaft erreichen bzw. ausbauen und sich über das differenzieren müsste. Wenn es darum
geht, maximale Abschöpfung zu betreiben, also EBIT-Maximierung, dann ist das ein möglicher
Ansatz, vor allem aus der Sicht eines kurzfristig denkenden Eigners. Wenn man hingegen schaut,
was die Erwartungshaltung von den Kunden her ist, dann wünschen die möglichst wenige Dienstleister und möglichst umfassende Lösungen. Und was macht dann dieser Dienstleister? Der
vergibt diese Transporte weiter und dann sind wir genau bei diesem Subunternehmertum, eine
Rolle, die ich in jedem Fall verhindern will. International gesehen ist diese schwieriger zu verhindern, aber national können wir sie verhindern, in dem wir selber die Rolle des Logistikdienstleisters wahrnehmen.
Man muss dies auch in einem gesunden Verhältnis sehen: Bei uns ist der Umsatz mit diesen
Zusatzleistungen rein in meinem Verantwortungsbereich 10% vom Gesamtumsatz. Der wird
vielleicht mal in Richtung 20-25% gehen, aber das ist eine Arrondierung vom Kerngeschäft und
auch als solches zu verstehen. Meine Zielsetzung ist es nicht, dass wir in 5 Jahren hier mehr
Umsatz machen als im Kerngeschäft. Diese Diversifizierung ist also zu einem grossen Teil kundengetrieben, das ist ein wichtiger Aspekt.
Aber es gibt auch noch den anderen Aspekt, nämlich den Aufbau von Logistikkompetenzen. Will man das oder will man das nicht? Und da habe ich ein gutes Feedback von unseren
Mitarbeitern erhalten: Das Paketgeschäft ist ein Systemgeschäft, welches wir ausgezeichnet beherrschen. Das führt dazu, dass wir auf einem stark durchrationalisierten Stand mit standardisierten Produkten sind. Wir können in diesem Segment alleine nicht beliebig innovativ sein. Das
führt auch dazu, dass unsere Mitarbeiter auch nicht immer wieder etwas Neues anpacken können.
Und im Rahmen der Weiterentwicklung habe ich viele positive Reaktionen erhalten, vor allem
auch von denjenigen Mitarbeitern, welche mir helfen, das Unternehmen weiterzuentwickeln, dass
sie mal wieder etwas bewegen können, etwas lernen, etwas verändern können.
Attraktivität des Logistikmarktes
Die Frage ist es, ob das, was wir hier machen, eine klassische Diversifizierung ist oder ob es nicht
bloss eine Portfolioerweiterung ist, denn eine richtige Diversifizierung ginge noch einen deutlichen
Schritt weiter, als das, was wir hier machen. Aber grundsätzlich hat der Logistikmarkt schon
nicht die gleichen Margen wie vielleicht ein Finanzmarkt. Wenn ich also Finanzspezialist wäre,
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dann müsste ich hier tatsächlich Vorbehalte haben. Aber dann muss man sich fragen, ob man als
Postunternehmen grundsätzlich überhaupt richtig aufgestellt ist. Es zeigt sich auch aus unserer
strategischen Planung heraus, dass diejenigen Postunternehmen, die nicht unter Monopolschutz
stehen, im Verlauf der Zeit Margen unter 5% haben werden. Da stellt sich schon die Frage, ob
es sich lohnt, in diesem Geschäft tätig zu sein. Ich bin im Verwaltungsrat eines Unternehmens,
das in der Baubranche tätig ist, und dort sind 2-3% Marge das höchste der Gefühle. Ausser der
Finanzbranche gibt es nämlich nicht viele Branchen, wo man sich eine goldige Nase verdienen
kann. Es stellt sich natürlich die Frage, ob man in andere Postunternehmen investieren will,
die immer noch unter dem Monopolschutz stehen. Aber das ist wiederum relativ weit weg von
unserem Unternehmenszweck.
Es ist mal sicher geographisch derselbe Markt. Dann haben wir Gemeinsamkeiten bei den Kunden, wir können ein Cross-Selling machen und unsere Leistungen erweitern. Und das ist nicht nur
irgendein Marketingspruch: Ich war letzthin bei 20 Kunden und da ist ein immenses Potential
vorhanden, welches man holen könnte, wenn man ein entsprechendes Wachstum erreichen will.
