Estonian Post expecting “intense” 2011

Estonia’s state-owned postal operator, Estonian Post, has said it is expecting next year to be “intense” as it responds to increasing competition and declining mail volumes. After approving its 2011 budget at the end of last week, the company said it will invest in new logistics and information systems in coming years, but next year will see investment levels dropping significantly.

Plans are to invest  $12.5m in its systems next year, compared to about $1.5m investment in 2010. The company’s total budget for 2011 will be about $59m.

The company said its budget plans were “projected realistically” given the overall economic situation, to provide a “sustainable and flexible” approach.

Chairman of the Board Ahti Kallaste said: “The markets are stabilising and majority of our customers are expecting volume growth, however we cannot be sure about the overall increase of economic activity.

“The biggest challenge is to ensure the provision of universal service in the situation of declining mail volumes, maintaining the high quality of service and profitability of the company,” added Kallaste.

Estonian Post is the only provider of universal postal services in a country with about one million addresses. In recent years it has had to face increasing competition from courier companies, and now has more than 25 competitors in the express and direct mail sectors.

The economic slowdown saw the company’s revenues sink by 18.6% in 2009, including a 13.9% decline in its mail services and a 16% decline in unaddressed direct mail services.

The company said last week that it believes direct mail service volumes are now increasing, particularly in the number of mailings to other European countries.

Estonian Post offers direct mail deliveries to almost all European countries and the United States, and can provide address verification for mailings through its partners.

Toomas Türk, head of Infologistics Division at Estonian Post, said: “Estonian Post provides direct mail service into all mailboxes or selected target groups all over Estonia. In addition to domestic direct mail service ordered from us, more and more orders to other countries are being received.”