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Tnt Post Group N.V. Business Information, Profile, and History

ptt postal services mail

PO Box 13000
1100 KG Amsterdam
The Netherlands

Company Perspectives:

Mission: TPG's mission is to achieve a recognized world leadership position through excellent service to customers in its three business areas--Mail, Express and Logistics--based on a strong market position in Europe.

History of Tnt Post Group N.V.

The Netherlands' TNT Post Group N.V. (TPG) is helping to redefine postal services. The first publicly traded postal service in the world, TPG offers mail, express mail, and logistics services on a worldwide basis. The combination of the former Dutch postal service and the express mail and logistics activities of TNT Worldwide has created the world's fourth largest mail services provider, behind Federal Express, UPS, and DHL, worth more than NLG 16 billion (nearly US$9 billion) in annual revenues. TPG's business activities include domestic mail services and direct mail services in The Netherlands; international mail and international express mail services, principally in Europe and Asia; and worldwide logistics operations with a focus on supply chain management. Formed from the breakup of the former Dutch postal and telecommunications monopoly, the PTT Nederland, TPG's shares joins sister company Royal KPN's shares on the Amsterdam, Frankfurt, London, and New York stock exchanges. The company is led by chairman and CEO A.J. Scheepbouwer.

Birth of a Postal System in the Mid-18th Century

The formation of The Netherlands' post office system coincided with the evolution of that country from a collection of loosely federated cities into a single national entity. Prior to the mid-18th century, each of the various cities operated their own postal services. The federalization of the region--which at one time included much of Belgium--into a more cohesive gathering of states under Stadhouder Willem III also encouraged the consolidation of the region's postal facilities. In the first half of the 18th century, ownership of postal services was transferred from a city level to a state level. In 1752 The Netherlands officially established a new postal service, called the Statenpost, which granted regional monopoly status to each of the state-run post offices.

The new entity placed the Dutch mail services on a more equal footing with the postal systems of other countries. It was not until the end of the 18th century that the Dutch postal services were reformed into a single, national system, modeling its organization after the system developed by the French. This system, officially established in 1799, provided the foundation of what would soon become known as the PTT Post.

The Dutch postal service inherited a variety of postal tariffs and collection and delivery methods. In 1807, however, the Post was placed under the administration of the Ministry of Finance. This body passed the country's first Postal Act, a series of regulations providing for a more standardized collection, carrying, and delivery system, while also establishing a single rate system--based on distance and weight--for the entire country. Yet the Post still was not conceived of as a public service; instead, it was expected to operate more along the lines of a tax collection service, providing funds for the national treasury.

A shift in the vision of The Netherlands' postal services came in the mid-19th century. The passage of the Postal Act of 1850 established the postal service as a service in the public interest. While remaining under the finance ministry, the Post shed its role as tax collector to become a public service. The Postal Act of 1850 further codified the postal service's domestic monopoly and created a simplified postal rate structure.

Two years later, the Post marked its entry into the modern era of postal services delivery, when it issued its first postage stamp. That same year also saw the institution of a nationally organized network of postal service facilities--now, every town received its own post office and a system was established for the collection and delivery of letters. The postman quickly became a national fixture, delivering mail as much as three times a day. The postal service rapidly extended its network of post offices. New services, including delivery of postcards and packages, also were introduced. By the 1870s, the Post's network of post offices covered most of the country.

A new communication technology would soon join the postal service. By the mid-1850s, The Netherlands had begun to install its first telegraph transmission networks. In 1852, the country formally organized its telegraph utility, the Rijkstelegraaf, under the Ministry of the Interior, which assumed responsibility for installing a roadside network of telegraph poles and cables. Use of the telegraph as a communication means remained relatively limited, however.

The postal system and the telegraph service, which was soon to add the newly invented telephone, operated as separate government agencies until the 1880s. Given the limited growth of the telegraph in The Netherlands, it was decided that the two services should be joined into one agency, under a single ministry in 1886. With the addition of telephone services, this agency would become known as the PTT (for Post, Telegraph, and Telephone) and remain a state-run monopoly for more than 100 years.

