Interview – Asendia seeks organic growth after successful integration

International mail and parcels delivery company Asendia has had a successful first full year ofbusiness, is aiming for good growth with its new harmonised product portfolio and is “open for

The La Poste – Swiss Post joint venture, formed in 2012 with the ambition to become the world’sleading provider of B2C cross-border mail services, increased revenues slightly to €452 millionlast year. The company, with over 1,000 employees, is present in 15 countries with 25 offices.

Asendia is currently the clear number two in the international mail market, well behind DHLGlobal Mail (with revenues of €1,783 million last year) but ahead of bpost’s international mailbusiness (€200 million revenues in 2013) and PostNL subsidiary Spring Global Mail (€150 millionrevenues).

“2013 was a satisfactory business year for Asendia,” Pontet said. The slight growth achievedwhile merging and integrating the former international mail activities of La Poste and Swiss Postwas an important sign, he said. “It’s been a very encouraging start for the joint venture. Thecustomers are still on board, the teams are motivated and we have the trust of theshareholders.”

Customers and staff had both provided “very positive” feedback, he pointed out. In a survey atthe end of 2013, 87% of customers said they were satisfied with the company’s services, and 90% ofrespondents said they would continue working with the firm for the next 12 months. Similarly, aninternal staff satisfaction survey found that 80% of staff were satisfied with their jobs and alarge majority were confident about the company’s future.

Clear product portfolio for international mail and e-commerce

Asked about Asendia’s strategy, Pontet responded: “Our strategic aim is to facilitate thecross-border business of our customers.” The company’s core services cover the international mailand small packages market, ranging from direct mail, business mail and press distribution toe-commerce delivery.

Earlier this month Asendia unveiled its harmonised product portfolio which has replaced theprevious parallel offering of La Poste and Swiss Post international mail products. This is a majorstep in the construction of the company. “We now have one product range with four areas: goods,direct mail, business mail and press,” Pontet said. Each product area is divided into sub-productsoffering a choice of service level.

Outlining the benefits, the former sales & marketing director of La Poste’s mail divisionsaid the single portfolio is “easy to understand” for its 6,000 customers around the world,especially SMEs “who are not experts” in this sector. “This SME segment is very important forAsendia and we expect a lot of growth from them,” he commented. Asendia’s customer base includesretailers, e-commerce merchants, publishers, marketing agencies and mailing houses.

In the mail sector, Business Mail offers reliable mailing solutions for international businesscorrespondence, Direct Mail provides individual mailing solutions for direct marketing and Pressoffers comprehensive international distribution of newspapers, magazines and other printpublications.

Pontet said he still saw “growth potential” in the €7 billion international mail market eventhough it is a declining segment. “We are a challenger in most countries so we see growth areas.”These included press and catalogue distribution, for example.  

The boom segment, however, is e-commerce. “The growth potential is really high,” the Asendiachief declared. “The market is attractive, not only for postal operators but also B2B parcelnetworks. We really want to take advantage of opportunities in this market.”

The Goods product range for e-commerce and retail firms covers four products, each offeringdifferent levels of tracking, insurance, point-of-delivery, returns and pricing, for smallgoods.

The “huge majority” of e-commerce volumes weigh less than 2 kg, Pontet noted.

The Standard Goods service is a cost-effective solution for goods that do not require tracking.The Country Tracked Goods service tracks goods as they are despatched and arrive in the destinationcountry. The Fully Tracked Goods service tracks goods from despatch to receipt with a choice ofdelivery and insurance options. The top-level Premium Goods service is designed for valuable itemsthat require full tracking and premium insurance.

“We have developed a strong range of products,” Pontet said. “If you have high-value goods, thenthe market already has good proposals. But with low-value goods, the traditional standard serviceis probably not good enough in the e-commerce market. So I’m very optimistic about these (newproducts) being successful.”

Benefits for retail and e-commerce businesses, according to Asendia, include a dedicated goodsdelivery solution, improved efficiency of delivery and distribution, increased customer loyaltythrough reliability and choice, optimised shipping costs and better control of costs, and theopportunity to expand overseas and extend the customer base.

While customers expect “excellent” logistics services, including collection, sorting,transportation and delivery, Asendia also wants to aims to offer wider services. “For example, ifit’s mail, then we can also cover printing as well as distribution and delivery. For publishers,not just provide them with delivery but also help to increase their customer base. For e-commercefirms, then we can provide customs clearance to help improve the customer experience of theirclients,” Pontet commented. 