Es ist dabei eher selten eine Frage der Kombination von Stückgut und Paket/Express, sondern
gefragt sind komplexe Outsourcing-Lösungen, wo die Kunden über uns abwickeln möchten.
Wichtig ist aber auch zu analysieren, was die letztendlich anzustrebende Rolle ist: Du sprichst
jetzt die Logistik an. Für mich gibt es einerseits die Post als Logistikdienstleister und andererseits
als Handelsunternehmen. Heute ist das noch relativ stark getrennt in diesen Märkten. Es gibt
die Distributoren, Grossisten, Grosshandel, Detailhandel und Logistikdienstleister und das wird
zusammenwachsen. In ein paar Jahren werden die Grosshandelsfunktionen verschwinden und
dort werden zunehmend Logistiker Fuss fassen, wo aber mehr können müssen als reine Logistik
betreiben, sondern gewisse Handelsfunktionen übernehmen. Das Geschäft mit Procter&Gamble
geht in diese Richtung, aber das wird zukünftig noch stärker in diese Richtung gehen. Und dann
braucht man natürlich noch einmal vertieftere Branchenkenntnisse, als wir sie heute haben.
Unterschiedliche Diversifizierungsstrategien
TNT musste sich wieder auf das Kerngeschäft konzentrieren, etwas was von der Börse her
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getrieben war. Börsenkotierte Unternehmen sind nicht gern gesehen, wenn sie zu fest diversifizieren. Die Deutsche Post kommt extrem breit daher, was an der Börse entsprechend kritisch
gewürdigt wird. Die französische Post ist eher vorsichtig, in welchen Segmenten sie aktiv werden
will und ist im klassischen Logistikgeschäft weniger präsent, mehr im internationalen Paketgeschäft. Italien hat auch weniger in Richtung Logistik gemacht als wir. Wobei man wieder
die Relationen vor Augen führen muss: Die Schweizerische Post macht 7 Milliarden Franken
Umsatz, davon sind 130 Millionen Umsatz mit diesen neuen Logistikdienstleistungen. Das ist
relativ wenig.
Vorteile Postunternehmung gegenüber klassischem Logistikdienstleister
Wenn du die Schweizerische Post nimmst, dann haben wir den Vorteil, dass wir relativ breit
abgestützt sind, dadurch dass wir auch PostFinance im Haus haben und sogar im PostautoDienst tätig sind. Damit haben wir eine gewaltige Substanz, die wir einsetzen können. Unsere
Mitbewerber im Raum Schweiz träumen davon, dass sie ein Mutterhaus hätten, die Finanzierungen im grösseren Ausmass ermöglichen kann. Das haben die meisten eigentlich nicht. Unsere
Mitbewerber lassen sich diesbezüglich in zwei Gruppen teilen: Die einen sind unternehmergetriebene Firmen, die das Geld entweder selber verdienen oder bei den Banken holen müssen.
Die anderen sind die Tochtergesellschaften unserer Mitbewerber aus dem Ausland und die sind
auch nicht bereit, in der kleinen Schweiz beliebig Investitionen zu tätigen. Dr. Zumwinkel hat es
deutlich gesagt: Warum soll er in kleinen nationalen Märkten Geld ausgeben, wenn er in Asien
in einem Markt mit zweistelligen Wachstumsraten das x-fache herausholen kann.
Schwächen einer Postunternehmung
Dort wo Mitbewerber unternehmergetrieben sind, sind diese sehr rasch in der Entscheidfindung
und persönlicher im Auftritt, da der Chef selber bei den Kunden vorbeigeht. Das bewirkt auch,
dass Versprechen gegenüber den Kunden auch wirklich eingehalten werden, gerade persönliche
Versprechen. Das sind die wesentlichen Unterschiede. Aber sie sind durch das natürlich auch
abhängiger, Stichwort Generationenwechsel: Wenn der Patron seine Sache gut macht, dann sind
diese Unternehmen gut aufgestellt und erfolgreich, aber es hängt alles an dieser Person. Eine
Post ist im Gegensatz dazu mehr managementorientiert.
