Hello, welcome at PostNL's International Mail and E-commerce Center in The Hague. This is the location where we organize our next deep dive, which is dedicated to our international activities today. Warm welcome to our guests here in the room, and also, of course, to our participants, who are joining us online today. I'm here standing together with Thijs Boel. He is a managing director, responsible for the international activities, and he's also a member of our Executive Committee since the beginning of this year. Let's look at the program of this deep dive today. We will start off with a presentation by Thijs, after I've given a little bit of context, strategic context for PostNL as a whole.
We will, of course, open the floor for your questions, for Thijs to answer, and for the people here in the room, it's our pleasure to take you on a tour in this sorting center here in The Hague. To be clear, in the invitation, we indicated we are not going to talk about the financial details of the international business, which, by the way, are reported and consolidated in our segments, in our business segments. We really focus on the business today, as we also have done in our previous investor deep dives. Let's start off with the strategic context, which is not new, by the way. Most of you follow PostNL for a longer time, and you will have seen this before.
Our purpose is defined as delivering special moments, as we want to achieve our ambition, which is to be your favorite deliverer. Strategically, we're looking at the objective to be the leading logistics and postal service provider into and from the Benelux region. For that latter part, into and from, it, we are specifically here today. The next slide is also familiar or could be familiar to you if you follow PostNL for a longer time. On the left-hand side, our strategic objectives. On the right-hand side, the value creation propositions. For parcels, we manage for sustainable growth. This is the growing part of our business, has been growing for over 20 years now, and represents the e-commerce opportunities that we have in the market.
Historically, the mail part of the business is, of course, where we come from, which is managed for value. A couple of years ago, we have identified Digital Next as the building block, the next building block, to grow our business and to develop new propositions for customers and consumers. With that, Thijs, I'd like to hand over to you and listen to your presentation on the international activities.
Thanks very much, Jochem. We're not quite used to talking about international and even not cross-border, these kind of deep dives. What we experience today is that a lot of consumers, but also customers, are much more global than ever. Customers are not looking into their own territory and where they are based, but also they cross borders. They look for consumers outside their home base. Why is that? Because nowadays, consumers don't care less about where their parcel is originated from. They just care about, "Give me my parcel in time, the right parcel," but they sometimes even don't know where their parcel is originated from. That is the cross-border market.
The cross-border market is a growing market in which we see potential to grow, and not only for the growth in itself, but also to fuel the mail and parcels network in the Benelux. My name is Thijs Boel. I'm now 14 years in this dynamic environment, and it's growing. It's really a pleasure to be here, and also online, welcome. As said, it is a dynamic market. It's not only because the regulation and trade policies play a role, but also global market economies. In every country they are different. All the conditions play a role, and that has impact on the supply chain. If you look into regulation and, for example, trade policies, we've seen a lot of changes with Brexit.
We've seen in 2021 a lot of changes with the VAT threshold, which was removed for goods outside of the EU coming into the EU. We also see a lot of customs procedures change. Also in the different countries, there are different requirements on products, on who can sell what, et cetera. This cross-border market is really constantly fluid and in a movement, but also because of the macroeconomic trends. Obviously, GDP developments are differently per country, but also what people can spend is different per country, and also the labor market. That also leads to supply chains that are pretty challenging sometimes. Obviously, well, if you have one country and one supply chain in a country, it's sometimes already challenging. If you have a lot of countries and you combine all the different supply chains, then it's even more challenging.
That's what we have seen, for example, we reflect to the war in Ukraine. Suddenly we couldn't fly over Russia anymore. Gas prices were higher, labor was short. We immediately saw the effects of that war. In the earlier stage, for example, COVID in China reflected in our supply chains. However, still it is a very attractive market. McKinsey figured that in this era, like 2020, the average revenue will be around, well, they said $300 billion. That will grow into 2025, into $500 billion and will grow even further. The cross-border market is a attractive market because it is growing. The reason that it's growing is just because of our consumers. In 2022, there was this large research amongst 33,000 consumers on 39 countries.
