German parcel industry group slams Hermes for its low prices

German parcel industry trade association BdKEP has hit out at non-member company Hermes Logisitics Group for pricing its new parcel service too low. BdKEP – the federation of postal, courier and express services, which tends to represent medium-sized city courier companies – said yesterday that Hermes Germany had “gone astray” in its offer of “cheap” parcel services.

At a time when the outsourcing of jobs to subcontractors was on the rise, it claimed Hermes was now threatening wage levels across the whole industry in the flat-rate Packchen service launched yesterday.

While other parcel delivery companies were increasing their prices, the association suggested Hermes should only have cut its prices if associating those price cuts with particular benefits to its own bottom line, such as for customers paying postage via the internet.

Rudolf Pfeiffer, the lobby group’s chairman, said: “Price cuts in the package area is definitely the wrong signal – delivery staff will end up paying for this.”

The BdKEP, which does not have Hamburg-based Hermes as a member, argued that the parcel business “is and will remain” a labour-intensive activity, with the potential for automating services “limited”. Any reduction in prices would therefore directly affect employees in the sector, it suggested.

Germany’s ruling political party, the Christian Democratic Union, is currently considering the possibility of a national minimum wage for Germany, and Pfeiffer said any such move would have to take into account hourly wages for companies making use of independent subcontractors rather than their own employees.

“Misses the point”

Hermes, which uses 420 subcontractor companies for its last mile delivery, told Post&Parcel today that the BdKEP “misses the point” of its new service.

Spokesman Martin Frommhold explained that the new Packchen service was priced to focus on the “untapped” segment of consumer-to-consumer business, “which has been operated almost exclusively by DHL”.

“Accordingly, we had to set new standards for service and value to gain awareness from customers,” he explained, noting that DHL had lowered prices for 2kg packages by 15% to one euro in August, but had avoided criticism from the BdKEP.

The Hermes spokesman agreed that parcel prices were “generally too cheap” in Germany, and revealed that his company is now planning price increases in the business-to-consumer market.

“For this purpose, we are currently in discussions with our business clients,” he said.

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