PostNord to transfer Danish parcels business to mail unit

PostNord has announced plans to reorganise its parcels business in Denmark, moving the activity from its Logistics division into its Danish mail division. The transfer of parcel operations into the Breve Danmark (Mail Denmark) unit will take affect from 1st January 2013.

The Scandinavian postal operator said it was looking to find more ways to cut costs and streamline the business.

But, importantly with high levels of competition in the Danish parcels and logistics market, the transfer of the parcels business may allow PostNord to make more of its Post Danmark brand in marketing its parcels services.

PostNord was not returning calls this week about the changes, and did not comment on whether the changes would mean downsizing operations or cutting jobs.

However, in a statement, the Swedish-based company said the organisational change did not involve a change to its ongoing strategy to seek profitable growth in the logistics market while defending the profitability of its mail business.

“In recent years, PostNord’s parcel operations in Denmark have been challenged by increasing competition and price pressure,” the company explained.

“PostNord now transfers the organisational responsibility for parcels sent by business customers (B2B and B2C) from the Logistics division to the Breve Danmark division. Breve Danmark will consequently run both the mail business and the parcel business in Denmark.”

The company added: “This will enhance opportunities to streamline and focus the overall offering and strengthens PostNord’s competitiveness in the market.”

Pressures

PostNord, based in Solna, near Stockholm, is parent company of both Post Danmark and Sweden’s national postal operator, Posten AB.

The company is profitable, but suffering under the slow economy, particularly in Denmark, and is facing ongoing declines in traditional letter volumes as customers switch to Internet communications, again with volume declines particularly steep in Denmark.

Breve Danmark has seen its net sales down 11% so far this year, compared to the first nine months of 2011.

Earlier this month, reporting on its results for the first nine months of this year, chief executive Lars Idermark said ecommerce has helped business-to-consumer parcel volumes to grow “strongly” this year.

Ecommerce has helped parcel volumes as a whole to be “essentially unchanged” this year for the group as a whole, but the Danish logistics business saw sales and volumes continuing to fall “due to tough competition and price pressure”, the firm said.

PostNord is going through a major conversion phase in 2012 and 2013 to achieve significant cost reductions and invest in growth areas of the business, particularly in the logistics arena.