Regulators force rethink on La Poste international parcel rates

France’s La Poste is reconsidering its plans for raising its international parcel tariffs, after its proposals were rejected by regulator ARCEP last month. The Regulatory Authority for Electronic and Postal Communications said last week that it had approved the postal operator’s request for increasing its domestic parcel rates as of this month.

But, it said prices intended for universal service parcel operations in French territories overseas, and for international parcels were too high.

La Poste wanted to increase domestic parcel rates by 2.5% in 2012, and a similar uplift for its overseas parcel services.

The company wanted to increase international outbound rates by 5%.

ARCEP said it believed La Poste’s gross margins were 2.5 times higher than for its domestic parcel services, and that even with increased operating costs international service margins would remain “very significant” with the La Poste proposals.

“For international services, ARCEP considered that its substantial gross profit margin enables La Poste to cope with the increased costs expected for 2012,” said the regulator in a statement explaining its decision.

“For overseas department services, La Poste’s gross profit margin is still significantly higher than for mainland services,” added ARCEP. “ARCEP felt it desirable to maintain these tariffs at the same level as this would help to align the tariffs for overseas department services better with those for mainland services.”

The regulator said it had also advised La Poste to make an online franking option available for outward bound mail from overseas departments, as it was already available for mail outward bound from the French mainland.

“Time to reflect”

La Poste said it would “take time to reflect” on its overseas and international parcel services, the regulator reported, and was therefore suspending introduction of proposed tariff changes for these two services in March 2012.

The French postal operator’s domestic parcel volumes decreased from 2009 to 2010 by 5.4% to 30.7m items, according to ARCEP data, but international and overseas volumes increased by around 5% to respectively 1.5m and 900,000 parcels during 2010.

Turnover for the domestic parcel services decreased by 2.9% to EUR 237.3m in 2010, and by 4.7% to EUR 19m for overseas parcels, but La Poste’s international parcel service saw turnover increase by 16.5% between 2009 and 2010, to EUR 44.3m.

This time last year, ARCEP managed to limit La Poste to a 0.3% increase in postal rates for overseas parcel services, after suggesting the “high margins” for its original proposals for 2011 had been “inappropriate”.