They've indicated that, and let me guide you through some of the results. Almost 30% of the consumers ordered already more than 8 times something cross-border. Also, well, what was the most important criteria for delivery? It was not, is the goods coming out of my own country or domestically or et cetera. No, it is, have clear information, give me clear guidance, clear information about what I can expect. I wanna have trust in the delivery company, especially when it's cross-border. It has to be free, simple, and I wanna have selective use of the different delivery locations. Basically, they said, we really don't care whether it's outside of, for example, the Netherlands or from Germany or whatsoever, as long as these criteria are met. What are the top three reasons for buying?
One is obviously purchase price, but the second one is also, is the good available in my own country or can I get it somewhere else? The third is, what are the delivery costs associated with getting the product? That's from the consumer side. Let's look into what are the origins. Where is the goods coming from? First, China. China is the continent or the land where a lot of e-commerce comes from. The second one is the U.S. Third, Germany, U.K., and France. We will come back to that when I explain you where we are with our Spring organization. Sustainability.
Obviously, asked, a consumer says, "Yeah, it's sustainably delivered." In this survey, about 66% of the consumers said, "If I can choose, yeah, please give me the sustainable." It's true in Western Europe, it's not yet true in most of the East European countries and Southern European countries, but it will get there. It will be more important going forward. Also the last one, 63% of all the consumers said, "I don't care if it's a domestic shop or a international web shop." All in all, this will fuel the growth of the cross-border market. However, if you are a merchant and you want to take part in this cross-border market, you obviously have a lot of hurdles to overcome. Let me, well, go through three of them.
The first is, every consumer has a different perception and expectation based on their preference in their home market. If you are a sender, you have to know what your consumers prefer. That's nice if you send to one country, if you send to 10 countries, it's already more difficult. Obviously, you also have to know which kind of partner do I choose in order to fulfill those needs. You have to fill in all the requirements that, for example, if you go into the European Union or if you ship into China or into the U.S., a lot of international trade regulations and customs and duties you have to fulfill.
That's where we come in and help our customers with solutions, for example, with a competitive delivery speed to other countries, with track and trace capabilities, but also with local knowledge about what consumers are expecting and how can you select the right parties in order to fulfill those needs. I would like to guide you quickly through what we do as PostNL International. First of all, our brand, PostNL. We've been here for more than 200 years, and we also have shipped to the rest of the world for more than 200 years. First of all, it was letters, of course, then, well, small parcels, and now letters, small parcels, e-commerce, returns, et cetera. We've been in this market for decades, but the market has changed.
We're not only doing letters anymore from here, the Netherlands, to the rest of the world, vice versa, but we also do a lot of things in Europe. In the Benelux, we use the brand PostNL. Outside of the Benelux, we use the brand Spring. That's the difference between Spring and PostNL. It's just a brand. Where are we located? Remember that out of the survey, the first two countries of origin were China and the U.S. With the sales organizations in Spring, we are present in Canada, where we help the Canadian customers ship their goods to Europe, but also we help USA, very large USA customers, for their shipments to the Benelux and from the Benelux to the rest of Europe.
Out of Hong Kong, we not only serve the Hong Kong customers, but also the mainland Chinese customers, which are pretty much large consolidators and large e-tailers. In Europe, we have this network of sales organizations around the different countries in Europe. That's our European network, in which we make sure that we know the local knowledge, but are also capable to fuel the networks in the Benelux mail and parcels. We don't do that ourselves for the majority. We use a lot of partners, so we have around 230 postal and commercial partners we use. It is an asset-light model. We make use of a lot of postal companies because they're governed by the Universal Postal Union, and we have access to them via the postal unions.
That's an easy access, especially to the rest of world, not only for mail, but also for e-commerce. Let me briefly talk you through what kind of customer segments we have. First of all, the PostNL brand. PostNL export and PostNL import. It's a strong brand, well-recognized, especially in the Benelux. We're very close to consumers, and that's what we want to be also. With our retail shops, we have to be very close to consumers sending parcels abroad, whether it can be returns or just send a parcel C to B, C to C, it's very easy to ship with PostNL. This is the first segment. The second segment is small, medium enterprises. Very close to them. They can easily hand it in all the retail networks that we have in the Netherlands, Belgium, and then we'll ship it out.
