Slovak Post to face tougher competition after accession

Fewer post offices, growing prices, and services of higher quality should result from the changes in the monopoly company The Slovak Post (SP) should become a modern institution in the postal service market by 2009. By then, it must overcome the transformation process, the decreasing number of post offices in Slovakia, and the growing prices of its services. The Slovak Post company will transform into a 100 percent state-owned stock company in May 2004 and the Transportation Ministry has stated that privatisation is a possibility at some point. The measure is expected to increase SPs flexibility and preparedness for the anticipated changes on the European market of postal services. SP will face real competition in the postal service market by the end of this decade, when the companys exclusive right to provide universal postal services will end. At present, the Slovak Post has an exclusive right on the shipping of certain types of consignments. Express shipments and the delivery of unaddressed promotional letters and packages are the services in which SP already experiences competition. "We have already seen the efforts of some companies to penetrate the area that is still exclusively under our postal jurisdiction – letter consignments," said SP spokeswoman Alexandra Fillova. In line with its rationalisation plan, the company is reviewing the number of post offices in Slovakia. It has already announced that it will decrease. "Today we are setting the criteria to evaluate post offices from an economic point of view. So far, it is not possible to predict how many post offices will close," explained Fillova. SP expects additional savings in technological processes and in salaries, as the whole rationalisation and transformation process also incorporates lay-offs. The company has not yet quantified the level of savings. From the beginning of next year, the tariffs for postal services provided by SP will probably increase slightly. The company has already submitted a proposal for amending prices to the state regulation body of the Slovak postal market – the Postal Regulation Office. "The new tariffs would reflect the expected inflation for 2004. The overall increase of regulated prices in the national market in 2004 should not significantly exceed the projected increase of postal prices, as it is included in the monetary programme of the National Bank of Slovakia," said Fillova. In civil language, this means that SP has asked for a possible 10 percent rise in prices for shipping letters with an international connection. It did not propose a change in tariffs for packages or for its financial services. The Postal Regulation Office should make a decision on the proposal by the end of this year. A more significant change in tariffs is expected after Slovakias accession to the EU. SP officials emphasize that the prices will have to be amended according to those in the member states of the EU. "The prices in member states are, on average, twice as high as they are in Slovakia. The average postal tariffs in the European Union are about 55 eurocents, while in Slovakia they are about 22-25 eurocents," Jan Kollar, the director of the international postal affairs of the Slovak post, told the daily SME. He continued, "The difference is big. It might take a generation before the level of our tariffs will approximate that of western Europe." The Slovak Post expects that after accession to the EU, its main competitors will be the "Big four", which are British, French, Dutch, and German postal companies, and some express international companies. It views small and mid-sized postal companies as more likely future partners. Competition is the reason why SP is making an effort to develop services such as courier and express services, and special logistical services orientated mostly at business clients. "We believe that the Slovak Post will be able to face it [the competition] successfully – thanks to the quality of our services, our price flexibility, and our ability to design tailor-made solutions," SP General Director Juraj Dobrotka told the magazine Tempo.