Norway Post seeks to abandon Saturday deliveries
Norway’s postal service Posten Norge is now expecting that letter volumes will amount to only 30% of the levels seen at the turn of the Millennium by the year 2020. It has recently revised its forecast in the light of a 20% drop in volumes seen in the last three years, and now wants to cut costs by eliminating Saturday deliveries.
The Post is now telling the Norwegian government that proposed new licensing conditions will not allow it to transform to address the drastic reduction in mail volumes.
“The decline in the amount of letters indicate that we have no time to lose,” said Norway Post chief executive Dag Mejdell as his company responded last week to licensing changes recommended by ministers.
“If we cannot constantly adapt to market developments, the restructuring we will need in a few years will be even more dramatic.”
Changes are currently being planned for Norway Post’s new operating licence to take effect January 1, 2012. A draft has already been circulated, prompting the Post’s responses.
Although the Norwegian government has said it will repeal Norway Post’s statutory duty to provide banking services in post offices, freeing up the Post to transfer more post office activities to counters provided in supermarkets, Mejdell said further changes are also needed to cope with the modern mail market.
Saturdays
In particular, Norway Post wants to reduce its delivery frequency from six days per week to five days, eliminating Saturday deliveries. An exception would be made for newspapers under such a move, allowing weekend editions to still go out on Saturdays, an important part of periodical shipping volumes.
“With the sharp decline we have seen in recent years, we must adapt the mail business to customer needs as they change and not wait until the development requires more dramatic changes,” said Mejdell.
Norway Post has already been restructuring to cut its operating costs and change its priorities as parcels have become a key growth area thanks to e-commerce, while letter volumes decline thanks to Internet communications and competition in the market.
This year so far has seen growth in parcel volumes helping to keep the company’s overall revenues increasingly slightly year-on-year, but in the first three quarters profits have fallen.
The Post said it has made good progress in its restructuring so far, but changes in the postal market are now much more rapid than ever before, while there is now less to gain in making further cutbacks in the name of efficiency.
It said there was now therefore a need for a political rethink on the social importance of letters and the whole concept of six-day-per-week delivery.
“To develop in this market we need an adjustment to the imposed service levels within our licence,” said Mejdell. “Otherwise, the burden on the State Budget will be too great. Political choices must now be taken.”
Norway Post said a white paper looking at the future of its business is expected to be issued early next year.