If customers grow bigger and bigger in the Netherlands, then most of the time they have their own solutions, because then they're so large that they can have complete filled trucks and, and go to the different countries of destination. We have very large customers in Europe, but also in the U.S., shipping into the Netherlands network by PostNL. It's simply a contract between PostNL and a very large e-tailer somewhere outside of the Benelux, shipping into our domestic network. Obviously, we have all the postal operators. All the postal operators also have a e-commerce and a mail proposition, which includes the Netherlands, and they will give that to us as being PostNL. Now over to Spring.
Spring has a lot of global solutions and is a very flexible organization if it comes to IT, it's also very close to customers. What we try is to have local people go to local customers, speak the same language, are in the same time zone, collect their goods, their parcels, their mail, and then ship it through our network. There's a difference between Asia and America, Spring Asia and America, and Spring Europe. Asia and America, very large customers ship to mainly Amsterdam and then into our network. Spring Europe has its own network, which PostNL can also use. We'll come to that in a minute. Let me first go into PostNL International. What we do there is obviously sales.
We have account managers selling domestic, they also sell international mail or domestic parcels, international parcels. We do the sales, we do the pickup, we do the sorting, this sorting center is one of the biggest sorting centers for all the exports going to the rest of the world. We use partners. We don't have any networks outside of the Benelux. We're also not planning to have any networks ourselves, we make use of the postal networks and the commercial networks, mainly in Europe. Import. Obviously, we have our own customers, which are pretty large, they have, for example, a truckload full of Dutch and Belgian material.
They ship it to us, we collect it, put it in our network, and we have the postal operators shipping, under the United Postal Agreements to PostNL, and that goes into the domestic network. To make it a bit more lively, we have a small animation of what you can do or can expect or what we do if you want to ship, something like a stroopwafel, I don't know what's the English words, I'm very sorry, from the Netherlands to Japan.
We deliver goods of different shapes and sizes, and sometimes it's a box of stroopwafels needing to find its way from the Netherlands to Japan. The journey starts with the sender, a Dutch online retailer, packing the order. They prepare the parcel to be sent to Japan and buy a shipping label on the PostNL website. The sender then adds the customs declaration online. This customs declaration includes data on the content of the parcel, and in this case, delicious Dutch stroopwafels, and the details of the receiver. PostNL collects the parcel at the sender's premises by van and brings it to a domestic sorting center. From there, the parcel is sorted and brought over to IMEC or the International Mail and E-commerce Center. At IMEC, the box of stroopwafels goes through a security check.
The box is then put on a truck and transported to Schiphol, where it is loaded on the plane's cargo hold. Once it lands in Japan, the local customs authorities check the parcel and the data attached to it. After checks, the parcel is picked up by a partner, Japan Post, and transported to their sorting center. Japan Post sorts and delivers the parcel to a happy customer. The sender gets a notification from PostNL that somewhere in Japan, somebody's about to enjoy a delicious Dutch treat.
That's how we do it, we do it almost every day, we receive and send a lot of parcels. This is the sorting center where everything comes in outside of the EU. It's sorted here. Customs is here. If you look around later, you will see customs people here at the premises and everything that is coming inside the EU from, or inside the Netherlands, out of the EU, out of the rest of world and going away, outside of the EU, will be sorted here. We use about 400 trucks every week, and we make use of 375 planes, and we put everything in the belly. There are passenger planes that we use, so we use them to fly out.
This is a very important sorting center for PostNL International. Let's take a look at Spring Asia. Spring Asia is located in Hong Kong, is a sales organization, and what it does is really go to the mainland Chinese large platforms, as we all know them, and integrators with, in their own language, so they speak Cantonese, for example. They come there, and they expect, or they say, what our customers can expect flying into Amsterdam or into Liège or into Frankfurt, where we can pick their material up and then put it in the network of PostNL. The same counts for Spring Canada. In Canada, we make use of salespeople over there, but also customer service.
They're in the same time zones as their customers, they're responsible for not only the Canadian customers, but also the U.S. very large consolidators that ship their volume into the Benelux and sometimes from the Benelux, using our networks into Europe. Spring Europe. Spring Europe is a organization that's also a sales organization with a bit of infrastructure, especially for e-commerce, we need a bit of infrastructure for the first scan if it's arriving in the network. We do the sales ourselves very closely in every country that we are in to the e-merchant, small medium enterprises, mainly. We arrange the pickup, we sort it ourselves. The line haul is again arranged, it's a network with trucks going around, all asset light, going around in Europe.
