Deutsche Post customers have to be prepared for the fact that their letters will be on the road longer in the future. "We have to think about whether every letter has to be delivered the next day," said Post boss Frank Appel at a conference call. According to the Postal Act, 80 percent of the daily letter volume is currently delivered on the day after it is put in the mailbox.
A transit time of two days is stipulated for 95 percent of letters. Now, however, the Bonn group wants to change the postal law and campaign for slower delivery at the responsible Federal Network Agency. "The level of demands on our service leads to enormously high costs," said Appel.
The background is that Swiss Post is struggling with falling letter volumes and rising delivery costs. In the third quarter of 2022, the decline in volume was five percent compared to the same period last year. This is offset by higher wages and energy prices. Swiss Post, on the other hand, cannot easily increase letter prices. Most recently, the regulatory authority granted the group an average price adjustment of almost five percent.
As a result, letter postage rose from 80 cents to 85 cents at the beginning of 2022. The new postage prices are valid until the end of 2024. "That's nowhere near enough to absorb the cost increases," said Appel. The group needs cost relief. According to the company, Deutsche Post postage costs an average of 30 cents less than other European countries. In addition, national postal companies receive state support. "We don't want that, but we need a changed postal law," said Appel.
The prices for parcel shipping are different from those for letters. This year, Swiss Post has raised parcel prices by a single-digit percentage and is announcing further steps. "Price increases in 2023 for parcel business customers will include energy and peak surcharges," says a presentation. What is meant are surcharges on public holidays such as Easter or Christmas.
The statements by the postal board come at a time when the post office is having major problems with letter delivery. In a number of delivery districts in the country, there is a shortage of staff that the work has to be organized according to emergency plans. This in turn means that individual districts no longer receive mail every day. The group justifies the failures with an above-average sickness rate among mail carriers, also due to the corona pandemic. It is far more problematic, however, that the post office can hardly find new staff for delivery.
On the other hand, the delivery of six working days, which is also required by law, should not be a central issue in the event of a change in the law. Post boss Appel said the six-day delivery was a hypothetical question. The background to the assessment is that the postal group is bringing letters and parcels together to the front door in more and more districts and is expanding the so-called network delivery almost nationwide. As a result, there is not a single day of the week on which a complete omission of the delivery appears to make economic sense for the postal service.
Parcels are delivered in large quantities on Saturdays because that's when the recipients are at home. On Mondays, on the other hand, the volume of parcels is particularly large due to private customers placing orders with online retailers over the weekend. "We have to deliver parcels every day anyway," Nikola Hagleitner recently answered when asked about the six-day delivery. She is responsible for the letter and parcel business on the postal board. The increasing delivery of daily newspapers by post also argues against reducing the delivery days.
In fact, the situation in the postal group has changed in recent years. In the past, mail delivery was the company's guarantee of profits, but the income and earnings from the business have been falling for years. The parcel business, on the other hand, is not as lucrative as letter mail due to strong competition - for example with the Otto subsidiary Hermes or its own delivery service at Amazon.
Letters account for around two thirds of sales in the German letter and parcel business. One eighth of the consolidated profit comes from the combined business area - almost 1.4 billion euros are expected in the current year.
The situation is different for the DHL companies in the group. The express business – with worldwide and comparatively expensive shipping of urgent shipments – brings in almost half of the group's profit. The Executive Board expects a pre-tax profit of around 8.4 billion euros in the current year. In addition to express shipping, air freight and sea freight in particular contribute to this. Even with a "globally cooling economy and uncertain situation", the management remains confident of further growth.
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