The Swedish Postal Services Market 2016

Transcription

Report number
Date
PTS-ER-2016:3
14/04/2016
The Swedish Postal
Services Market 2016
Report number
PTS-ER-2016:3
Reference number
16-238
ISSN
1650-9862
Authors
Lars Forslund, Anders Hildingsson, Joakim Levin, Pär Lindberg and Gabriel Rhawi
The Swedish Post and Telecom Authority
Box 5398
102 49 Stockholm
+46 (0)8 678 55 00
[email protected]
www.pts.se
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Foreword
In its Terms of Reference for 2016, the Swedish Post and Telecom Authority
was assigned to follow up and analyse the postal market and postal services
with the following information:
-
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developments in the postal services market,
the competition situation in various sub-markets within the postal
services sector,
barriers to market entry and effective competition,
price trends in the postal services market and how the regulation of
prices contained in Section 9 of the Postal Services Ordinance
(2010:1049) has been complied with,
how the stipulations of Chapter 3, Section 2 of the Postal Services Act
(2010:1045) for pricing and other special terms to be transparent, nondiscriminatory and cost-oriented have been complied with by the
designated provider of the universal postal service, as well as
whether the density of the service points covered by the universal
postal service takes account of the needs of users in all parts of the
country.
The Swedish Post and Telecom Authority shall also report:
-
the nature and extent of complaints that the general public has
presented to postal operators and to the authority, as well as
any changes in the service level of services included in the universal
postal service.
The assignments are presented in this report “The Swedish Postal Services
Market 2016”1.
Catarina Wretman
Acting Director-General
1
It corresponds to previous years' reports, “Service and Competition” up to and including 2014
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Contents
Foreword
3
Summary
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1
Developments in the Swedish postal services market
1.1 The VAT ruling
1.2 The bpost ruling concerning annual quantity discounts
1.2.1 PTS issues PostNord with an order following decision to
modify annual quantity discounts
1.2.2 The role of consolidators in the market
1.2.3 Consequences if PostNord is allowed to give different
treatment to consolidators
1.3 PostNord's changes in its production operations
1.3.1 Concept Delivery and new terminals
1.4 Development of volumes and market shares in the letter market
1.5 The parcel market and e-commerce
1.5.1 The service network
1.5.2 Collaboration pushes competition far across the country
1.5.3 Parcel lockers
1.5.4 E-commerce, development and capacity in the distribution
networks
1.5.5 Shipping platforms and access to delivery options for ecommerce consumers
1.5.6 The sharing economy - alternative forms of delivery
1.6 Development - digital mailboxes and My Messages
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Competition and pricing
2.1 The competition situation in the letter market
2.1.1 Bulk mail
2.1.2 Single letters
2.2 Barriers to market entry in the letter market
2.2.1 Bulk mail sent overnight
2.2.2 Bulk mail not sent overnight
2.2.3 Market for the nationwide distribution of single letters
2.2.4 Market for the local conveyance of single letters
2.3 Price developments in the postal services market
2.4 Price regulation in Section 9 of the Postal Services Ordinance
2.5 Compliance with Chapter 3, Section 2 of the Postal Services Act
2.6 Review of PostNord's internal accounts
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Service and quality
3.1 Development of complaints
3.1.1 Complaints received by PTS
3.1.2 PostNord's reporting of complaints
PostNord's trend in complaints: 2011-2015
3.2 Complaints - Bring Citymail
3.3 Undeliverable letters
3.4 Challenges of access to postal services in rural and sparsely
populated areas
3.5 The population's need and use of postal services
3.6 Residential customers without five day deliveries
3.7 Communal letterboxes
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Looking ahead
4.1 International perspective
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4.2
4.3
4.1.1 EU-related issues
4.1.2 UPU-related issues
The DSM parcel initiative
What will happen over the next year?