What we also do is make sure that we connect to digital sales channels. For example, the Metapack, PrestaShop of this world, that also can reach some of the customers we cannot reach with our sales force. We make sure that via those IT platforms or digital channels, we introduce them to our partners, and we integrate with them. That's the thing that Spring Europe is very good in. Integration on IT level, combination with own infrastructure when it comes to sorting, and then a asset-light model to make sure it goes to everywhere in the world. Spring is a very asset-light model with its own competitive edge, its own unique selling points, and its own benefits for PostNL.
One of the most important competitive edges of Spring is that they're very flexible and very innovative when it comes to complex problems. For example, Brexit, we were already working very hard on Brexit when we for the first time heard of it. We had a very good solution in place, which really outperforms all our competitors, and we gained a lot of volume into the UK. If it's complex, then we want to know it, and we want to help our customers. That's really a competitive edge of the Spring model, which is very agile, asset light, and though 100% owned by PostNL. If we come to the unique selling points, then especially in Asia and in the US, the 100% PostNL is really a big point.
We have a very good Benelux network, and out of there, we have great connections via Schiphol, but also via Liege to the rest of Europe. We have global solutions, so that's very important for global customers. If you only have Dutch solutions, then they probably will say, "Yeah, nice, but not for today." The thing is that we always have local people, local customer service, and local management to make sure that we are very close to the customer. With respect to the benefits for PostNL, it's not only beneficial for PostNL for filling the networks in the Netherlands and in Belgium, but also because of the European network, the flows will get more dense.
If you have more dense flows, then it will be cheaper in the traffic, in the road network, and also your bargaining power will be much higher if you go to partners saying, "Okay, this is the consolidated volume that we have." That is why it's important to see that the European network that we are currently building is not only important as a network on itself and for our Asian and US customers, but also for our exporting customers out of the Netherlands. We have come a long way. When I took over Spring, like 10 years ago, it really was a mail company. Everything was mail. Around 90% was mail, 10% was parcels. If you now look at the figures, then approximately 75% and growing is e-commerce traffic, and only 25% and going down is mail.
We made a huge transformation, not only on the importance of data, but also on the tech foundation. If you want to, well, connect with customers then, and quickly connect with customers, then you have to invest in the tech foundation, but also investing in our people that had to, well, go from handling mail to handling parcels, which is really totally different. When you look into the sorting center here, and you will see it, if you are here, then you will see still a bit of international mail and a lot of parcels. We are transforming into a e-commerce service provider company, and one of the things that we have said is we will do a large program, and that's something I want to show you today, on which we look into itemized visibility.
How can we make sure that we always know where the parcel is, and how can we make sure that the supply chain is steered on data? We have a short video for you to watch on itemized visibility.
There is a complex world behind international e-commerce logistics, and growing volumes impact our customer journey. Not only does complexity increase because of the amount of partners, regulatory requirements, IT systems, and information flows, customer and consumer needs and expectations change as well. To stay competitive, we need logistical data. Customers and consumers should be able to find out where their parcel is at any time and know when to expect it. This will make us the favorite deliverer. This is what we call itemized visibility. With itemized visibility, we use and share accurate and convenient tracking data to boost the quality of our logistic services, manage our supply chain, prevent operational disruptions, and improve our customers' experience.
Our partners will be able to self-source data on the physical flow, even predictive data, providing them with the necessary information to make commercial and logistical decisions, enabling them to inform their customers in turn. Giving them a choice to continue, stop, or reroute their flows, enabling us to make our partnerships stronger. Itemized visibility is the start of a new era, where data gives us the control of our supply chain and enables us to manage complex challenges in cross-border e-commerce and proactively inform our customers on the status of their deliveries.
This is one of the things that was a large program on cross-border solutions, and we do this to are really able to better manage the global supply chain, but also make sure that we can predict the flows that are coming, which is, especially in peak, very important, and also improve the overall level of logistical services for our customers. In order to overcome all the logistical hurdles a sender has to overcome, this is the answer for part of it, and the other part is managing our supply chain the best way we can. One other topic that's very important, talking about cross-border. If you are running a cross-border supply chain, then there's always a lot of CO2 footprint involved, especially when you fly out to other destinations or when planes come flying in.
