Financing the Recovery

Financing the recovery

On March 11, 2011, a magnitude 9 earthquake rocked Japan, causing extensive damage to the north-eastern part of the country. It was the most powerful earthquake in Japan’s history, damaging hundreds of thousands of buildings and causing considerable loss of life. Four years later, the devastating effects of the deadly force are still felt in the hearts and minds of Japan’s citizens. In one of many actions to finance ongoing recovery efforts, Japan is selling a well-known state asset.

In a move expected to take place later this year, Japan is preparing to sell shares of Japan Post Holdings Co. in three separate initial public offerings. In addition to Japan Post, the holdings company also includes Japan Post Bank Co and Japan Post Insurance Co. The first IPO round is expected to provide more than $8 billion in funding, but that could change based on investor evaluation of earnings growth potential of the company.

In addition to struggling with reduced earnings due to decreased demand for its letter delivery operations and low interest earnings on its financial products, the company will face restrictions on its flexibility. The soon-to-be publicly owned company must obtain approval from government regulators before venturing into any new businesses. The requirement could extend the time it takes to pursue new endeavors if it receives permission to do so.

If the sale of Japan Post Holdings proves as fruitful as the government anticipates, it could provide a needed infusion of cash to support continued earthquake recovery efforts in the country.

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Printing Gifts at the Post Office

SingPost1

In many parts of the world, 3D printing technology is expanding rapidly. From large businesses to libraries, the popular machines are increasing in popularity for their versatility and convenience. Royal Mail recently introduced a version of the handy printers to its customers, but the Post is not alone. Another Postal Service also introduced the technology within a handful of its modern stores, and demand has thus far been encouraging.

SingPost, Singapore’s Post Office, has modified a number of its retail facilities to integrate enhanced technological capabilities to appeal to the diverse needs of its customer base. Besides offering conveniently located parcel lockers and terminals with services similar to a USPS self-service kiosk such as label and stamp printing, customer can peruse available stamps and other products at stations equipped with tablet devices. They can also print small, 3D objects.

The new printers aren’t capable of printing everything a customer might desire, but expanded options are a possibility in the future. For now, the devices can replicate figurines and small accessories such as pendants. Customers can also have their faces scanned to customize the figurines before purchase.

SingPost intends to adapt more of its offices to the 24/7 auto-lobby concept going forward. The move will help provide convenient access to many services offered by the Post at a time that’s convenient for customers.

Shipper Experiences Lower Earnings During 2014 Holiday Season

Shipper experiences lower earnings

Last week, UPS released a warning about its fourth quarter results that reduced adjusted earnings below expectations. The unexpectedly lower estimate shocked investors, sending the stock down nearly 10 percent in Friday’s trading session.

UPS attributed the cause for the decrease to higher than expected peak-season expenses as well as a West Coast port dispute. In 2013, the company experienced shipping difficulties during the holiday season and sought to avoid a similar situation in 2014 by spending approximately $500 million on network upgrades. While the upgrades allowed UPS customers to enjoy higher quality service, the expenditure adversely impacted operating costs. The company also experienced less than expected volume during most of the 2014 holiday season, though the increased network capacity did assist with handling the significant Cyber Monday and Dec. 22 spike in demand.

For the 2015 holiday season, Chief Executive Officer David Abney stated in a Jan. 23 release that the company “will reduce operating costs and implement new pricing strategies during peak season.”

Given this information, customers of the firm could potentially see a temporary price increase for peak delivery days during the holiday season in 2015 to avoid a repeat of 2014’s financial performance.

Shipping Companies Could Refuse Packages This Holiday Season

Shipping companies could refuse packages

A slowly recovering economy and intense competition could prompt business to ramp up their sales promotions this holiday season. While this has the potential to increase spending by consumers tempted by irresistible deals, some might find that getting items delivered to their homes may have to wait until after the holiday rush.

FedEx and UPS both announced plans this year to work with major businesses to ensure a smooth, timely delivery flow. Last minute sales, however, could add unanticipated pressure to shipper delivery networks. This might have the potential to adversely impact operations and reduce delivery fluidity. If such a situation occurs, it could become necessary for the two shippers to increase the cost of their package services, and perhaps even prompt them to refuse the business if it threatens to overwhelm the network.

If their delivery networks suffer a repeat performance of last year’s delays, both shipping companies may find themselves with the tough decision of introducing higher shipping charges specifically for the holidays in 2015. This could cause online shoppers to abandon their shopping carts at checkout when faced with higher than expected shipping charges, and might even result in an unexpected revenue decline for businesses during their most profitable time of the year.

As the holiday season progresses, only time will tell if advanced preparation by UPS and FedEx is sufficient to handle actual volumes this year.

Celebrating Success

Royals 2014

The conclusion of this year’s World Series made for a powerful experience that will be remembered by all who enjoyed it. To commemorate the timeless match-up, the Postal Service has introduced two new matted art and cachet sets.

This special collection not only celebrates the hard work of both teams, it also captures the moving experience of when the Kansas City Royals won the American League Championship.

Order forms for the new Kansas City American League Championship and World Series match-up matted art and commemorative envelopes can be downloaded by clicking here.

World Series 2014

Fierce Competition

Fierce competition

In some countries around the world, mail delivery is open to competition. In others, it remains a closely guarded government monopoly. When mail service faces competition among multiple organizations, could it ultimately put accessibility at risk?

Last year, Royal Mail went through a significant change when the British government sold a majority stake in the company. While many still debate the decision, the company itself is blaming another factor entirely on its revenue circumstances – competition.

In 2006, mail service in the United Kingdom opened to competition. Throughout the years since, Royal Mail has shared the playing field with other organizations in the collection and sorting of mail. Recently, that field includes competing delivery service TNT Post.

