NZ Post ends courier joint-venture with DHL
"Freightways management will be sleeping well with this move by their competitor."
Featured commentBUSINESSDESK: New Zealand Post is ending its joint-venture courier arrangements with DHL after eight years by buying its partner out.
It will buy DHL's 50% share of their joint-ventures Express Couriers in New Zealand and Parcel Direct Group, which owns Couriers Please in Australia, for an undisclosed sum.
Express Couriers operates the CourierPost, Pace, Contract Logistics and Roadstar brands.
The partners will continue to have a contract relationship, DHL providing international express delivery for NZ Post and NZ Post providing such services to DHL in the New Zealand and Australian markets.
“Express delivery is a core element of our current and future strategy,” NZ Post chief executive Brian Roche says.
“We continue to observe a dramatic decline in the amount of letter mail in our traditional postal network while at the same time parcel and courier volumes are growing steadily on the back of growth in e-tailing and e-trading.
“Having full alignment between NZ Post and Express Couriers will allow us to better match our product offerings to customers' needs and, as we have previously indicated, explore the benefits of further aligning our postal and courier networks.
"We can only achieve this if we have full ownership of Express Couriers,” he says.
When the joint venture was formed in 2004, then NZ Post chief executive John Allen said: “The decision to enter into a joint venture with DHL has been driven by a number of factors, including DHL's strong presence in South East Asia, China, Japan and rapid growth in India, which are all important markets to New Zealand's future.”
DHL had promised the joint venture would mean New Zealanders “will receive a more complete service”.
Now, DHL senior vice-president for Oceania, Gary Edstein, says: “Together we've created a business that has strong brand awareness and solid operational processes and no longer requires a joint ownership to ensure its success.”
His company “is excited about the opportunity to focus on our core business: international time definite delivery”.
The courier business operates as one part of the duopoly dominating the New Zealand market, competing against NZX-listed Freightways.
NZ Post has $200 million of subordinated notes listed on NZX which have a 7.5% coupon. They last traded at $103.723 per $100 face value, or 6.2%.
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Comments and questions9
buying its partner out really means NZ Post made a blunder in setting up the JV years ago, found out about the blunder now, and decided to rectify it.
$35million lose ,last year , hmmm let’s just go out and buy some more income , instead of fixing the real issues.
We have only known mail numbers have been dropping for how long ?
so lets wait and do someting now its at tipping point ,
its okay tho , cause im sure the Crown will inject capital
However, mail volumes are in free fall. It had forecast a drop of 5 per cent a year as the long-term trend to electronic mail bit. But in the six months to the end of December 2011 the decline had steepened to 7 per cent; the fastest ever, "which may be the new norm", Cullen said. "The trend will not reverse and cannot be ignored."
Hard to know if this is the right decision unless NZP think they can take the model regional or global and go to SE Asis.
Freightways management will be sleeping well with this move by their competitor.
So what is going to happen to Localist? how long before they fold.
Two months
Owning 100% of this may be one fo the few smart things NZPost have done (depending on the price paid).
With online shopping, the number of courier packages is only going to increase, compared to the volume of letters which is in free fall.
Yep, another reverse by a Government-owned asset. The sum may be undisclosed but DHL surely would have made money on the deal! How short-sighted can NZ Post be when they sold the only business unit in growth (parcels) and kept all the others reliant on letters. A merge and complete restructure of the parcel and letter delivery networks is something NZ Post has wanted for quite some time and this move will allow them to "streamline the offer".
DHL have to sell out to recoup losses on their Australian parcel venture with NZ Post - between them they have lost tens if not hundreds of millions... not to mention the tens of millions lost on Localist.
Strange that management still find the money to pay bonuses - thank you management (from my wife - she likes buying lots of furniture annually).
Prediction.....Next will be the full purchase of Reachmedia
then they will get a bail out in say ..2-3 years’ time from the Crown