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Appendix 1: Bring Citymail's area of coverage
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Appendix 2: MTD's area of coverage
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Appendix 3: SDR's area of coverage
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Appendix 4: Other local postal operators' areas of coverage
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Appendix 5: PostNord's agent network
62
Appendix 6: DHL's agent network
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Appendix 7: DB Schenker's agent network
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Appendix 8: Bussgods' agent network
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Appendix 9 PostNord's report of the number of complaints, 2015
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Tables
Table 1: Trend in the total letter market ................................................................... 16
Table 2: The postal operators' distributed volumes..................................................... 18
Table 3: The postal operators' market shares by value (turnover) and by distributed and
cleared volume....................................................................................... 19
Table 4: Parcel agents in Sweden ............................................................................ 22
Table 5: Parcel lockers in Europe ............................................................................. 23
Diagrams
Figure 1: Results for delivery times achieved, first class letters.................................... 14
Figure 2: Annual rate of decline in letter volume since 2001 ........................................ 17
Figure 3: Development of letter mail volumes since 1997 ........................................... 18
Figure 4: E-commerce growth in Sweden .................................................................. 25
Figure 5: Change in number of profiles in 2015 ......................................................... 27
Figure 6: Diagram of the letter market 2015 ............................................................. 28
Figure 7: Complaints, Domestic letters ..................................................................... 40
Figure 8: Complaints, International letters ................................................................ 40
Figure 9: Complaints, Domestic postal parcels ........................................................... 41
Figure 10: Complaints, International postal parcels .................................................... 42
Figure 11: Undeliverable letters and the total amount of letters ................................... 43
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Summary
The report “The Swedish Postal Services Market” provides a follow-up and
analysis of the situation on the postal services market in Sweden. It is rooted in
the assignments that PTS has for presenting an annual report to the
Government about the current conditions on the market in question. In order
to put the information requested by these government assignments in their
context, we have this year chosen to compile it under four headings, namely 1.
Developments in the Swedish postal services market, 2. Competition and
pricing, 3. Service and quality, and 4. Looking ahead.
The chapter entitled Developments in the Swedish postal services market begins with
an account of three significant events in 2015 that might have a major impact
on the Swedish postal services market. The first is the European Court of
Justice's “VAT ruling”, which has forced Sweden to abolish obligatory VAT
for certain parts of the universal postal service. The second relates to the
“bpost ruling” concerning annual quantity discounts where another ruling by
the European Court of Justice has been used by PostNord to justify the
introduction of a model of annual quantity discounts, which in the view of PTS
would entail an impermissible difference in treatment with respect to a
particular group of clients. The issue is still the subject of judicial examination.
The third event concerns the deficiencies in the quality of distribution that
have arisen due to the rationalisation measures taken by PostNord in response
to the effects of fewer and fewer letters being sent. The same chapter
continues with a report on the development of volumes and market shares in
the letter market. Partly in light of the steadily growing e-commerce, we then
provide a more detailed treatment of prevailing conditions on the parcel
market and of what can be discerned with regard to the development of this
sub-market over the next few years.
Under the heading of Competition and pricing we begin with an account of the
competitive situation in the letter market broken down into six “sub-markets”.
The section “Barriers to market entry in the letter market” describes the
conditions for establishing a competing letter conveyance service in Sweden,
also broken down into a number of relevant sub-markets. The section “Price
developments in the postal services market” discusses price development in
general and PTS's follow-up of compliance with price regulation within the
postal services sector. This mainly relates to the obligation for PostNord's
pricing of the universal service to be transparent, non-discriminatory and costoriented, and to the “price cap” for single mail items.
Service and quality is the title of the chapter discussing complaints trends in the
postal services market. This involves statistics on complaints received by PTS,
PostNord and Bring Citymail, which show that complaints against these postal
operators have increased, rather significantly, in 2015. In connection with the
section on complaints, there is also a report of how PTS handles
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“undeliverable letters” (letters that the postal operator has for some reason not
been able to deliver to the addressee and has also not been able to return to the
sender but has instead sent to PTS). The most remarkable aspect in this
context is that at the beginning of the year 2000, one in every 12,000 letters
was classed as undeliverable, while the corresponding rate today is one in 5,200
letters. The section “Challenges of access to postal services in rural and
sparsely populated areas” describes the conditions for efforts to maintain a
good postal service in such areas despite declining letter volumes. We also
present the user surveys carried out by PTS to obtain a better basis for the
considerations that need to be made, for example as regards the scope of the
universal postal service.
