COVID-19: dramatic impact on Posti’s revenue

COVID-19: dramatic impact on Posti’s revenue

Finland Post (Posti) has said that the coronavirus pandemic has accelerated the decline in mail volumes so drastically that Posti will reduce Friday delivery for the summer and plans to temporarily lay off around 8,000 members of staff.

In April, mail volumes decreased by as much as approximately 20 percent. Consequently, Postal Services is forced to plan special arrangements for the summer, with the objective of delivering most Friday items already on Thursday.

In addition, Posti is initiating cooperation negotiations on possible temporary layoffs concerning operations and administration personnel within the Postal Services business group and personnel within Posti Group administration. Personnel in the Parcel & eCommerce business group are not within scope of these cooperation negotiations.

The impact of the coronavirus pandemic is clear especially in the postal volumes of businesses, public authorities and communities, which together account for approximately 96% of all mail delivered by Posti.

Yrjö Eskola, SVP, Postal Services at Posti Group commented: “Due to the coronavirus restrictions, operations in many service sector businesses have been slowed down or interrupted altogether. As a result, these organisations are not sending paper invoices or advertisements to customers in the usual volumes. In April, the decrease in the volume of addressed letters accelerated to approximately 20%, whereas in January–March the decrease was 15% year on year. This is a dramatic change, as five years ago the volume decline was only 6%. Due to the coronavirus pandemic, also advertisement mail has decreased significantly.”

Early-morning newspaper delivery as well as magazine and parcel delivery continue normally

The planned special arrangements in operations would introduce a new rhythm to item sorting and delivery, as delivery volumes have decreased by approximately one fifth when compared to last summer. Early-morning newspaper delivery, magazine delivery and parcel delivery will continue normally according to customer agreements. In addition, Posti service points and customer service are not affected by the planned arrangements.

For mail recipients, the changes during the summer (June 1 – August 31) would be visible as the earlier sorting of items scheduled for delivery of Fridays – these items would be mostly delivered already on Thursdays. Only very few items would be delivered on Fridays. For some items, the delivery date could be changed to Monday, if Monday is an agreed delivery day for the given item.

According to Eskola, mail volumes have fallen by 50% during the past 10 years due to digitalisation, and this trend is continuing inevitably, as the role of traditional mail decreases in people’s everyday life.

“The current trend is similar in the postal industry across Europe – the coronavirus pandemic is accelerating the adoption of digital communication tools. Furthermore, in Finland the public sector is giving up on paper mail and also the state is accelerating this process. The impact on Posti’s revenues is dramatic,” Eskola emphasizes.

Mail volumes are significantly lower during summer

The rescheduling of deliveries is easier during the summer, when mail volumes are even in normal times significantly lower than during other seasons. Posti has adjusted the service rhythms and staff allocation based on mail volumes also during previous years.

Posti delivers newspapers seven days a week and parcels six days a week to pickup points. Other mail, such as letters, magazines and advertisements, is delivered five days a week. However, not all items are delivered on every weekday, as some products have differing delivery schedules agreed with the sending customer. For example, some products have a fixed delivery day on a specific weekday, while other products have a delivery window of several days.

Negotiations on possible temporary layoffs at Postal Services and Posti Group administration

Due to the financial impact of the coronavirus pandemic, Posti is initiating cooperation negotiations on possible temporary layoffs.

The current plan is to initiate temporary layoffs among operations and administration personnel within the Postal Services business group and personnel at Posti Group administration. In total, approximately 8,000 persons are in scope of the negotiations.

Personnel in the Parcel & eCommerce business group are not in scope of these negotiations.

The planned temporary layoffs will be scheduled in a manner ensuring that they will not affect the service provided to customers.

“Posti operates without any public subsidies. These measures will allow us to maintain the profitability of our operations and thereby ensure that citizens and businesses will continue to have access to postal services also during the exceptional situation cased by the coronavirus”, says Eskola.

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