© UPU 2010 – All rights reserved How well has the UPU responded to the economic crisis? Dr. Andreas Taprantzis Chairman of the UPU Postal Operations Council

© UPU 2010 – All rights reserved Main issues  With regard to postal business, which are the existing trends that have been accelerated by the crisis?  What are the other impacts?  Are there any new opportunities created by the crisis?  And what is the added value of the Nairobi Postal Strategy in this context?  Main conclusions to be drawn from this Conference

© UPU 2010 – All rights reserved General Remarks  Defensive nature of Postal Sector as to the crisis, in relation to other sectors  The current crisis is creating three main threats in three different geographical levels Risk Aversion Recession Rejection that can be mitigated through Trust Inclusion and Partnership that constitute main strengths of the postal sector. Rejection Trust Inclusion Partners Risk AversionRecession Dealt with through Risk Aversion Recession Rejection Trust Inclusion Partnership Source: UPU paper on the financial and economic crisis

© UPU 2010 – All rights reserved Existing trends accelerated by the crisis Trends in domestic markets (the domestic letter-post segment increasingly felt the effects of the financial and economic crisis) – also reinforced by trends towards electronic substitution of traditional mail.  Substitution for Postcards  Substitution for Bills  Decline of Advertising expenditure (subsequent decrease in direct mail volumes) due to increase of e-commerce – international cheaper solutions through internet consequent transfer of volumes from Express Mail to A Priority and from A Priority to B Priority  Decline of letter mail volumes small performance variations for letter-post between operators  Stability or increase for parcels larger variations for parcels and in particular express items  Customers switching from top-range products to lower quality and cost products Source: UPU Study, the Global Economic and Financial Crisis: further insights into its impact on the Postal Sector

© UPU 2010 – All rights reserved Existing trends accelerated by the crisis Postal Traffic and Express Revenues - Letter-post revenues greatly affected - Parcel Revenues more resistant with a positive picture for the international service - Express Mail Revenues plunging Postal Financial Services Trends in International Markets …with positive growth rates achieved in the first half of the year, but also more volatile as to volume performance  Signs of recovery for letter-post and parcels volumes, decline in international worldwide express volumes  International markets have proven more resilient  Almost all segments were affected by the downturn  Influx of customers and deposits for postal operators providing financial services.

© UPU 2010 – All rights reserved Other impacts  Deregulation especially in the field of cross-border/ international mail - Change in the structure of the cross-border industry - Blurring of the boundaries between private, semi-public and governmental operators (liberalization and privitization policies under discussion)  Increase in the competition level and competitive instability (closely related to the regulatory framework)  Concerns about the level of employment in terms of workforce and about the level of wages and pensions (downsizing)  Acceleration of electronic mail substitution  Differentiation in funds transfer  Development of financial services (IFS, projects on financial inclusion) – New customers’ acquisition (taking advantage of the image of the Post as a trustworthy servant as well as 3 rd party)  Declining consumer spending (potential loss of customers)  Price Pressure  Cost - cutting measures resulting sometimes in deterioration of quality of provided postal service  Reduction in the number of new or ongoing projects

© UPU 2010 – All rights reserved New opportunities  Postal networks are being increasingly trusted to serve e-commerce development and act as financial service providers (that practically constituting the defensive nature of Postal Sector) - maintenance and development of efficient and reliable domestic, regional and international postal payment systems - provision of basic financial services to low and middle-income households liable to be excluded by traditional banks –the financial inclusion agenda of the governments of developing countries often matches the willingness of the post to strengthen the economic viability of its network - the post acting as a trusted third party particularly in the area of e-commerce where buyers and sellers often do not know each other  Change in the UPU regulatory and pricing environment in order to support the operators’ actions for growth  Review of the Universal Service Obligation - matching the perception of the need for universal service with the actual demand  Cooperation with strategic importance companies of common interest (railways, airlines, telecoms etc)  Restructuring of postal administrators/introduction of new services/costs cutting / leaner operations  Diversification of revenue streams (product portfolios) – bigger share of the “pie” for more profitable services  Substitution of courier services with A Priority Services – emphasis on quality of service provided and trustworthiness  Use of innovation  Use of new technology as the basis for service innovation and increase of efficiency and productivity

© UPU 2010 – All rights reserved Added value of the Nairobi Postal Strategy  The Nairobi Postal Strategy lays solid foundations for global, regional and national strategic planning processes within the postal sector. The four pillars of the strategy and the 18 associated strategic programmes form the structure upon which actions to mitigate the crisis will be implemented.  The implementation of the NPS globally, regionally and nationally helps dealing with the crisis in 3 levels.  Emphasis of the NPS on regional approach attaches a more ad-hoc character to regional activities designed to confront the crisis.  Many priority actions indicated by the crisis have already been included in the NPS implementation programs. (emphasis on technology and innovation etc). Main UPU actions in the context of the NPS Strategy - Provision of a clear set of governance and organization rules - Emphasis on use and development of technology - Creation of conditions for promotion of international trade fluidity (partnership and integration activities with the airlines – IATA – and the WCO – World Customs Organization) - The issue of migrants’ fund transfers - Development of International Financial System (IFS) - Actions in favour of the UPU’s workforce (TRAINPOST, partnership agreement with UNI) Source: UPU paper on the financial and economic crisis, 2009

© UPU 2010 – All rights reserved Main conclusions to be drawn by this Conference Review our position given the changing circumstances  The definition of weak and strong areas regarding our work.  The definition of ways to improve weak areas  The extent of implementing regional development.  The definition of the effectiveness of the Budget.  How do we measure performance in the implementation of the Strategy?  How do we reshape our strategy given the new trends on the way to the Doha Congress?