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Wichtigkeit des Brands
Die Marke ist schon nicht unbedeutend. Schlussendlich spricht man ja doch immer von den
einzelnen Marken. Aber es gibt auch da wieder unterschiedliche Philosophien: Galliker akquiriert
nicht so viel, aber re-branded dann relativ rasch. Planzer lässt die Labels stehen und hat diverse
Unternehmungen im Portfolio, da er regional so auftreten will, wie es sich die Leute gewohnt
sind. Wir als Post haben relativ spät reagiert: Wir haben national einen so guten Brand, dass
es sinnvoller ist, wenn wir ausschliesslich unter diesem auftreten.
Die Deutsche Post hat realisiert, dass DHL weltweit viel bekannter war als ihr eigener Brand
und deshalb hat sie diesen gewählt, damit sie weniger Marketingaufwendungen hatte. Und TNT
ist für mich ein ähnlicher Fall. Wenn wir selber einen grossen multinationalen Anbieter kaufen
würden, müsste man sich auch überlegen, ob wir im Ausland unter diesem Brand auftreten
wollen. Aber zurzeit stellt sich für mich diese Frage nicht. Unsere Marke Post ist in der Schweiz
sehr gut verankert und im Ausland ein sensationeller Türöffner, das ist identisch mit Qualität.
Operative Synergien zwischen Post- und Logistikgeschäft
Es ist immer die Frage, aus welcher Distanz man eine solche Betrachtung macht: Wir haben
in der Schweiz sicher nicht die gleichen Grössenordnungen wie eine Deutsche Post. Wir haben
Synergien in den klassischen Querschnittsfunktionen, welche wir zusammengelegt haben. Wir
haben Synergien in der Produktentwicklung, im Marketing, in der Kommunikation. Aber auch
im Verkauf, das ist gewaltig. Da hatte ich zuerst etwas Bedenken, ob denn unsere Verkäufer in
der Lage sind, nebst den postalischen Produkten auch logistische Dienstleistungen anbieten zu
können, aber ich habe unsere Verkäufer unterschätzt.
Mir ist klar, dass man nicht einfach sämtliche zu transportierende Güter zusammenlegen kann,
das bringt es nicht. Aber es braucht ein ausgeklügeltes System, was dazu führt, dass dort, wo
wir viel Volumen haben, diese Kanäle parallel führen, und dort zusammenlegen, wo wir Mengen poolen können. Hier haben wir das Thema Mittelland-Banane versus Randregionen. Das
zeigt sich schon, dass hier Potential genutzt werden kann. Es hängt natürlich auch immer davon
ab, wenn man fragt und wie die jeweiligen Befindlichkeiten sind: Wenn jemand die Systemführerschaft für ein Produkt beansprucht, dann ist es klar, dass der keine Synergien sehen will.
Das hat dann schnell mit der Autonomie zu tun, die man hat oder eben nicht hat.
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Aber ich rechne damit, dass wir mit den eingeleiteten Massnahmen sicher 20-40 Millionen
Einsparungen erzielen können.
Neue Ressourcen für Diversifizierung
Es braucht vor allem Experten, die in der Lage sind, solche Supply-Chain-Management-Lösungen
zu konzipieren und auch zu kalkulieren und Vorschläge zu machen, wie man optimieren kann. Und
das ist für mich das A und O, um Kunden zu gewinnen. Man muss eigentlich mehr Kompetenzen
haben, als der Kunde selber hat, sonst passiert nichts, sonst kann man seine eigene Leistung nicht
verkaufen. Und das ist relativ anspruchsvoll, denn die Logistikspezialisten beim Kunden sind
auch nicht 0815-Leute, sondern verfügen ebenfalls über ein fundiertes Wissen.
Noch vor 5 Jahren haben wir zu zweit mit diesem Thema begonnen und heute ist es relativ breit
abgestützt. Wir haben dies hauptsächlich über organisches Wachstum erreicht. Aber man kann
auch über Akquisitionen erreichen. Wir haben auch überlegt, ob wir eine Firma kaufen, welche
Logistikberatungen anbietet. Das ist halt auch wieder eine Philosophiefrage: Wenn man sehr
rasch wachsen will, dann geht das nur über Akquisitionen, dafür geht man auch wieder Risiken ein
und vernachlässigt vielleicht Integrationsaufgaben. Ich erachte zum Beispiel die Deutsche Post
nicht als integrierten Konzern, sondern als zusammengewürfeltes und kaum führbares Gebilde,
sowohl vom Diversifizierungsgrad wie auch von der regionalen Ausprägung her. Deshalb kann
ich es nachvollziehen, wenn die Deutsche Post sagt, dass sie keine Synergien erzielen konnten, da
sie die Integration noch gar nicht vollziehen konnten. Da hat man zentral aus der Ferne versucht
festzulegen, wie die Integration aussehen soll, aber hat dann in der Praxis gesehen, dass das so
nicht funktioniert.