We are busy with the airline industry, looking into how can we make use of less polluting planes, but also, can we make use of more sustainable airline fuel? Next to that, we try to shift from air to road, and within road, we are trying to invest in HVO100. Have more sustainable biodiesel, and if we can't do that because the infrastructure is not present in all of the countries, we buy equivalent of the gasoline and then inject it in a different way into the supply chain. We also are looking into different modalities. Can we make use of the train? Last year, we decided to make use of the train to Norway. That are kind of small examples, how we try to reduce the Scope 3 impact.
One other thing is that we are not only looking into transport, but we're also looking into our own processes. I'm pretty proud on what we have invented, like, 4 months ago, this pallet box, which you see here. Before we used a pallet box, we were using poly wrap and a normal pallet, and then push it into the truck. You can imagine that you can't stack pallets then, and it's also not so convenient for our CO2 footprint. We decided to have a gathering with all of our partners and said: Okay, this is the whole industry has to be more carbon neutral. Why don't we collectively use these kind of pallet boxes?
It has a great advantage, not only because our partners don't have the waste anymore, and we don't have to buy all the material, but it also can be stacked, like what you see on the picture, in a truck on top of each other, which increase, again, density, which reduce costs, and which gives less CO2 emissions, and it's also very profitable when it comes to costs. Those are a bit the things that we are proud of and will continue. All in all, cross-border has a solid growth potential, and we are in a position to capture some of that, not only for the value in itself, but also to make sure that we are with the customers that send and ship their parcels into the PostNL mail network and parcels network.
That's basically what we do, well, 6 or almost 7 days a week. Thank you very much.
Thank you, Thijs. This is where we open the floor for your questions. I'd like to start here in the room. If you can wait for a moment, a microphone will be with you. Mark, from ING.
Mark Zwartsenberg, ING. going back to your slide 21, you mentioned the advantages for PostNL to have the Spring volumes. Can you explain to me why this really helps you in getting the cost lower for transportation? Because these volumes would normally be somewhere else, and they just would put in via a competitor in Asia into your network in PostNL, and in the end, you will still deliver the parcel in the Netherlands. What is really then the competitive edge to have Spring next to PostNL?
That's a very good question. What we see in Asia is that a lot of the large players do business, of course, with everyone. What we can offer them is a much better offer if they land in Schiphol and it's injected in the PostNL environment. That's the first thing. That is because of the systems, it's because of the integration, it's because of the customs, it's because of the things that we can't do when we get it, for example, from a postal operator, but what we can do if we're in direct contact with all those large players. The other one is, what I also can provide them is not only the Benelux, but also for example, Germany, a second, apart from that, they do business with Deutsche Post, et cetera, DHL.
A second way to do business in Germany, which, if the first one is not really well, or stuck or there's something there, they can ship it via the Netherlands to that country. It's not only for the Netherlands itself, but we also provide them an opportunity for a second supplier.
For PostNL, it's much more convenient to have direct contact with these large platforms because of capacity predictions, because of the interactions about data, and for example, if we know three days beforehand, what kind of goods will come in, then we can automatically clear it already and then dispatch it, and that's much more convenient than if it's just put on our floors saying, "Okay, well, this is it." Last thing, obviously, PostNL has a large competitor, and we not only compete on the last mile network, we also compete on how convenient is it for customers to do business with us.
What we see is that we have teams around those customers, helping them not only with your data, with what is customs here in Europe, but also making sure that there's a back and forth knowledge transfer of what we see happening here with their shipments, what they expect there, and that's totally different than if you would, well, get it via, for example, China Post. The benefit is really to capture the growth and the e-commerce of those large e-commerce sellers.
I do see the advantages for an e-commerce seller in China, that he has more options to get it to Benelux, instead of using only DHL, because that's your main competitor in the end, here on the last mile. 'Cause they will probably not be able to ship it with someone else on the last mile, 'cause they won't have the network that you have here in Holland. I struggle to find a bit the advantage for PostNL. I see the point that you know better when the flow is coming, but still it's quite a complicated supply chain, which in the end, DHL, in a very competitive way, can also offer. Then I'm questioning a bit, what is the advantage for PostNL? Will you make, in the end, and also a good return at your end on that investment?