The concluding chapter Looking ahead discusses the international conditions on
the postal services market that affect opportunities for employing regulation
and other means to promote good national development in the sector. The
discussion is divided into EU-related and UPU-related issues. At the EU level,
PTS works mainly in the context of the European Regulators Group for Postal
Services (ERGP), and at the global level, the activities of the UN agency, the
UPU, are of interest. The chapter presents the issues that are currently of
greatest relevance to these two organisations. And in a special section, we
discuss the European Commission's initiatives to bring to completion an
internal market also for parcel delivery.
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1
Developments in the Swedish postal
services market
The term “the postal services market” is generally used to refer to the entire
market for the distribution of letters and parcels. As these sub-markets differ
significantly in terms of structure, function and regulation, it is necessary to
analyse the letter and parcel markets separately. This is part of what we will
cover in this chapter.
However, to begin with, we will shed light on three significant events over the
past year that might have a major impact on the Swedish postal services
market. These are the VAT ruling, the bpost ruling on annual quantity discounts and
PostNord's changes to its distribution operations, presented in Sections 1.1 to 1.3
below.
1.1
The VAT ruling
On 21 April 2015, the European Court of Justice found Sweden in breach of
EU law.2 The breach was Sweden's failing to exempt certain postal services and
postage stamps from value added tax (VAT) in accordance with Directive
2006/112/EC on the common system of value added tax. In response to this
judgment, the Swedish Parliament adopted an amendment to the Value Added
Tax Act which entered into force on 1 April 2016. The amendment means a
VAT exemption3 for stamped letters and for letter, parcel, registered and
valuable items (incl. certain additional services) subject to cash payment when
deposited (with one of PostNord´s agents or business centres).
In 1995, two years after the Swedish postal services market was opened to
competition, VAT on all postal services was introduced. One of the reasons
for no VAT exemptions for any postal services was the need to give the same
tax conditions to all actors in the Swedish postal services market. Generally
speaking, this cannot be accomplished with a system that exempts some
services from VAT, but not others. It has therefore been considered important
to minimise the negative impact of the amended Swedish VAT rules from 1
April 2016 by applying them as symmetrically as possible to the
operators/actors in the postal services market. Furthermore, it has been
Judgment of the European Court of Justice of 21 April 2015 in Case C-114/14
A complete list of VAT-exempted services offered by PostNord: Stamps, Postage-paid
(envelopes/bags), Riktiga Vykort (service for sending your own photo as a postcard), Unstamped
collector's items, Registered Mail domestic/international, Proof of receipt domestic/international,
Recipient confirmation domestic, Personal delivery (Sw: personlig utlämning), Valuables, Skicka Lätt
(trackable mail service for objects, goods and documents weighing up to 2 kg), Parcel post, Parcel post
International, Shipping for PostNord box domestic/international.
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3
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important to ensure that the new VAT rules do not affect the scope of the
universal postal service.
Somewhat simplified, the exemption from VAT refers to services within the
scope of the universal postal service that one (or more) undertaking(s) may be
designated to provide.4 In the bill finally adopted by the Swedish Parliament on
10 February 20165 the VAT exemption was designed to exempt stamps and
postal services which are included in the universal postal service and which are
provided by the designated universal service provider but which have not been
negotiated individually. . In practice this means, as mentioned, a VAT
exemption for stamped letters and for letter, parcel, registered and valuable
items (incl. certain additional services) subject to cash payment when
deposited. As regards the letter services concerned and registered/valuable
mail items, PostNord in practice already has a de facto monopoly, which means
that no existing competitors are affected, but that the already high entry
barriers in the relevant sub-markets are made even higher. In contrast, the
situation for cash-paid parcels is considerably different since this part of the
market has several competitors offering similar parcel services to consumers.
