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

The state of play and development trends of European express services

Ilse Wilczek, Group Director Public Affairs TNT Beijing International Hotel, February 13, 2009

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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  Best postal operator in the world  Mail networks in eight European countries  4.7 billion addressed mail items in Holland

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History of TNT

1799 1986 1989 1994 1996 1998 2004 2005 2006

Foundation of the Dutch National Post Postbank split off (now part of ING) Corporatization of the Company into KPN (Post and Telecom Combined) Flotation of KPN shares Acquisition of TNT Demerger and listing TNT Post Group / TPG; Dutch State 34,5% shareholder Sell down of Dutch State shares to approx. 19% Name changed to TNT The Dutch government sold its remaining stake of 10.9% in 2006, including its ‘golden share’

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TNT Hoau China network

Urumchi

56 Hubs 1100 depots

Jiamusi Haerbin Changchun Yinchuan Xi

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ning Lanzhou Xi

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an Jingzhou Shenyang Huhehaote Taiyuan Beijing Dalian Tangshan Tianjin Ji

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nan Y antai Qingdao Zhengzhou Hefei Chongqing Chengdu Changsha Wuhan Nanchang Fuzhou Guiyang Xiamen Kunming Liuzhou Nanning Xuz hou Yangzho Nanjing u Wuxi Cha ngzhou Suz hou Jiax ing Shanghai Hangzhou Jinhua Ningbo Wen Foshan Jia ngmen Guangzhou Dongguan Shantou Huizhou Shenzhen Zho ngshan Nantong Kunshan zhou Zh anji ang

Express market segment

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Speed

Sameday Time certain/ Next day Day certain Expedited Day uncertain/ Standard

Express Economy Express

• 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 • B2B focus

Documents

Services Office > 1 kg 31.5 kg

Parcels

Trade Distribution Centre 1,000 kg

Freight/pallets

Production Factory

Weight

Example of a shipment cycle

Customer

5.30 PM PICK-UP

Local Station (Origin)

7.30 PM

Country Gateway (outbound)

9.30 PM EXPORT CLEARANCE

Hub

11.30 PM 6

Consignee

9.30 AM DELIVERY

Local Station (Destination)

08.30 AM

Country Gateway (inbound)

05.30 AM IMPORT CLEARANCE

Express industry enables trade and economic development

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Scope

Express services reduce the biggest trade barrier of distance and connects business to world markets

Investment

• Express services facilitate foreign direct investment 

The express industry is a key enabler of foreign trade Supply chain

 Express services help to reduce purchasing and inventory costs • Express services enable small and medium sized companies to operate internationally by contracting out the management in the process

Service

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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 (CO2) in the atmosphere are trapping more heat, thus increasing global temperatures.

Demographic

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

Driven by globalisation, intercontinental trade is growing continuously.

Digitisation

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.

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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

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

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.

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Express trade associations

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

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Our programme to fight climate change: Planet Me

 We measure and manage our CO 2 our Count Carbon initiative footprint through  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