Delivering tough postal competition
Few markets are harder to open than postal services. Slowly but surely, e-mail, regulation, competition and market fragmentation are forcing national operators to rethink their models.
Europe’s pace is about to quicken. Denmark will soon announce the winner of a 25 per cent stake in Post Danmark, with Dutch TPG and Germany’s Deutsche Post among contenders. Belgium wants a minority partner to modernise its service: TPG and France’s La Poste are rumoured to be considering bidding jointly.
Cross-border consolidation so far has been held back by slow liberalisation and national sensitivity. Austria balked last year at partial privatisation for fear its service would land in German hands.
Change has to come. Under EU pressure, the legally permissible monopoly on letters dropped from 350 to 100 grams in 2003 and falls to 50 next year. Markets are supposed to be open completely by 2009, though several may not be ready.
Pain is already felt. France has seen strikes over plans to cut jobs and close branches. Deutsche Post, Europe’s biggest mail carrier, was ordered by Germany’s Cartel Office this week to allow competitors to pre-sort types of letters, which it will fight in court.
The question is – will all this deepen competition, or will operators extend their dominance? The Dutch and Germans have aggressively expanded into new businesses and other countries. La Poste also wants to be a European player.
TPG has efficiency on its side, though it could eventually be a takeover target. Deutsche Post, which clashed in the past with European competition authorities, will be a powerful player. America’s UPS is eyeing the European bulk business mail market.
Governments and regulators must be tough. Politicians fear controversy over rural branch closures and threats to the universal service obligation, but there is a real opportunity to cut costs and expand business.
Eighty per cent of letter mail comes from companies. Traditional mail may be declining but innovations in direct marketing, along with e-commerce parcel deliveries, can create growth if competition flowers.