Consumers thus do not have to pay VAT if they purchase parcel distribution
from PostNord, but must pay VAT if they purchase the corresponding service
from one of its competitors. This inevitably leads to an alteration of
competitive conditions on the parcel market. However, this negative market
effect is alleviated by the fact that PostNord also has higher costs due to less
deductible (input) VAT, which means that the real scope for passing on price
reductions to consumers is not the full VAT rate (25 per cent), but instead
about 10 per cent. Furthermore, the sub-market for parcels sent by consumers
that is affected by VAT asymmetry only accounts for about 1 per cent of the
parcel market. This makes the financial consequences for PostNord's
competitors still fairly limited.
Competitors within the parcel delivery sector have expressed concerns that
ambiguities in the VAT regulations might be exploited by PostNord. This
primarily relates to issues that could arise due to it not always being the sender
who pays for the postal service. With respect to e-commerce parcels, DB
Schenker has warned against that a consumer could be regarded as the paying
customer and thereby obtain VAT-free distribution, even if the sender is an ecommerce company. This could lead to the distribution of such mail items
being “reclassified” from VAT-liable to VAT-exempt – thereby considerably
In licence conditions (the latest from 11/09/2015, Ref. no. 15-8920) PTS decided that PostNord shall
provide the universal postal service in Sweden.
5 Government Bill 2015/16:51 Exemption from value added tax for certain postal services.
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affecting the competitive conditions on the business parcel market. It is
therefore important for the Swedish Tax Agency, which is the authority
responsible for VAT provisions, to ensure that the application of the new rules
does not permit such an evasion of tax liability with its accompanying
distortions of competition. The Swedish Tax Agency's enforcement is also
important for preventing PostNord from otherwise being able to evade tax
liability with respect to case-by-case assessments of what is to be considered
individually negotiated terms.
1.2
The bpost ruling concerning annual quantity
discounts
On 11 February 2015, the European Court of Justice passed a judgment
concerning a preliminary ruling in a Belgian case between the former Belgian
postal service, bpost SA (bpost), a universal postal service provider in Belgium,
and the Belgian regulatory authority, BIPT.6 The case concerned bpost's system
of annual quantity discounts that gives different treatment to a particular group
of clients, known as consolidators, and which BIPT had prohibited with
reference to the non-discriminatory pricing required by the Postal Directive.
The Court found that in circumstances such as those in the national case,
consolidators are not in a situation comparable with other clients (in relation to
the purpose of the quantity discount, i.e. to stimulate demand) and that the
non-discriminatory pricing required by the Postal Directive7 thus does not
preclude such a system of quantity discounts as bpost's.
1.2.1
PTS issues PostNord with an order following decision to
modify annual quantity discounts
In spring 2015, PostNord announced its intention to introduce a structure
similar to that of bpost for its annual quantity discounts in Sweden. After
PostNord´s publication of the design of its discount system, PTS assessed that
consolidators on the Swedish market, unlike on the Belgian market, are in a
situation comparable with PostNord's other clients as regards annual quantity
discounts, and that PostNord's system would thereby contravene the
requirement of non-discrimination.8 On 8 December 2015, PTS therefore
issued PostNord with an order prohibiting the introduction of its new system
for annual quantity discounts. PostNord appealed PTS's decision to the
Administrative Court, where it is subject to examination and initially was
suspended. PTS appealed this suspension to the Administrative Court of
Judgment of the European Court of Justice of 11 February 2015 in Case C-340/13
EC Postal Directive (97/67/EC)
8 An appreciable difference between the case examined at the European Court of Justice and Swedish
conditions is that the demand-stimulating effect of PostNord's annual quantity discount is almost
negligible in relation to the main purpose of the discount as found by PTS, i.e. to gain volumes from
competing postal operators (such as Bring Citymail and the MTD-companies).
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Appeal, which ruled in PTS's favour. Subsequently, the Supreme
Administrative Court did not grant PostNord leave to appeal, for which reason
PTS's order is in force until further notice.