Meanwhile, as a subsidiary of two groups with strong sustainability policies, Asendia alsooffers CO2 neutral shipping, which is already important for European customers, according toPontet. “Asendia is measuring and reducing its CO2 footprint. With the new product offering, wehave expanded offsetting and have a carbon-neutral service. We expect to expand it to the USA andAsia in due course.”

Contract partners for transportation and delivery

In terms of operations, Asendia owns and runs four regional sorting hubs, covering NorthAmerica, Asia, Continental Europe and the UK, and works with selected partners for transportationand final delivery. “Sub-contracting is a very efficient way to operate the business while you areable to monitor quality,” the Asendia chief explained.

Intercontinental volumes are flown by various airlines under capacity contracts. Among these,Air France is “a key partner” while Swiss is also an important carrier. Within Europe, volumes aretransported by “fast and reliable” trucking services.

Asendia has no final-mile delivery operation of its own. “We are a bit sceptical about havingour own delivery structure. Because of the decline in volumes we consider it would be difficult tohave profitable last-mile delivery,” the CEO commented. 

Instead, the international mail and parcels firm mostly contracts other postal operators fordelivery. “We think that these are the most efficient partners for delivery to 2C customers,”Pontet explained. “But we also work with private suppliers if they meet price and efficiencylevels.”

In France and Switzerland, Asendia uses the networks of its two parent companies. Indeed, Pontetsees Asendia’s expertise in the important French and Swiss markets as a competitive advantage. “Weare experts in destination France and Switzerland,” he declared. “No one is better positioned thanwe are.”

Differentiation through sustainable positioning and service quality

Looking at the competitive environment, Pontet said there are “different kinds of competitors”.These included not only the other large players such as DHL, Spring and bpost, but also many localpostal operators and small specialist firms. “In terms of products there’s no big differencebetween the products of the big players,” he claimed.

Instead, Asendia wanted to differentiate itself in several ways. The long-term commitment of itsshareholders is “a very important indicator of stability for customers”, according to the CEO. Inaddition, Asendia aims to operate a stable and sustainable business model with a wide range ofservices and prices adjusted to the service level. “I’m not sure if all competitors have a widerange of products and quality of service,” he observed.

On pricing, Pontet said Asendia is “not the most expensive but not the cheapest”. The companywanted to have a pricing policy that was sustainable in the long-term and provide good services ona profitable basis. “The best guarantee we can give our customers is to provide high qualityservice and with the kind of profits that enables us to invest in the quality of our service,” hedeclared.

Open for acquisitions at the right price

Asendia believes it is well-positioned geographically, in 15 key countries which generate 80-85%of global cross-border revenues. “We do not intend to operate in new countries. Our intention is tostrengthen our position in these 15 countries,” Pontet stressed. “We consider this network willstay stable for the next few years.”

However, acquisitions are clearly on the company’s radar screen. After two significant dealslast year, Asendia is open for further acquisitions at the right price to achieve non-organicgrowth and play an active role in industry consolidation.

Last spring the company bought Pitney Bowes’ international mail business in the UK to expand itspresence in the important British market. In the autumn it acquired a 40% stake in Irish e-commercesolutions provider eShopWorld whose IT platform provides currency conversion, duty and taxescalculation, delivery solutions, customs clearance, returns management and order paymentprocessing.

“We have proven in 2013 that we are open to making acquisitions,” Pontet said. “In future,Asendia will probably proceed to new acquisitions. We think there’s a need to consolidate themarket. Asendia has a long-term commitment to the market and we want to be part of theconsolidation.” However, he stressed that any deal “has to be at the right price” and that Asendiais not currently in any acquisition talks. “Acquisitions are not a must. We will only do this if wehave a good opportunity or can strengthen the value chain of the business.”

Asked why the cross-border market “needs to consolidate”, Pontet explained: “Postal operatorshave to concentrate on their domestic operations at present.” In particular, they needed torestructure their operations to cope with the decline in volumes and focus more on profitability. “The cash cow is over,” he declared. This meant some postal operators would review theirinternational operations where “margins are a bit low”. He predicted: “In future I think there willbe fewer players than at present.”