I know it's asset light, but still, you're a small player versus DHL, and you're offering your clients something, but if that volume is not with you, who cares? I would say, ’cause in the end, or it comes in through your network, through Japan Post, and you charge them, or it's inconvenient for that client that sits on the other side of the world, and in the end, who cares? I think. Can you explain me the return on investment that PostNL is making to keep this network while you're a small player in that global field, and in the end, you probably get part of the flow anyway.
The assumption that we get part of the flow anyway, is not always true. They use DHL, and DHL is pretty competitive, especially on the higher weights. They are, if it comes to the Netherlands, a truly, well, high standard competitor. What we do there is only invest in sales, and they will fly everything for Europe into one destination. After that, they will dispatch it to the service providers they use. There's not much cost involved except for the relationship, getting the IT, et cetera, and then picking it up at Schiphol. The advantage of having people there and getting all the data on beforehand and making your capacity plan, is already that big, that it really accounts for all the, well, investment in sales that we do there.
Okay, well, maybe we can discuss the numbers a bit afterwards, because John told us not to discuss numbers. Maybe something else. If you look at client behavior or people that are ordering online, you say, "Well, customers don't really care where their parcel comes from." I see now also that if you order something in China, the lead times are very long, it's getting more expensive. It's not so, how you say it, environmental friendly. Do you believe in the future that there will be a shift change, that in the end, people will start to care and maybe order more locally than from a Chinese web shop?
'Cause I'm not a big fan, to be fair, to order something from China, or it doesn't come, or it's off quality that I think, "Yeah, leave it." It's getting also quite expensive, actually.
Yeah, the youth is not really in favor of your opinion, I think. What we see now is that.
Well, they are more into the world.
Yeah, more into the world, but they also order more less expensive goods. What I think is that also those parties will, at the end, comply with CO2 standards, et cetera. What we now see up till now is that there are a lot of very large consolidators and platforms that ship into Europe, and a lot of consumers are getting worried about environment, but still they keep on buying those goods. It will be a bit more expensive, but even compared with a lot of other goods here in Europe, the same goods, it's relatively inexpensive. Will that stay? I don't know.
What we see is that a lot of platforms, the number of platforms increase in China, that have Europe as a focal point, especially with the growing tension of China versus the US. In the end, I think everyone has to move to a more CO2 neutral place, but we're not yet there.
Thank you.
Please, go ahead.
Yes, Frank Claassen of Degroof Petercam . Question on let's say your network and growth. How much slack is there still in your current network? In other words, how much growth can you still handle in the coming years before you need to invest in new capacity? Could you give us a feel about this?
Yeah, I can't say a lot about the Dutch network. If you look into the international network, the beauty is that it's really scalable. We don't have anything on our own except for some premises where there's not much automation. It's mainly for the first scan in the diverse countries. It's all outsourced. In Europe, it's really scalable. It's more drivers, more trucks. As long as our partners are scalable in the diverse countries, we're scalable enough. That's why we also have different partners in different countries to make sure that if one partner doesn't, well, lives up to the standards, we can also use a second one or a third one. It's a totally scalable up and down model. The only thing is, of course, there are barriers.
If labor capacity is really, well, strained, then we also have a problem. Yeah.
Okay. Thank you.
Let's take our next question from online. For those of you who are following us via the webcast, please use the chat function to ask your questions, like this one. "PostNL uses a broker model for deliveries outside the Benelux. If I want to send a parcel to France, PostNL will probably use Geopost to handle delivery. In practice, the parcel will be handed over by PostNL to Geopost, which immediately puts its own label," then the question, "puts on its own label." There we go. "This often means that the PostNL track and trace code is no longer active. The questions: Is this still the case? Doesn't that create disadvantage for its peers, that they have their own footprint in most of the countries, and if so, how to overcome this problem?" Thijs.
Yeah, that's a good question. We used to have barcodes of PostNL that were over-stickered by different barcodes, et cetera. What we now have are barcodes from PostNL, and then sometimes a partner uses a different barcode. That has a disadvantage because of the over-stickering, so it's a bit more expensive. The thing is, it all depends on the first mile and how you can follow your parcel. In Spring, we have a more generic label, so the more generic label we give to our customers, and it's also read by Geopost or the other delivery companies. Is it a disadvantage?