1.2.2
The role of consolidators in the market
The end customers in the market for business mail consist of a large number
of senders. These can either produce their mail entirely in-house (i.e. print,
envelope, address and sort letters) and sign contracts themselves with letter
distribution suppliers (postal operators). They can also choose to outsource
parts of their production to third parties (such as print shops) or have a third
party help them make the most effective choice of postal operator. In some
cases, these third parties can also offer to handle the business relationship with
the postal operators. They thus also de facto relieve the postal operators by
managing customers, and their customer contracts and invoicing. This also
makes the postal operator's reception of mail items considerably easier in
practice – instead of receiving many small items of bulk mail from all the
different senders, the postal operator receives one (1) large consolidated and
processed item of bulk mail from the third party, the consolidator. It is thus in
this case, i.e. when the third party signs an agreement with PostNord, that this
party can qualify for PostNord's definition of a consolidator. Consolidators
thereby have several roles in relation to PostNord:
1) Consolidators are competitors of PostNord in terms of the business
relationship with senders.
2) Consolidators are customers of PostNord since they deposit mail items
with PostNord for final delivery.
3) Consolidators also perform postal production services for senders that
are direct customers of PostNord, and are thereby competitors to
PostNord's subsidiary Strålfors.
1.2.3
Consequences if PostNord is allowed to give different
treatment to consolidators
It is obvious that the function of consolidators in the market benefits postal
customers. The price models of postal operators are complex, and it is not easy
for individual postal customers to themselves choose the distribution that is
most financially advantageous. Because consolidators also pass on discounts
from operators to customers, customers also have access to a lower price level
than they could have obtained on their own. A lower price level also leads to
an increase in demand. Thus, in purely general terms, the activities of
consolidators should probably also have a restraining effect on the volume
decline in the letter market. Moreover, consolidators are also often direct
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competitors of PostNord and its subsidiary Strålfors. Competition also benefits
customers in the letter market and the market for various mail-related services.
PostNord's new discount conditions for consolidators should also be seen
against the background of PostNord simultaneously integrating its subsidiary
Strålfors AB into its letter distribution operations in a new, joint business area,
Communication Services. This will enable PostNord to offer the entire chain
of service production (printing, addressing, enveloping and also final
distribution) from an integrated business area. Therefore, all end customers in
the market (i.e. the senders) run the risk of a considerable reduction of choice,
and ultimately higher prices, if they to a greater extent than before are limited
to using PostNord at every stage in the postal chain.
1.3
PostNord's changes in its production operations
During 2015 and in early 2016, PostNord implemented a number of changes in
its production operations. These changes have led to a poorer quality of these
operations and thus an increase in the number of complaints (see also Section
3.1 below). There is reason to view seriously on this situation.
The Postal Services Ordinance (2010:1049) states that at least 85 per cent of
the letters deposited for overnight delivery within Sweden should be delivered
on the next working day and at least 97 per cent within three working days.
Figure 1 below shows the results trend regarding delivery times achieved for
first class letters since 2001. According to information from PostNord9, the
results for 2015 showed that 89.75 per cent (with a statistical margin of error of
0.16 per cent) of first class letters could be delivered on the first working day
after being deposited. Thus, in the past year alone, there has been a significant
deterioration in quality (93.26 per cent in 2014).
On assignment from PostNord, TNS-SIFO carried out a survey in 2015 with the aid of approximately
146,000 first class letters. PostNord's result is an average for the entire country and for all the months of
the year. The best result was achieved in January 2015, with 92.40 per cent of letters being delivered on
time, while the worst month was April with 84.84 per cent delivered on time. The results also vary in
geographical respects; the Malmö terminal shows the highest result (93.27 per cent) while the terminal in
Rosersberg shows the lowest (82.40 per cent).
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Figure 1: Results for delivery times achieved, first-class mail
According to information from PostNord, the results for 2015 showed that
99.75 per cent (with a statistical margin of error of 0.16 per cent) of first class
mail had been delivered within three working days of being deposited. This is
on a par with 2014, when the result was 99.85 per cent.
PostNord thus still fulfils the formal requirement of the Postal Services
Ordinance. It should however be emphasised that the 85 per cent rule is not to
be viewed as a target for what may be considered acceptable service. When this
provision was introduced around twenty years ago, it was assumed that former
Posten AB would, for commercial and other reasons, continue to strive for the
highest possible quality without the need to regulate this in particular.
Legislators were therefore content with minimal regulation whose sole purpose
was to satisfy the requirements of the Postal Directive with respect to crossborder mail. As shown in the graph above, this has also performed
satisfactorily without any target up until a few years ago. In PTS's view, the
recent trend shows that there may be reason to reconsider this order.
