Mission statement
TNT’s mission is to exceed its customers’ expectations in the transfer of their goods and documents around the world. TNT delivers value to its clients by providing the most reliable and efficient solutions through delivery networks.
TNT seeks to lead the industry by:
— instilling pride in its people,
— creating value for its shareholders, and
— sharing responsibility for the world in which it operates.
Industry trends and TNT’s business description
TNT is in the business of transferring goods and documents around the world tailored to its customers’ requirements with focus on time- and/or day-certain pick up and delivery. It is TNT’s business to deliver its customers’ “business” at the right time and at the right place.
TNT believes the following four trends will be increasingly relevant to its business over the next five to ten years.
Environmental concerns
There is growing concern 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. This phenomenon is referred to as global warming, which will give rise to all sorts of measures and regulations that try to abate the CO2 emissions around the globe. Since transport and distribution contribute nearly one fifth of these emissions, the transport and distribution industries will be affected significantly by any measures or regulations. TNT has responded to this challenge by launching its Planet Me programme. More details on Planet Me can be found later in this report and in our Planet Me case.
Demographic trends
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 65 by 2020. Also, people will increasingly live in cities with more than five million inhabitants (so-called megacities), posing significant distribution challenges.
As a result of the ageing population, spending on healthcare will increase significantly. In addition, there is a trend towards more biopharma products and an increased need for special handling services in healthcare. These trends have several implications for the transport and distribution industries, such as accelerated growth of healthcare product flows, an increasing demand for to-consumer distribution networks, and possibly more challenges in attracting and retaining staff.
Restructuring of global supply chains
Driven by globalisation, intercontinental trade is growing continuously. Multinationals continue to move their manufacturing to countries with low-cost labour such as China. With an increasing middle class in the emerging countries, spending in those markets will rise, driving regional transportation and global flows as well. In contrast, environmental concerns may eventually lead to renewed regionalisation of manufacturing and regional “self sufficiency” models.
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. Digitised design of goods and services as well as globalisation of product development and promotion will also influence delivery requirements.
Mail strategy
In Mail, TNT’s strategic intent in phase 1 was twofold: to actively maintain its market share in its home market the Netherlands and to capture growth opportunities outside its home market. In the Netherlands, TNT is faced with continuing competitive pressure and substitution. TNT believes that without new commercial and cost initiatives a volume decline of up to 40% by 2015 compared to 2006 would be inevitable.
In the first phase of the Focus on Networks strategy, successfully completed at the end of 2007, TNT’s Mail division thus prepared itself for full liberalisation of the Dutch mail market, whilst outside the Netherlands platforms were established to become the number one challenger to incumbent European mail operators. In the second phase Mail Netherlands will further detail and execute the cost and commercial initiatives and continue to monitor, evaluate and respond to regulatory developments. Outside the Netherlands it will focus on optimising and growing market positions and realising growth in profitability.
Express strategy
In Express, TNT’s strategic intent in phase 1 was fourfold: to strengthen the number one position in Europe in national and intra-European flows, to build uplift capacity from China to fuel its European network and establish an intra-China network, to build the number one position in rest-of-the-world selected emerging markets and to expand its position in the broader market through offering special services. Underpinning TNT’s Express networks is a strong focus on key customer interfacing processes, by understanding customer needs, winning and keeping profitable customers, delivering excellent customer service and delivering on time and in perfect condition. In all four strategic intent areas TNT made excellent progress in 2007. TNT has continued to strengthen its position in Europe by, amongst others, finalising the integration of Trespertrans S.L. (TG+), a Spanish company acquired in 2006, and capturing high growth in Eastern Europe. In China, TNT is integrating Hoau Group of China (Hoau) to build the leading domestic network in that country, and it has implemented its own Boeing 747 freighter service between China and Europe to capture the strong growth on this intercontinental flow. TNT has acquired domestic networks in India and Brazil and extended the reach of its South-east Asian road network. Lastly, TNT has expanded its position in special services by further growth in its same-day business and continued fast growth in time-critical freight. TNT’s Express division thus created a strong platform by delivering on all four strategic intents mentioned above.
In the second phase the emphasis will be on network optimisation to further strengthen leading positions of the Express division, to strengthen the Europe-Asia connectivity and to transform the newly-acquired domestic platforms in China, India and Brazil into integral international Express operations.
Social responsibility strategy
The abovementioned trends, alongside our growth ambitions that focus on emerging markets, confront us directly with related social and environmental issues. The way we work and operate our fleet will need to be adjusted in accordance with the stricter legislation related to climate change and air pollution. With each company we purchase, social responsibility is part of our due diligence questionnaire. Once acquired, new TNT entities must in time adhere to our social responsibility policies and practices, including the implementation of the five certified management systems. Moreover, we develop and implement policies and practices to promote a positive and sustainable environmental and social contribution to each community in which we operate. Factors that will influence our decision-making in the near future and over the long-term include matters such as globalisation, liberalisation of the postal markets and changes in the environment.
In 2006 and 2007 we purchased Boeing 747s. This increased accordingly the number of consignments delivered by our own aircraft, which were previously outsourced. Although it increased our CO2 emissions, it also enables us to take ownership of our environmental impact. The decision has increased our insight into the effect of our air fleet. In order to manage this environmental impact, we are investigating closely our growing fleet that we need to ship the goods and satisfy our customers.
Our social responsibility strategy is captured in the TNT Group Social Responsibility Policy (see Annex 1). In this policy we refer to our subscription to the United Nations Global Compact, which embraces, supports and enacts a range of values in the areas of human rights, labour standards and the environment that we can influence. We refer also to our Business Principles in which we underpin our commitment to integrity, legal compliance, continued improvement and sustainability (see our website www.group.tnt.com). We strive continuously to comply with the OECD and ILO agreements regarding the societal impact of multinational corporations.