Germans Lead Way in Global Struggle for Market Share, Influence
Over the last year the Germans have caused the greatest turmoil with a concerted drive to buy and build market share in Eastern and Western Europe and in the US. They are also playing an active advisory role in Latin America with their private Argentine partner, OCA, and have projects underway in Indonesia, China, South Africa and other countries.
The German challenge could well trigger a mail war as the Dutch and the British, the other two European powerhouses, meet the German expansion with raids into Germany and other competitive markets.
Canada, France, Scandinavia, Switzerland and Belgium are smaller players trying to pick up business on the edges of the global marketplace.
Nor is the US playing a bystander role. USPS's International Business Unit (IBU) has reached out across the globe from China and Japan to South America and Europe, practicing tactics that are clearly "cooperation and competition."
Given the level and the intensity of this competition, people in the business are beginning to talk about "mail wars" as more than just journalistic hyperbole.
Elsewhere in this issue (Page 12) the Royal Mail's Chris Powell concedes that some might argue a mail war has broken out but points to the need for cooperation among world mailers as an offsetting factor. He calls for a "revolution" in how mail services are provided.
John Costanza, president of the Dutch TNT Post Group in North America, writes (page 13) about the "equivalent" of World War III fought on US soil with stamps instead of bullets. The outcome, he noted, is "potentially deadly" to postal competitors' bottom line.
The Germans have made clear just how deadly. In the last six weeks of 1998 they spent 7 billion German marks ($4.25 billion) on acquisitions in the US, the UK, France and Switzerland.
More than $1 billion went for the purchase of Danzas, a Swiss-based leader in sea and air freight forwarding with offices in 60 countries and on par with companies like Schenker and PanAlpina.
The Deutsche Post AG also bought Global Mail in the US in September, spent $400 million on a 50 percent share of Securicor Distribution in the UK and last month took a 68 percent stake in Ducros Services Rapides in France.
As the world's leading mail market the US is key to German strategy. "We are committed to becoming the leading player in the US with a full range of high quality value-added services," said Don Brooks, a Canadian who heads DP's International Mail Services (IMS) subsidiary.
Global Mail, he added, is the trigger. "They have in excess of 2,500 active customers whom we will be folding into a full range of DP services." The Germans also hope to attract US catalogers with a panoply of services from call centers to lists to help them.
DP has just opened an office in Washington D.C. under the Deutsche Post name which will offer all the DP products to Americans. Rainer Hengst, a 27-year veteran of USPS where he helped found IBU, will run it.
Brooks explained that German companies looking to move overseas had initially spurred DP's global expansion.
"A lot of German companies are making acquisitions in North America, across Europe and around the world and they are looking to us as being a strategic partner to help meet their distribution needs."
Brooks cited Daimler-Chrysler as an example of organizations that want a one-stop shop partner. The Germans, he added, have developed four basic platforms to meet customer needs.
International express services are the first platform and DP provides them through majority control of DHL International, which it has together with Lufthansa. The decision to buy was based on a study showing that the express business did not have room for a fifth global carrier to compete with DHL, TNT, UPS and Federal Express.
Deutsche Post has introduced the DHL brand into all German retail post outlets and "we put all our international express shipments into the DHL network."
The second platform is expansion of a Europe-wide parcel delivery service by road with day certain guarantees - normally 24 to 48 hour delivery services. That hasn't existed in Europe before, Brooks said.
"The market has been fragmented with a number of national parcel players but no real integrated European network. We've spent billions re-engineering our domestic parcel market and are now doing the same thing in Europe, he said.
"Our customers want time definite guarantees, signature upon delivery, and track and trace information available on a timely basis. Other posts can't provide this information for us in Germany."
Over the last 18 months, therefore, "we have set up our own parcel service networks in a number of European countries and linked them together and to our home market in Germany,"
What the Germans did was buy in Western Europe and build start-up operations in Eastern Europe. They built a hub and spoke system in Austria and now deliver 10,000 parcels a night there.
They've done the same thing in the Czech Republic, building 50 depots in Poland, its most rapidly growing foreign operation, are in Hungary and Slovenia and are looking at the Baltics.
The third platform is international sea and air freight forwarding where value and cost are more important than speed. Danzas will fulfill that role, offering freight forwarding, warehousing and logistics on and to every continent.
The fourth platform is international mail distribution which Brooks' division handles. "We plan to have a global infrastructure of offices and businesses that can give our international customers the same high quality service we give at home," he said.