If you don't have your own network, that can be an advantage because you don't have a network to fill, you don't have the fixed cost of a network, you make use of all the partners. That's what we say to our own network: You can buy from us, either Geopost, we will give you the right barcode, that will be injected in 1 or 2 or 3 or even 4 delivery companies. We think that is an advantage. If you say, "Yeah, well, there are also disadvantages," that's really true. What we see for our customers, if you wanna know your consumers, what kind of delivery methods do they want, it's easy to have more than one partner.
Okay, thank you. The next question: When using a broker model, how do you make sure that the quality is the same across the entire network?
Yeah, that's typically something that we have solved with itemized visibility. We have itemized every shipment, making sure that we can follow it, that artificial intelligence looking into this and saying, "Okay, this parcel should go to the right, it now goes to the left." Does it mean nothing gets stuck or? No, that's not true, because you also have that in your own network, but the IT foundation is really crucial. Within Spring, it's really crucial that we can integrate with our customers, that we get all the data, that we follow the data till the parcel is well received. That's how we make sure that there's a constant quality. We measure that here. There's a quality room over there. It's a control room. We measure that throughout the network.
Very clear. Thank you. Are there any next questions in the room? Yes, there we go. The microphone is coming your way.
Thank you. Clive Anderson. Given the problems that have been experienced in the supply chains over the last couple of years and sort of generally the sort of, should we say, the geopolitical situation, do you think that there is going to be a meaningful move towards more local sourcing, and what are the implications of that?
I think there is gonna be a lot of customers that wanna, for example, go from Asia, source into Europe, have their local warehouses here, and dispatch it from out of a country in Europe. What we also have seen is that a lot of U.K. customers have said: "Can't you, well, do the fulfillment for us? Can't you, don't you have a warehouse? Because we don't want to have the extra VAT, et cetera." That is something that is going on already for a long time. Is it gonna be more? I always expected it would be gonna be more. What we also see is that the variety, it's a hard English word for a Dutch guy, that the number of items, and the items are so differently that it's not possible to have everything here.
There will be a combination of sourcing it in Europe, for example, and then dispatching it from the Netherlands to Germany, France, et cetera, with flying everything in itemized. It will be a combination. For sure, there are a lot of U.K.-based companies that have put a warehouse here and then said, "Okay, you normally would ship it out of the U.K. Can you now ship it out of the Netherlands or out of Germany, out of France?" Yeah.
Very good. Our next online question is: Where do you see your international activity stand in 3 to 5 years? Will PostNL become more international going forward? I shouldn't ask this to the head of international, I guess, but...
Yeah, cross-border, the cross-border market is really dynamic, so 3-5 years is a long way. What I see happening is that we are currently building for PostNL, also for Spring, and for our customers out of Asia and out of the U.S., a European network. Building by IT, different partners, et cetera. We are, for the coming years, building this European network, fueling it for the sake of our customers that we have now, but also our customers in the Netherlands for export. That is for 3 years. Will PostNL become more international? We will never have, at least not in the coming 3-5 years, our own infrastructure, our own delivery companies outside of the Benelux. I think, at least, if the boss is gonna correct me. We will not invest in that.
What we will see is that a lot of our customers and a lot of our consumers will be more globally oriented, so we'll be more international. That side of PostNL, when it comes to sales, when it comes to how do we acquire customers, et cetera, that certainly will be much more international than it has been now.
Next question: Will the international market in the end not be dominated by large, strong international players? How will you continue to compete?
I always thought that one or two large players out of China would dominate the market. Then I suddenly find out, being there, that there were not two really large players, but there were like four or five, six, seven. Even now, we see new players that enter the European market. We now all know SHEIN and AliExpress, but we got now Temu, et cetera. There are a lot of new entrants also in the European market. In the end, it's also about having the ability to serve the consumers. The question is, will there be one very big player that can cater for all those consumers and all the consumer wishes, or will there stay a lot of different large players?
The other thing, what we see is, we see a lot of C2C business also, or manufacturer to consumer. That balances a bit the power I think that the large players have. In the end, it's obviously also about size. What you see in the international world, so what you see, for example, in the international network, is that almost none of the players have a such a big size that they can have all full truckloads every day continually over Europe. It will also always be beneficial to have a party that can join everyone and that can make a network out of that, irrespectively of their own network. That's where we want to tap into, and that's also why we don't want to have our own network in the rest of outside of the Benelux.