Es gibt hier kein richtig oder falsch, sondern einfach verschiedene Möglichkeiten, sich zu entwickeln. Da muss man einfach den Markt und die Konkurrenzsituation anschauen und sich
entsprechend entscheiden. Ich würde nie sagen, dass das von uns gewählte Modell für andere
Postunternehmen sinnvoll ist. Das ist einfach unser Ansatz, weil er unseres Erachtens für unsere
Verhältnisse so richtig ist.
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Standardisiertes vs. Lösungsgeschäft
Ich bin nicht überzeugt, dass es wirklich zwei Strategien im Sinne einer Dualstrategie braucht.
Wir müssen die Stärken im standardisierten Geschäft beibehalten und dieses Standardisierungsdenken auch im Lösungsgeschäft anwenden. Das ist anspruchsvoll, aber machbar. Man sollte
nur dort vom Standard abweichen, wo man es IT-mässig unterstützen kann. Die technologische Unterstützung ermöglicht heute viel mehr als noch vor ein paar Jahren: Mit den neuen
Scannern werden wir dem Zustellboten zukünftig Informationen übermitteln können, wie er sich
verhalten muss bezogen auf den einzelnen Empfängerkunden. Und dann kann man für diesen
Empfängerkunden plötzlich Sonderwünsche zulassen. Der Zustellbote braucht keine spezielle
Ausbildung oder so, sondern hat alles auf dem Scanner und muss nur noch ausführen. Darum
bin ich überzeugt, dass man die Standardisierung heute viel mehr auf individuelle Bedürfnisse
anpassen kann.
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Why do postal operators diversify in general?
There are a couple of reasons, I think. For example, if you look at DPWN, one of their big aims
is to offer one-stop-shopping, from the point of view that they want to offer all services, not just
mail but also logistics and express. They want to take care of all the postal needs of a customer.
Some customers probably would actually like more services than just look for the lowest price.
So that’s one part of it. But also if you manage to obtain a profitable logistics company that
increases your revenue which allows you additional investments in markets abroad. So I think
that are the two reasons why we see diversification in the postal industry.
Another reason is that all the traditional postal markets are under pressure, for all postal incumbents. So diversification is a way to survive in the market actually: Either expansion in the
mail market abroad or diversification into other businesses. But we see of course big differences
in the approaches.
Are there other strategic options than diversification?
Of course there are other options: Also at the smallest scale a national operator can remain profitable. There is also scope for postal operators that only focus on their domestic mail market.
Only this will be a smaller size than today, so this is a model of shrinking instead of growth. So
this is not compatible with the more ambitious strategies.
Do you observe different types of diversification?
We made the analysis in the EU report: We have put a table that indicates which company
diversifies into which market. And there you see that all the incumbents of course have mail
as their starting point. And then a number of them are quite strong in express, but some of
them not. One third of them are in logistics. So it is a quite a diverse picture. And others are
in financial services. So you have the broadest diversification structure is doing mail, express,
logistics and financial services. And you have a lot of models also without logistics. And you
have models without financial services, like for example TNT, they go for express and mail only.
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When you look at the European market, do you observe some incumbents that obviously
pursue a more successful diversification strategy than others?
Well, the markets are not yet fully liberalised, this will only be in 2009, so we will only then see
what will happen. Whether or not the model of TNT with the focus on networks will work or
that will be better or worse than for example DPWN. I don’t know yet as we have not done yet
research with this specific focus. I think that the best operator with logistics in its portfolio is
DPWN and of course they are doing well.
Do you think there is a kind of evolution in the diversification strategies?