Separation in the 1990s

The combination of postal services with the country's telegraph and telephone systems was never wholeheartedly performed. Even though the two services were available through the same offices--the network of post offices created by the postal service--operations remained more or less separate, with each branch retaining its own personnel and culture. For the most part, the two services operated in parallel, each with its own personnel, budget, finances, and infrastructure.

The Depression era forced the PTT to modernize. Where mail previously had been sorted by hand, the government agency introduced mechanized systems, especially with the introduction of the Marchand Transorma, a machine capable of sorting mail to 400 different destinations, placed into service in 1931. A more efficient sorting system enabled the PTT to cut back on the number of its delivery rounds--instead of the three deliveries per day, PTT postmen now performed only two. This cutback produced still more economies, encouraging the PTT later to cut back the number of daily deliveries to one.

The economic climate presented another opportunity for the PTT, as the government allowed the agency to operate more and more as a commercial enterprise. Unlike other government agencies, which were provided for in the national budget, the PTT was given a more corporate status, enabling the company to make the necessary capital investments and take write-offs on its balance sheets, rather than to depend on government approval for each investment. The PTT also was given its own press and publicity departments, enabling the agency to compete for consumer attention. While most of Europe's postal services and telephone companies remained under government control, the PTT's relative independence allowed it to present a more modern appearance to consumers, who were treated also with original postal stamp designs.

The Nazi takeover of The Netherlands during World War II interrupted the PTT's independent activities, as the German occupier seized control of the country's communications systems as well. With the Liberation, the PTT was faced with rebuilding its telephone infrastructure. By the end of the 1940s, however, the agency was presenting heavy losses. In this way, the PTT was no different from most of its government-run counterparts in other countries.

The agency performed its first analysis of postal usage, identifying national traffic trends and postal processing rates. This analysis led to more cost-cutting steps, including the scaling back of the post office network, in which many of the smallest offices were closed and the number of daily deliveries was reduced, as a single daily delivery became standard. At the same time, the agency began raising its postage and telephone rates. Telephone services provided a means to maintain a positive balance sheet when the telephone quickly imposed itself as a mainstay in the postwar home. Yet the PTT's postal arm continued to represent a financial burden, in part because its personnel were considered civil servants and granted all of the benefits of this status.

By the late 1960s, the PTT was faced with the need for still more cost-cutting measures. The decision was made to reorganize operations, in particular, to consolidate sorting, culling, canceling, and other handling activities into larger-scale facilities. The process of concentration began in the 1960s and continued through the 1970s, with the opening of 18 "mail interchange" processing facilities. Advancements in automating, sorting, and handling systems enabled fewer processing centers to handle increasingly large volumes of mail. An important improvement in the PTT's mail system came with the introduction of the postal code (known as the zip code in the United States) in 1977. The four-digit, two-letter postal code system allowed automated equipment to sort mail down to the individual delivery round, whereas the previous system could only automate sorting to a citywide level. This improvement finally enabled the PTT to reduce its delivery schedule to a single delivery per day. The number of processing facilities could also be reduced, down to 12. The great volumes of mail being processed in these facilities enabled the PTT to operate at a profit.

Innovation also was coming to the telephone industry--soon to become known as the telecommunications industry. The use of telex equipment and facsimile machines, joined later by electronic messaging systems and Internet-based voice and video communication technology, as well as portable telephone systems freed of dependence on a physical telephone wiring system, threatened a drastic transformation of traditional communication systems. While the telephony industry was facing a time of great change, the postal world also was changing: the arrival of dedicated express mail and other courier services, led by such U.S. companies as Federal Express and United Parcel Service and Australia's TNT, presented new challenges to traditional postal services.

The era of government-run, monopoly services had reached the beginning of the end. Restructuring was quickly becoming a necessity, not only to enable the PTT to compete in a rapidly transforming marketplace, but also to give the consumer more options--and potentially lower rates. During the 1980s, however, the PTT focused on expansion activities, buying up interests in domestic cable and television networks and moving toward international expansion of its telecommunications services. It was only in 1989 that the PTT was finally privatized.