Yeah, how many of these sort of Spring, sort of brokers are there actually, where you compete with? We know the DHLs and the ones with the integrated networks, but how many of these broker models are there?
Yeah, they're numerous. There are also. For example, we have large networks that don't have any infrastructure, but are just a IT broker platform. Those are the MetaPack, et cetera, of this world, or the, in the Netherlands, MyParcel or, well, a few of those. Those are competitors, but you also have, like, the postal international side of ePost, et cetera. There are numerous of this kind of organizations. What our stronghold is that we're very strong in the Netherlands, but also that we can combine all the volumes. What I think is that because if we don't have a own network, we can integrate all kinds of options that people want for a specific solution in a specific country.
If you ask me, how many competitors do you have? We have multiple, and we work together with a lot of them. It's a combination of working together and also sometimes competing. It's like the postals in the old days, we were competing with Deutsche Post, but we were also giving them volume. This is a bit the same. If you can build a network together, then obviously you will always come across your competitors. In the end, it is a leverage against the large integrators that have their own network.
If I think about it, PostNL has Spring, bpost has some international activities also, as you mentioned. Are there also postal incumbents that don't have a sort of Spring business that would logically be able to be connected to Spring, that they become the PostNL in Spain or wherever? Is that something that you foresee for the future, that is a possibility? Or will every postal incumbent have his own sort of Spring or partner, which deliver the volumes in the network for the advantages that you mentioned as for PostNL?
There are a lot of postal administrations that only care for their domestic, or for example, some of the postal, some of the countries are so large that international is not really on their radar. There are also countries that have a very active international organization, like Bring or like bpost has. Sometimes we work together and sometimes we work apart. That depends on what kind of customers do you want to attract domestically, if that's convenient to use Spring or your own international broker? The thing is, if you now want to start one, that's really hard. We have now Spring for about 20 years. We know all the people. Everyone knows us in the market.
When you are a postal administration, and you want to start now with an international organization, that's pretty hard. There are a few.
Just for my understanding, how many people do work in, say, let's say, China or in Canada?
Yeah.
-the broker?
Very good question. We only really have sales in Canada and Hong Kong. In Hong Kong, there are about 40 people. That's it. It's predominantly sales, customer service, finance, so they speak Mandarin, Cantonese, et cetera. They go to those customers in Hong Kong, but also in mainland China, so they interact with the teams there. In Canada, it's also a bit the same, like 25, 30 people. Don't think about very large organizations, because we have to be and want to be asset light also in that kind of countries.
That is then hard to replicate for someone that doesn't have it, or they can buy your team over.
Yeah.
It's the IT part that's difficult.
It's the IT part in combination with, especially when it comes to relationships in Asia, then relations really play a role.
Wow!
Yeah. It's not impossible. It's not impossible, but it's hard to do. Obviously, you always can buy PostNL or Spring.
Yeah. Thank you for that final remark. Wijnand, please go ahead.
You mentioned you intend to invest in your network, and you don't want to have infrastructure. How should I look at it? What's in what direction will these investments go? More salespeople in more territories? How should I look at it?
Yeah. If you look into the countries that we're in now, we're predominantly in Western Europe, whereas we see the market shift also and upcoming in Eastern Europe. Czech, very important. Poland, very important. We will invest with salespeople over there. We will still not invest in infrastructure, apart from a sorting hall , et cetera, so to get the first scan that, to prove that everything is in our network. That's the first thing we want to invest in. Second thing is obviously the IT and making sure that we have the right data for steering the supply chain. That are the both things that we really want to invest in order to make that European network much more really European and robust. That's kind of things you have to think about.
Again, the investments are not that much compared to, of course, if you have your own network. That's always. It is an asset-light model, where we're really flexible, that has advantages. It also has disadvantages.
Thank you. I think we're going to conclude our session Q&A here. The hour has almost gone by. I would like to thank everyone, following us online. This webcast will be available for replay. If you have any further questions, please contact us, for instance, via ir@PostNL.nl. For our guests here in the room, it's our pleasure to show you the sorting center we are at and, give you a little tour of the facilities. Thanks very much. Thank you very much, Thijs.
You're welcome.
for taking the time. See you next time. Thank you. Goodbye.