In 2012, TNT Post launched delivery services in certain parts of the UK in direct competition with Royal Mail. TNT Post is continuing to expand its last mile of delivery coverage map and anticipates a staff of 20,000 carriers by the end of the current decade. Though the company is enjoying a period of increased profits, Royal Mail is concerned about the ultimate impact for customers as well as its own bottom line.

Officials at Royal Mail have called on tougher regulations for its rival, stating that the competition’s ability to cherry pick delivery areas and deliver on fewer days during week will ensure higher profit margins. This leaves Royal Mail at a strategic disadvantage by continuing its universal service obligation to deliver mail to all areas in the UK, including less profitable rural areas, six days per week.

However the British postal regulator Ofcom decides to handle the situation, Royal Mail’s competition is likely here to stay.

Do you think mail service in the United States should be opened up to competition?

Shipper Profits Tumble

Shipper profits tumble

Still smarting from heavy shipping delays last December, UPS is taking steps to ensure that it doesn’t have a repeat occurrence this fall.

In its latest financial report on the first six months of this year issued on July 29, UPS announced that it would increase investment in improved capacity and accelerate deployment of routing software, among other investments, by $175 million.

Also in the report, the company recorded an after-tax liability of $665 million to transfer certain Teamster employee post-retirement liabilities to defined contribution healthcare plans. The additional expenses contributed to a 57 percent drop in net income from the previous year to $1.36 billion.

While the additional expenses had an adverse impact on net income, UPS realized a healthy increase in its domestic shipping operations with a gain of $644 million or 3.9 percent. Average domestic daily volume increased by 785,000 or 5.8 percent, however the average domestic revenue per piece decreased by 1.8 percent.

Though the company warned investors of reduced earnings through the remainder of the year, it also stated that these expenses will “provide financial benefits for years to come.”

Streaming Could Be a New Road to Revenue

Streaming new road to revenue

The previous article reviewed Netflix’s recently reported strong growth in its video streaming service. The article also noted a substantial decrease in Netflix’s DVD subscriber base. With physical media slowly losing its popularity to cloud-type material, could there be room on the playing field for a well-known company to offer a competing service?

The Postal Service has delivered valuable material to customers for 239 years. It has honed and expanded its delivery expertise to incorporate many modern technologies that assist in delivering items more efficiently and transparently than ever before. With its growing skill in harnessing the power of innovation, it may very well be possible for the organization to enter the increasingly popular field of cloud-based services.

Advanced application and web-based software, detailed tracking capabilities, a large computing capacity, and many other data-driven technologies have given the Postal Service a stronger presence in an increasingly digital world. If it adapted its growing expertise to offer streaming services to customers seeking video and audio-based entertainment, the organization might very well compete with some of the biggest names in the business.

Resistance to the idea could be significant as current players might not be interested in increased competition. Still, with heightened consumer demand for secured digital transactions from well-known and well-respected brands, no other business in the country can rival the favored reputation of the Postal Service.

Do you think the Postal Service could offer a competitive media streaming service?

Streaming Success

Streaming success

Many companies are currently in the process of releasing their earnings for the first half of the year, and for many, the news is fairly positive. One particular company has enjoyed steady revenue growth for some time, and its recent Security and Exchange Commission filing is no exception.

During the first half of 2014, Netflix earned $2.61 billion in revenue and $227 million in operating income. That’s a substantial increase from the $2.09 billion in revenue and $88.9 million in operating income it generated during the same period last year. A sizeable increase in the company’s domestic subscriber based was the primary driver of this, increasing from 29.8 million in the first half of 2013 to 36.2 million during the same period this year.

The company’s domestic DVD subscriber base didn’t fare as well, however, decreasing from 7.74 million in the first half of 2013 to 6.26 million at the end of June 2014. The consumer trend is clearly shifting away from physical media copy toward the instant availability and convenience offered by its streaming service. Netflix’s future investment spending reflects the reality of this trend, as evidenced by a statement from its latest 10-Q:

“As we grow our streaming segments, we continue to shift spending away from the Domestic DVD segment to invest more in streaming content and marketing for our streaming services.”

While the DVD portion of Netflix’s operations is likely to continue its decline for the foreseeable future, revenue gains from the strength and popularity of its streaming service will likely far outweigh any losses from the foundering business segment.

Clouds and Data Privacy

Clouds and data privacy

Cloud networks offer a convenient and inexpensive way for individuals to store and access their documents and other files electronically across a variety of devices. With the increasing attention by hackers toward electronic documents for nefarious purposes, are these files slated to become their next target?

Documents with personal and sensitive information have been sought by interested and unauthorized people ever since the creation of scrolls, tablets, and other recording methods many years ago. As technology becomes ever more sophisticated, the ability of these individuals to gain access to such information has improved along with it.

Financial institutions, social media sites, and other companies report intrusions into their secure systems every year. While many of the details on these infiltrations remain restricted, the ability of hackers to access such secure networks is certainly cause for heightened caution. With the introduction of cloud networks geared towards storing electronic copies of mail, hackers could have a new tempting target.

One of the benefits of electronic mail storage by such companies as Zumbox, Outbox, and Digital Post Australia is the ability to access mail from anywhere on any device. Each of these firms offer tight system security to assuage fear over hackers accessing this information. Companies, including financial institutions, have touted this level of security before, however, only to discover an unauthorized intrusion into their systems.

As technology continues to develop, only time will tell if tighter security measures can keep up with hacker determination.

Do you think the security of electronic mailbox services is tight enough to protect the privacy of digital mail?

  • Hello, I'm Benny the Blogger: I'm the world's most famous postal employee. My hobbies are snappy quotes, kite flying and publishing. I was born Jan. 17, 1706, but don't call me old.

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