EU China Seminar on Postal and Express

EU – China Seminar on Postal and Express Services Beijing International Hotel 12 -13 February 2009 0

The state of play and development trends of European express services Ilse Wilczek, Group Director Public Affairs TNT Beijing International Hotel, February 13, 2009 1

Global provider of express and mail services 161, 000 employees 64 countries Network covers 200 countries § Largest in express in Europe § 47 aircraft § 26, 760 vehicles § 228 million consignments 2 § Best postal operator in the world § Mail networks in eight European countries § 4. 7 billion addressed mail items in Holland

History of TNT 1799 1986 Postbank split off (now part of ING) 1989 Corporatization of the Company into KPN (Post and Telecom Combined) 1994 Flotation of KPN shares 1996 Acquisition of TNT 1998 Demerger and listing TNT Post Group / TPG; Dutch State 34, 5% shareholder 2004 Sell down of Dutch State shares to approx. 19% 2005 Name changed to TNT 2006 3 Foundation of the Dutch National Post The Dutch government sold its remaining stake of 10. 9% in 2006, including its ‘golden share’

TNT Hoau China network Jiamusi Haerbin Changchun Urumchi Jingzhou Shenyang Xuzhou Huhehaote Dalian Beijing Tangshan Y antai Tianjin Shijiazhuang Taiyuan Qingdao Ji’ nan Yinchuan Xi’ ning Wuxi Kunshan Shanghai Changzhou Suzhou Jiax ing Hangzhou. Ningbo Zhengzhou Lanzhou Nantong Yangzhou Nanjing Xi’an Jinhua Hefei Wenzhou Wuhan Chongqing Chengdu Changsha Nanchang Fuzhou Guiyang Kunming 56 Hubs 1100 depots Liuzhou Nanning Shantou Guangzhou Dongguan Xiamen Foshan Jiangmen Zhongshan Zhanjiang 4 Huizhou Shenzhen

Express market segment Speed Sameday Time certain/ Next day • Time certain, next day or fastest by road (intra-continent) day certain delivery • Consignments transported through a scheduled network • Door-to-door track and trace of individual items/consignments • Often (partial) money-back guarantee • B 2 B focus Express Economy Express Day certain Expedited Day uncertain/ Standard > 1 kg Documents Services Office 5 31. 5 kg Parcels Trade Distribution Centre 1, 000 kg Freight/pallets Production Factory Weight

Example of a shipment cycle Customer 5. 30 PM Local Station (Origin) Country Gateway (outbound) 7. 30 PM PICK-UP 9. 30 PM EXPORT CLEARANCE Consignee 9. 30 AM 6 DELIVERY Local Station (Destination) 05. 30 AM Hub Country Gateway (inbound) 08. 30 AM R IMPORT CLEARANCE 11. 30 PM

Express industry enables trade and economic development Scope Express services reduce the biggest trade barrier of distance and connects business to world markets Supply chain Investment • Express services facilitate foreign direct investment The express industry is a key enabler of foreign trade • Express services enable small and medium sized companies to operate internationally by contracting out the management in the process Service 7 Express services help to reduce purchasing and inventory costs

Market trends Environment There is growing consensus amongst the general public, politicians and others that climate change is threatening the environment. Increasing levels of carbon dioxide (CO 2) in the atmosphere are trapping more heat, thus increasing global temperatures. Demographic trends are changing the composition of the population across the globe. For example, in the largest Western European countries it is estimated that between 20% and 25% of the population will be above the age of 65 by 2020. Supply chain Digitisation Driven by globalisation, intercontinental trade is growing continuously. 8 Demographic Digitisation is a trend that TNT has faced for quite some time. As a result of continuously improving technologies, documents can be digitised, transmitted and reproduced without requiring delivery of the printed material.

Current conditions in the express market are very challenging In 2008, the European express market grew slower than the economy: - The industry is one of the first to notice a drop in volumes demand - Not all express players could pass inflationary pressures on to customers The impact of the economic downturn is high: - Significant drop in express volumes - Shift from air to road transportation - Blurring of industry boundaries between express and e. g. freight Competition in the fragmented market further intensified especially from parcel operators, there was further market consolidation in Eastern European markets In the mature Western European markets, the focus has been on improving efficiency, improving customer service, and expanding coverage as well as service levels The business to consumer segment is growing, mainly driven by electronic commerce Express operators increasingly invest in Green initiatives, like TNT’s Planet Me 9

Express services differ from (universal) postal services Key objectives • EU companies are dependent on express services for around 3% of their sales on average – worth around EUR 450 billion • By 2013, over 5% of EU sales are expected to be dependent on express services • Europe’s success in fast-growing economic sectors will increasingly be facilitated by the express industry • Hindering the competitiveness of the express industry will hinder the competitiveness of the economy as a whole 10 Express services are a premium value added service that differs from (universal) postal services. Express delivery companies should be able to conduct their business under the general commercial and legal rules that apply to normal competitive services.

Express trade associations 11 Trade associations have been established in almost every part of the world to enable express delivery companies to engage governments in a constructive way

Our programme to fight climate change: Planet Me We measure and manage our CO 2 footprint through our Count Carbon initiative We increase the CO 2 efficiency of our operations through our Code Orange initiatives Choose Orange engages our employees to participate at work and at home with their families 12