Comment on German postal services market from 2004 Annual Report

Postal services market
The German postal services market generated revenues in 2004 of more than €23 billion. Some two thirds of the market is open to competition. Just under two thirds of these revenues is accounted for by Deutsche Post AG (DPAG), with the remaining third being split among a number of providers, most notably courier, express and parcel service providers.

Revenues in the licensed area (commercial conveyance of letters not exceeding 1000g in weight) were some €10bn in 2004. DPAG’s rivals generated around €500 million of this, translating into a market share of around five percent. This does not necessarily indicate the presence of workable, fair competition; in this, Germany – as indeed all the European countries – still has a long way to go.

Irrespective of this, price levels for the main letter services in Germany remained constant. Price increases, some considerable, were recorded in most European countries in 2004.

To date, RegTP has granted some 1,750 licences for letter mail. Currently, around 1,100 licence holders are operating; the stagnation that was feared has not happened. Yet most of the licence holders are small enterprises (annual revenues of less than €500,000); only a small number are medium size enterprises (annual revenues up to €50m).

Licence holders’ revenues are growing steadily (+ 195 percent since 2000); however, revenue levels are low. The services offered by the competitors continue to focus on added value (higher quality of service level). In 2004 as much as half of the licence holders’ revenues was accounted for by higher quality services.

According to information from the companies, there was an average of 190,000 jobs in the licensed area in the year under review. DPAG has shed jobs steadily – since the end of 1997 the equivalent of more than 20,000 full time jobs. By contrast, the new licence holders have created over 37,000 new jobs since 1998; of these, some 7,100 are full time and slightly fewer than 8,500 are part time. Thus the new licence holders are making a not insignificant contribution to easing the pressure on the labour market.

After all, the Postal Act aims, through regulation, to guarantee appropriate and adequate services throughout Germany (universal service). This aim has been achieved. True, consumers are not always happy with certain changes in services, but the provision of basic postal services, the core task, has been ensured. This holds good in terms of both nationwide provision and the quality standards for the retail outlet network, collection box network and transit times. Looking back at 2004, RegTP can thus conclude that universal service is being provided appropriately and adequately in Germany as required by the Postal Act and the Postal Universal Service Ordinance.