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Deutsche Post: Postage increase burst – now you save on climate protection

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Deutsche Post: Postage increase burst – now you save on climate protection

Economy Decision of the network agency

Swiss Post must not increase the postage – and is now saving on climate protection

Status: 08.08.2023 | Reading time: 4 minutes

A Swiss Post car: the “classic postman” will soon be gone

Quelle: picture alliance/Rainer Keuenhof

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Deutsche Post fails with its application for an early postage increase. The group is now missing a three-digit million amount. CEO Meyer now wants to invest less money in climate protection – and save on electric vehicles, for example.

As is so often the case, this message has two sides: Deutsche Post is not allowed to increase letter postage. The responsible federal network agency has rejected the postal group’s application for an early postage increase as unfounded in the matter. This means that it remains at 85 cents for a standard letter for both private and business letter writers.

The downside can be seen in the reaction of the Bonn group and its new CEO Tobias Meyer. “We are missing out on a lower three-digit million euro amount as a result of the decision. This money is now not available for investments in converting letter delivery to climate neutrality,” Meyer said in a video conference.

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The manager cited expenditure for new buildings in the delivery department or the fleet of electric vehicles as examples. The Post must reduce its costs in the delivery work even more significantly. For the approximately 120,000 employees in the division, the statement by the CEO does not bode well.

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A collective agreement has just been concluded with an average wage increase of around twelve percent over a period of two years. The postal manager responsible for the area, Nikola Hagleitner, is likely to come under pressure to have to absorb the rising personnel costs through internal cost-cutting measures and work intensification.

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The dispute behind the letter postage is symbolic of the current relationship between politics and the union to Deutsche Post. Most recently, the group had increased letter postage by five cents to 85 cents for standard letters at the beginning of 2022.

At that time, an inflation rate of a good two percent was used as the basis for the decision. In fact, the inflation rate has been above seven percent for around a year. The Management Board wanted to use this increase and the higher wage costs as an opportunity to raise the postage early.

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The Federal Network Agency, under its President and Green Party politician Klaus Müller, rejects this because the postal company allegedly could not adequately prove the rising costs. “A profit is made in the regulated mail sector”, said the head of the authority Müller.

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The development of general inflation does not have a significant effect on the relevant costs in the mail sector. The postal board is considering a lawsuit against the decision.

However, for reasons of time, CEO Meyer considers going to court “makes little sense”. After all, a regular approval procedure for a new postage rate for letters is already due in the course of the coming year.

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Bond market anomaly

In fact, there are different perspectives on the postal delivery business. Although the volume of fully paid-for letters is falling, the unit costs for delivery are rising. However, this does not apply to the total volume of letters of around 50 million items per working day.

Advertising letters or business mail with a discount on postage are increasing in mailing volume. In its analysis of costs, Swiss Post separates the individual areas.

The Federal Network Agency, on the other hand, sees the letter dispatch as a unit and looks at the overall financial result. In addition, the postal group’s parcel shipping profit has been increasing for years.

The pure postman will soon no longer exist

However, the company does not publish separate earnings figures for the two areas letter and parcel. The postal board has failed to provide evidence of the financial pressure and rising delivery costs in the various business areas.

As with the dispute over letter postage, Swiss Post is now emphasizing the consequences for the country. “The high-quality supply of letter services is at risk,” said CEO Meyer. Exactly what he means by that remains unclear. After all, Swiss Post is currently converting its delivery system to a combination of letters and parcels.

The pure postman will soon no longer exist. Rather, the delivery person in the vehicle with letters and parcels on the tour is becoming the standard. Swiss Post will hardly restrict these services.

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Significant deterioration

In parcel shipping, the group faces tough competition from parcel services such as Hermes, DPD, GLS and Amazon. The online retailer uses its own organization to deliver around a quarter of its online orders to subcontractors.

After this political and regulatory failure, the postal board is now likely to demand even more vehement changes in the new postal law, which is due for autumn. In order to reduce delivery costs, the group is aiming for slower delivery of the letters.

At present, 85 percent of fully paid-for letters have to reach the recipient one day after they have been put in the mailbox. The wish of the postal management is a standard delivery that takes significantly longer, and also a more expensive, faster mail delivery – as is common in Austria, Italy or Scandinavian countries.

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