I don’t know whether we can establish really an evolution. If we look at our list, this is quite
a diverse picture, so I don’t think that there is a common pattern. Moving into express and
courier services is a more logical step than to move into logistics. Also to move into financial
services is more logical than logistics. I would think that in logistics there has not yet been a
real consolidation phase yet in the global market. As opposed to the express market where you
have basically four market leaders, two in the US, and two in Europe. I would not think that all
of these incumbents would move into logistics. This would not be wise. The incumbents’ scope
is quite limited and the consolidation process will continue and will it make impossible for all
incumbents to move into logistics.
If you look at economies of scope between mail and logistics, mainly international, you have
some economies of scope in B2B or B2C. If you look at the national level, you have hardly
any scope advantages. So unless you have an ambition as a national postal operator to focus on
a national or even global strategy, I don’t think it makes sense to try to start logistics operations.
Can you please specify these economies of scope?
We would first look for economies of scope in terms of operations. So maybe you can use the
same hubs and things, but there are very limited economies of scope. Of course, in terms of
branding and in terms of marketing, there you have economies of scope. That’s why DPWN
with DHL has a very strong brand name. But it terms of operations, there are no economies.
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What are the strengths of a diversifying postal incumbent?
We have not yet really analysed business models in the context of the SWOT analysis. I think one
thing that they actually do bring with and which is valued by the market, is trust in the quality of
the service provided. Especially in the mail market, private operators have to overcome the lack
of faith that they will provide a good service. And of course if you are already a national postal
operator, you have an established network and an established reputation for a level of quality
that might provide an easier step into logistics, compared to others that start from scratch.
The main things are therefore brand, customer base and trust, these are the three. Customer
base is important as well because all the incumbents are moving from, let’s say, supply chain
based organisations towards customer-focuses organisations. So all are paying more and more attention to proper client management. There are so many mergers and acquisitions because it’s the
fastest way to grow, but it’s also the easiest way to acquire a brand, trust and customer contacts.
Why do you analyse incumbents on the basis of their turnover and not on the basis of their
profits?
This is just an overview of the relative size of different postal incumbents and the total results.
We didn’t go so far that we want to make analyses of the relative results of individual divisions.
In the Netherlands, these figures for logistics were of course very low, that is the reason why
it was sold. For our purpose, it was useful to have an overview of the different sizes of these
businesses. And its interesting to see that TNT is as big than Royal Mail because of their international activities, although the home base of Royal Mail is of course three or four times as big
as the home base of TNT. But when you compare the number of employees, you see that Royal
Mail is very large – or TNT just more efficient.
What are the weaknesses of a diversifying postal incumbent?
Honestly, we don’t know... In my view, the Scandinavian operators are doing quite well and they
have a reasonable market. And DPWN is doing well. And all the others are either not engaged
or are not strong. La Poste has quite a small parcel logistics business and I was speaking at the
Management Meeting in Bordeaux, so I have gotten a bit more inside information: I believe that
logistics is not really a focus of their strategy. They have four types of jobs, they call it, and in
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the job profile of those four jobs, logistics is not really an important part. At least not logistics
in the narrower sense, they are of course strong with DPD in the European parcel business. And
if it exceeds 20 kilos from time to time, why not.
But there are of course weaknesses in the business model: We have the situation in the postal
market that starts with the monopolies. A couple of operators are taking a proactive strategy and
TNT and DPWN are the main players but also other reasonable operators like Austria Post or
Scandinavian Posts on a more regional market. They have a sort of diversification strategy, reasonable in the sense of expanding mail activities in the region and moving into other businesses.
I would think that in the end, that you would have a re-assessment of the relative strengths of
your business. So for example financial services, it is clear that in a lot of emerging markets it is
crucial to have financial services to establish a profitable mail division. If mail volumes are low,
it is one possibility to combine things and to establish a profitable business model. At a certain
moment, I would think that the example of the Netherlands will prevail where you say, okay,
the postal incumbent is strong in post and banks are good at financial services. So then I would
expect that you get a concentration again in terms of types of activities. Why would a postal
operator be better in financial services than a bank that is fully specialised? So I think that
there will come a moment where incumbents split again their activities. We have also contacts
to people that have a history in the postal industry, but now advise several postal operators and
one aspect is to combine two separate post banks.
(Open discussion on various topics, no new information from the interview partner)
Is there a common business model behind mail and logistics or are there no synergies between
a bulk business and customer-tailored services?
