Global economic slowdown

2001 was dominated by a slowdown in the global economy, with growth rates in the key economic regions declining from the end of 2000 onwards. The terrorist attacks on New York and Washington on September 11, 2001 further increased the uncertainty surrounding economic developments.

According to the International Monetary Fund (IMF), GDP in the USA rose by a mere 1.0%, as opposed to 4.1% the previous year. The same trend can be seen in exports: although they rose by 9.5% in 2000, they dropped again by 4.6% in the year under review.

In Japan – the main economic barometer for the Asian region – GDP was down 0.3%, in contrast to a 2.4% rise the previous year. Exports were also weak, dropping by 3.5% in 2001 following a 12.1% rise in 2000.

In the euro zone, the economic slowdown that was already visible in the second half of 2000 continued in the year under review. Real GDP rose by 1.5%.

Germany was also impacted by this trend: the economy, which had been on a growth course until fall 2000, visibly lost momentum from the beginning of the year onwards. Growth in GDP dropped from 3.0% the previous year to 0.6% in 2001. While the export trend remained positive,with real growth of 5.1%, the pace of growth has dropped substantially from the 13.2% recorded in 2000.

Uneven market development

In 2001, the transport and logistics markets experienced both positive and negative influences. Growth in world trade is one of the key factors determining growth in the logistics sector. In the past decades,world trade has been growing substantially faster than global output. Increasing globalization is boosting business for transportation and logistics service providers. The accession of China and Taiwan to the World Trade Organization (WTO) in November 2001 is a clear signal that barriers to trade will continue to be dismantled. Despite the poor economic outlook, the trend toward outsourcing – commissioning third parties to supply logistics services – remains unchecked. Increasing cost pressure is leading a growing number of companies to transfer their logistics activities to global service providers. However, the logistics sector, and the air freight business in particular, suffered a severe setback in the wake of the terrorist attacks on September 11, 2001. These events, together with the global economic slowdown which had already started to take hold, served to curb the sector’s growth.

Stable growth on the mail market
The domestic and international mail market continued its growth in the year under review. Despite the increased use of electronic media, the traditional letter has been able to hold its own as a means of communication. For our business customers, the letter still plays an important part in cementing customer loyalty. Business volume on the domestic mail market increased from 7.7 billion the previous year to 7.8 billion in the year under review.

Paper-based mailing as a method of direct customer contact in Germany has also continued to grow. Nevertheless, growth in the advertising industry slowed down considerably in 2001 with the forecast market volume of the advertising mail, telemarketing and e-marketing segment amounting to 13.3 billion.

In contrast, the international mail market has suffered setbacks since the emergence of the first cases of anthrax infection in the USA that were caused by letters containing anthrax spores.The number of samples sent by post and of direct mail campaigns has declined dramatically, particularly in the USA.

Solid growth against strong competition on the market for courier, express and parcel services
The market for courier, express and parcel services (CEP market) experienced further growth in the year under review. However, the economic downturn did affect market growth in Germany: while revenues on the German CEP market rose by some 6% in 2000, growth of around 5% was recorded in the year under review. Higher fuel and staff costs forced Deutsche Post World Net to raise prices for parcel services in mid-2001. Almost all our competitors subsequently followed our example and raised their prices. Competitive pressures increased, in particular from foreign CEP service providers with considerable financial strength aiming to increase their market presence in Germany.

The economic slowdown has further exacerbated competition not only on the domestic CEP market, but also Europe-wide, with growth of around 7% in the year under review. Consolidation on the European market has also increased considerably.This applies in particular to large postal companies such as TPG, La Poste and Consignia.

Growth and concentration in the growth market for logistics
The logistics services market,with a business volume of over 220 billion in Europe alone, is undergoing further consolidation. National and international providers are expanding their reach and areas of expertise by making acquisitions and entering into strategic alliances. The extent of this concentration process is vast: since the early 1990s, the number of logistics service providers in Europe has decreased by around 70%.

As production processes become more complex, so the demands placed on international logistics service providers increase. In order to guarantee the flow of goods, they not only take care of physical transportation, but must also provide a wide range of value-added services, such as the administration of customs and tax matters. The range of expertise necessary for this level of service is generally only available to larger logistics firms, and this is contributing to the process of further consolidation.

The future of this market lies in globalization and supply chain management. The latter consists of customer-specific solutions for end-to-end processes along the logistics supply chain. In the year under review, the market for customer-specific solutions recorded the largest growth rate of any of the segments in the logistics sector. In contrast, intercontinental goods transport performed worse than expected, due to the slowdown in the global economy. The European overland transport market grew only slightly, although the pace of growth is still clearly above that of GDP for the respective countries. As in recent years, there has been substantial pressure on prices, for example from suppliers from low wage European economies.

Financial market turmoil, cost pressure and consolidation in the banking sector
2001 was not a good year for the stock markets. Stock market prices fell from one low to the next.

The sliding prices unsettled the majority of investors,who became increasingly unwilling to invest in shares and fund products. Commission-based securities trading at banks suffered as a result. The steady fall in interest rates throughout the year hit margins from interest-based business. This saw earnings from retail business collapse at the large banks, and even losses in some cases.

The economic slowdown led to larger loan write-downs in corporate banking. Overall, the investment business declined,with the banks’ issuing business more or less grinding to a halt. Against this backdrop, operating income fell considerably on the previous year’s figures. The banks have reacted by introducing cost-cutting programs, streamlining their sales organizations in order to improve efficiency, and shedding large numbers of jobs.

In this economic environment, the pressure on financial service providers in Germany to consolidate increased still further. In some cases, former competitors are now cooperating in order to boost earnings, as in the case of the merger announced between the three mortgage bank subsidiaries of Deutsche Bank, Dresdner Bank and Commerzbank. In other cases, mergers were aimed at expanding service portfolios, leveraging the existing customer base and opening up new sales channels. This applies in particular to the takeover of Dresdner Bank by Allianz.