In that year, the PTT was reorganized as a private business, PTT Nederland NV, under direction of CEO Wim Dik. In the new structure, the postal service, renamed PTT Post, joined its larger telecommunications industry sister company, PTT Telecom, as an independently operating subsidiary. Despite being no longer a government agency, the new PTT remained nonetheless wholly owned by the Dutch government. The change, however, allowed the company to pursue its own growth strategy into the 1990s, unhampered by the slower governmental decision-making process. Privatization also enabled the company to seek new international partners, some of which had balked at the prospect of pursuing projects with a government agency.

One such partnership was established in 1992, when PTT Post joined its time-sensitive mail and freight services with those of Australia's private TNT and the government-owned post offices of Canada, France, Germany, and Sweden in the partnership GD Express Worldwide (GDEW). TNT, which, since its founding in 1946 had expanded to become one of the world's top four express mail and freight delivery businesses, took on a 50 percent ownership of GDEW. Before long, PTT Post bought out GDEW's public post office partners, so that GDEW became a de facto joint venture with TNT.

Faced with the imperatives of the commercial business world, PTT Post, led by Ad Scheepbouwer, underwent a restructuring during the first half of the 1990s, reaching profitability as early as 1993. One important move PTT Post made was to franchise some 1,600 of its smaller post offices, while placing the others under a joint venture operation with the Postbank, a subsidiary of Internationale Nederlanden. The reorganization also led PTT Post to cut some 1,000 jobs. At the same time, the subsidiary began making its first expansion moves, buying up a number of small domestic and international courier and express mail delivery services. PTT Post also was making moves into a new area, that of logistics.

In 1994, PTT Nederland went to the stock market, as the Dutch government sold off some 30 percent of its shares on the Amsterdam stock exchange. The public listing of the post-telecommunications business marked the largest offering ever in The Netherlands and also was the world's first public listing of a post office. Interest was high in the shares; nonetheless, most investor attention went to PTT Telecom, nearly twice as large as the NLG 5 billion-per-year PTT Post. Two years later, PTT Nederland offered another 25 percent of its shares, effectively ending the Dutch government's control of the country's post and telecommunications services. At that time, PTT Nederland took listings on the New York, London, and Frankfurt stock exchanges as well.

The following year, PTT Post stepped out of the shadows of its larger sister company when it reached an agreement to acquire the struggling TNT for some NLG 2.7 billion. The purchase, which placed PTT Post roughly on the same revenue footing as PTT Telecom, set the stage for the next evolution of the former state-run monopoly. In 1998, PTT Nederland announced that it was splitting into two entirely independent, publicly listed companies: Royal KPN, which contained the company's telecommunications activities, and TNT Post Group (TPG), which took over the company's postal, logistics, and express mail services wing, including both companies' shares of the GDEW partnership. Both KPN and TPG retained listings on the Amsterdam, New York, London, and Frankfurt stock exchanges.

Among the first activities of the newly independent TPG was to reorganize its operations into two distinct units, PTT Post and TNT Worldwide, while shedding the noncore activities inherited from the TNT acquisition. The company also concentrated on the expansion of its mail handling facilities, including the opening of a state-of-the-art sorting facility in Liege, Belgium, an international road hub and depot in Duiven, The Netherlands, and the opening of six new Netherlands-based sorting facilities replacing the 12 facilities that had been in existence since the early 1980s. While expanding its infrastructure, TPG also continued consolidating its international presence, acquiring Jet Services, an express service based in France and operating throughout most of Europe, and in 1999 acquiring Italy's Tecnologistica, with logistics operations in Italy, France, and Germany.

TPG ended its first year as an independent company on the upswing. Not only had its operating revenues swelled to more than NLG 16 billion, with profits of more than NLG 820 million, but the company's PTT Post subsidiary received a new distinction, as it was granted the right to add the moniker Koninglijke (Royal) to its name. To commemorate the occasion, the Royal PTT Post issued a special postage stamp, marking its 200th anniversary. As one of the world's largest postal and express mail services, with a steadily building position in international logistics, TPG had taken center stage in a rapidly changing postal industry.

Principal Operating Units: Koninglijke PTT Post; TNT Worldwide.

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