I think also that there is a trend, at least in the mail market, where consumer mail is only a
small portion. Its major part is business mail, meaning B2B or B2C. Currently, you also have
the huge power of postal customers that are organised in the Netherlands. I think they are
already providing 50-70% of the total mail volume. They are more and more working on hybrid
mail solutions, printing on location. So the process gets less and less physical. It is more data
processing and printing at the latest possible stage of the value chain instead of printing and
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then collecting physical mail. In that way, it will probably take another route to logistics, if you
take the example of Dell.
Of course, some part of bulk mail has some commodity characteristics, but I’m sure that all
the new competitor operators are trying to offer tailored customer solutions. Otherwise, they
wouldn’t have a real chance. So it’s a bit difficult to say where it’s moving because you see both
tendencies at the same time. You see the tendency of part of the bulk mail becoming customised
and you see it the other way round of standardising as much as possible. Or take advertising mail
where you customise specific advertising campaigns with value added services for your customer,
but in the same you try to standardise so you can reduce your costs.
Do you think that postal incumbents that haven’t already diversified internationally, must
now stick to their home market?
Is there still a chance to expand internationally? I would not think that they are too late, yet.
There are still quite a lot of European countries where not so much is happening. So I think
there is still hope but time runs and it will become increasingly difficult to become active in
the international market. And do not forget, the largest mail market in Europe, Netherlands,
UK and Germany, are already open to competition and DPWN and TNT are already in good
positions in these markets. So smaller incumbents might still enter other markets but they
will have to work quite hard. Or then they have the financial means to buy in. So there are
opportunities, but it depends on who has the financial resources. It is interesting to see what
CVC with Denmark Post will do. The general impression is that they will use Denmark as a
home base and a base of expertise to expand into other markets and CVC will of course envisage
their exist. So there are options: If a new venture capitalist will come in and cooperate with
one of the incumbents, there are many possibilities in several countries. If you look today, the
liberalisation process has not yet fully begun. If you look at where TNT and DPWN are active,
this is only a minority of the European mail markets. So there are still possibilities.
I mean, if I were a venture capitalist, I would go for the new member states in Eastern Europe.
It’s risky and it’s a bit of a long shot, but I think you win something by regional integration. So
if you have all these markets together, it’s a quite a big market, the potential is huge. But it is
a long shot; a lot of things have to change first. One important thing to develop these markets
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is to develop the direct mail market, which is pretty underdeveloped in these countries. This
might be actually very interesting.
How will the revenue mix of diversified incumbents change in the future?
For those who are successful in diversification, the numbers will most certainly change. Because
they will lose volumes in mail, that’s clear. I would expect that there would be quite a number
that will do without logistics in the future. Whether mail will hold vis-à-vis financial services?
Maybe. I would not expect dramatic changes, at least not in the next five years. If you lose
now volumes in mail, you can compensate a bit with financial services. In the longer term, the
question will be whether financial services will be part of your business or not. For the strongly
diversified companies, of course, I would expect that mail would become less important. For
example also for the Scandinavian Posts.
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Introductory question: Can you please explain the current strategy of Post Denmark and explain
its ambition in the logistics market?
We have this, let’s say, special challenge in this year: We try to expand the value chain and if you
look at the logistics part, we see our business in two directions, in logistics and communications.
In communications, you have the letter business, mailroom management, printing solutions,
scanning of letters and so on. In logistics, you have parcels and light goods. So you could say
that in the logistics, we have some definitions: Up to 5kg, we have parcels and light goods are
defined up to 999kg. That’s where we are today, but our ambition for the near future is to go
further and if you have looked in the press, we have tried to buy one of the players in the Danish
market, Transportgruppen A/S, who represents a nationwide logistics operator on heavy goods.
So we could say, “heavy goods” is our ambition, not by our own company but by buying some
private companies in the Danish market. So that’s, generally, one ambition, one strategy.
In the other direction, we are going out on the value chain on our customers’ site, and here
we go out on facility services in general. We have different solutions for the big companies in
Denmark, also under this umbrella of facility services. And this is a growth business for us. Not
as big as the parcel business, but it’s growing with about 20% a year. And there are some good
markets. And this is important for us, because our core business, the letter business, is declining
with 3-5% a year. And then we have the real competition coming from the beginning of the next
year. So it’s obvious that we have to extend our product line and to develop new services.
And there is the other strategy, to go into an alliance with a global player. We’re at the end
of the strategy period of 2003-2006 where we wanted to become partner of a global player like
TNT or DPWN or maybe GLS or La Poste. The focus is not on becoming part of a major global
player or company, but to offer our customers one-stop-shopping. That’s the key goal in our
strategy because more and more of our domestic customers ask for services abroad and we need
to deliver and we need one caretaker of parcels, light goods and different services in the letter
businesses. So we need to be part of one of these global groups in order to be competitive in the
future. We can see now rather tough market plans for different kinds of postal services, we have
all the big players in Denmark, so in order to be competitive, in order to fulfil our customers’
requirements, we need to offer competitive services.
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There was a specific timetable for this alliance, in fact before the end of this year. We have
the current strategy period of 2003-2006 and we are running out of time. In December, we are
expected to have the new strategy for 2009. If you look at our last one and a half year, you see
that we have been privatised, at least 25%, and 22% of the shares were sold to CVC Capital
Group. We expected 100% sure, only one year ago, that these shares would be sold to the Dutch
Post or the German Post. We couldn’t imagine that there would be any interested party in this
share-selling, so we built our strategy that by selling these shares we would be on the one hand
less depending on the parliament, this is important, and secondly, would become in the same
time part of a global alliance. But then, there were three serious bidders, the Dutch and the
German Post, and the third one was CVC and their offer was much higher than the other two.
So, the parliament, the politicians, said we want the best price and they made an agreement
with CVC. So we had to start the process of searching a global alliance over again. And that’s
where we are now. So, we are still very eager to enter one of the global clubs, but we don’t have
the solution right now. CVC has the exclusivity that within 5 years they should be offered the
remaining shares. If the state does not want to sell any more shares, they are obliged to buy back
the shares from CVC. So at the moment, we have no possibility to sell shares to another investor.
The ambition of CVC, of course, is to get a 100% ownership of the Danish postal business in
order to sell the shares again. And then they will probably sell it to TNT or DPWN, but this
will be not before 3-5 years from now. But we need to have this global alliance earlier.
In the meantime, we try to buy domestic logistics operators here in Denmark. Because the
negotiations with global players are going on, we are only allowed to consolidate on the domestic
market. If we have any ambitions to go abroad, we must have some good arguments that go in
the same directions as the current discussions. We know that you can not operate a logistics
service business within domestic boarders because you can not get the full benefits out of the
business and that’s why we can not wait four or five years until we have this global solution. So
I expect that within the first half of next year, we will have some kind of conclusion and we will
enter a global alliance.
So that’s the general picture of our strategy. We are still earning most of our money in the
letter business. We are reducing our costs heavily and we have been good at automating our letter business. Together with the Dutch and the German Post, we are one of the most automated
letter businesses in the world. So we can keep the problem down to a relatively reduced level,
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but we can not continue with this kind of problems in our core business. At the moment, we
don’t have the tools to go out into a fair competition from the 1st of January because we are
forced to have unit prices all over the country. So we go out to the rural area at the same low
price and our competitors do cherry-picking and concentrate on the area around Copenhagen
and pick up the easy, good letters. We are at 50 grams monopoly right now and we expect in
2009 to go to zero grams although the European Union now discusses the impact of this further
liberalisation. We expect that our liberal government in Denmark will decide that we have to be
in front and go for full liberalisation in Denmark. When we face this change in 2009, we have to
make fundamental changes in the business model with the state, they have to give us something
else instead of the monopoly and that’s what we discuss with them at the moment. So we are
still very depending on the parliament.
In general, why do postal operators diversify into logistics?
As I have said for Post Denmark, we all operate in a very difficult market environment where
competition is increasing and the total mail volume is decreasing. So you have no other option
than looking for new opportunities, new businesses. And the goal is that you generate enough
money with these new businesses to finance the universal service obligation you have from the
State.
What kind of diversification strategies do you observe today?
I observe very different strategies and sometimes I am surprised what new businesses the operators are opening. But I guess that the more successful strategies are the ones close to the
mail business, such as hybrid mail, direct marketing, but also various logistics services. Which
of them will be successful in the long run? I have no idea, time will tell...
Which postal operators could diversify into logistics in the near future?
That’s a tough question, which cannot be answered in general. In my opinion, virtually all
incumbents are trying to offer some kind of logistics services. Many of them do that by simply
extending their product portfolio, so it is not really a typical diversification. But you probably
talk about strategic moves, which must be made by acquisition of an existing logistics operator.
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Here in the Nordics, Norway Post is very aggressive and will certainly continue to acquire businesses and maybe other countries will follow, simply to keep up with Norway. And then I think
that some of the bigger countries in Eastern Europe will also take the chance of the developing
economy there and soon offer logistics services.
What are the strengths of a postal operator, which diversified into logistics, and what the
corresponding opportunities?
The biggest strength is certainly that a postal operator has already a huge know-how about
logistics operations and how networks must be run. And they have a huge customer database,
since they postmen visit every citizen in the country every day. But they have also very good
contacts to business customers and offer generally already very competitive postal solutions. So
if they can combine the knowledge and the customer connections and apply them to a new business, especially logistics, the incumbent will certainly benefit. I doubt however whether this is
really enough to be better off than a traditional logistics operator who has also long experience
and a good reputation.
What are the weaknesses, and what the corresponding threats?
As long as postal incumbents are owned by the government, they will face restrictions about how
to run their business. Even if the Universal Service Obligation only applies to the mail market,
incumbents are under pressure from politicians and unions and cannot always act like they would
as a private company. Most postal employees are furthermore civil servants or have at the least
still the privileges what increases the fix costs of incumbents. And the average post is certainly
not as agile and adaptive as smaller competing providers, this is certainly also a disadvantage.
How can they overcome these shortcomings?
I guess that they will overcome these weaknesses automatically, they have no other option. Most
of the incumbents, as far as I can say, are on the right path and have made massive progresses in
the last couple of years. When an incumbent diversifies into logistics, he most often acquires a
company and buys in a lot of new know-how and a competitive attitude. It’s then basically the
task of the top management to benefit from this fresh blood and to leave them their freedom,
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instead of fully integrating them and breaking this drive.
Where do you see synergies between the postal and the logistics business?
I’m not sure if there are too many synergies really in the daily business. You can certainly plan
your various networks in such a way that you can link them together, optimise time slots, and
minimise distances. However, I don’t know whether this leads really to a competitive advantage
compared to existing logistics operators. But they can exploit synergies in the field of marketing
and sales, when they offer the customers really one-stop-shopping solutions for all their different
needs, starting with postal products and ending with complex logistics solutions. They must
probably not even carry out the transportation themselves, but can outsource this activity to
another operator. But the post has one face to the customer and solves all his logistics problems.
On the other side, customers are increasingly looking for the cheapest provider and sometimes
prefer to have different providers if they are cheaper than one operator who offers all the services.
Is there a minimal geographic coverage that a postal operator needs in order to be successful?
As we have already discussed, logistics per se is an international business that does not stop at
the country borders. So you need to offer your customers somehow an access to a European or
even international network. You can probably confine yourself to your home country, but you
won’t find many customers, which have only domestic logistics. Or then you have just quite
small customers and therefore no economies of scale, which could help you to make profits in
this difficult market.
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9.5 Curriculum Vitae
Patrick Mollet was born in 1977 in Solothurn (Switzerland) where he also went to school. In
2003, he graduated from the University of Berne (Switzerland) with a Master’s degree in Business
Administration. He specialised in strategic marketing, information technology, and law. During
his studies he worked for different companies, most recently in the marketing department of IBM
Global Services. He is also founder of StudiMedia GmbH, an agency specialised in university
marketing and media planning. Together with his spouse, he lives in Zug (Switzerland).
The dissertation on hand resulted from a joint venture of the Chair MIR at the Swiss Federal
Institute of Technology (EPFL) and Swiss Post where Patrick Mollet was the first participant in
the newly created “MIR-Post PhD program”. During his PhD, he worked as an assistant (60%)
in the field of corporate strategy in the logistics business unit at Swiss Post. This close link
between academia and industry enabled the author to continuously compare theoretical findings
with the postal reality, as well as to apply academic concepts to strategic challenges of postal
incumbents.
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