1.3.1
Concept Delivery and new terminals
A major change in method implemented by PostNord is the introduction of
the new operational approach, called Concept Delivery, throughout the
country. This new approach above all means that letters have been machine
sorted in distribution order at the letter terminals even more than previously.
As a result of postmen having fewer letters to sort manually, they instead
spend a larger part of their working day delivering mail. One consequence of
Concept Delivery is that most routes have been redesigned so that many
households have their mail delivered at a different time than previously.
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Another major change is that PostNord has built new, larger terminals in
Rosersberg and Hallsberg to replace old terminals.
The fact that PostNord has for a few years employed greater organisational
and other coordination of its letter operations with its handling of parcels also
appears to have affected the quality of letter distribution. That this has taken
place at the same time as launching Concept Delivery has probably contributed
to the problems that have arisen.
According to PostNord, the background to the changes in question is the
population's new user habits and new communication patterns, whereby we in
Sweden, on the one hand, send fewer and fewer physical letters every year and,
on the other hand, order more goods on the internet, which are delivered as
parcels to households and to agents.
1.3.1.1 PTS measures in response to deficiencies in the quality of PostNord's
distribution operations
In spring 2015, PostNord had problems with deliveries from the new
Rosersberg terminal when its operations started. This had serious
consequences for distribution operations, not least in Dalarna, which resulted
in PTS receiving an increased number of complaints from the public. At the
same time, PostNord introduced Concept Delivery in Dalarna. As regards
Concept Delivery, a necessary precondition for this new approach to work is
that deliveries from the terminal also function as planned. Delays from the
terminal meant that postmen were unable to start their routes on time and
therefore in many cases could not deliver all their mail on such days. In
response to complaints concerning Dalarna, PTS commenced supervision in
the spring (Ref. no. 15-4798). The complaints mainly concerned lost or delayed
mail, but also wrongly delivered letters. After summer 2015, the quantity of
complaints received by PostNord and PTS decreased, which indicated that the
measures taken by PostNord according to its case report to PTS had begun to
have an effect. PTS therefore closed that particular supervisory case in
December, but continues to closely monitor the development of Concept
Delivery and the expansion of the new terminal structure.
Over the past year, PTS has also been able to note deficiencies in the quality of
PostNord's distribution operations at several other locations in Sweden, and
that complaints to PostNord have seen a substantial increase in 2015
compared with the previous year (see Section 3.1 below). This too is probably
explained by PostNord's changes. Given this situation, PTS has expanded its
supervisory initiatives over the past year. If these initiatives, together with the
ongoing dialogue with PostNord, do not yield the intended effect and the
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problems thus persist, PTS will consider which further administrative measures
are required to rectify them.
1.4
Development of volumes and market shares in the
letter market
The letter market covers the distribution of addressed mail items weighing at
most 2 kg.10 In order to conduct postal operations for a charge, a licence is
required under the Postal Services Act.11
Year
Number of letters (millions)
Index
2000
3,426.3
100
2011
2,767.7
80.8
2012
2,645.0
77.2
2013
2,545.1
74.3
2014
2,433.0
71.0
2015
2,312.5
67.5
…
Table 1: Trend in the total letter market
Volumes on the Swedish letter market declined in 2015 by 4.9 per cent to 2.31
billion mail items. This means that the drop in volume in progress since the
turn of the millennium has accelerated slightly, and the decline in 2015 was the
biggest since 2009, when volumes fell by 5.6 per cent. Since the year 2000, the
total letter volume has declined by 32.5 per cent (see also Table 1).
There is a trend in the growth rate of the volume decline showing that this rate
has accelerated somewhat over time. A rolling three-year average of the annual
volume change shows that the rate has never been as high as in 2015 (see also
Figure 2).
According to the definition in Chapter 1, Section 2 of the Postal Services Act, a letter is an addressed
mail item that is enclosed in an envelope or other wrapping weighing at most 2 kg together with
viewcards, postcards and similar mail items.
11 The Postal Services Act (2010:1045)
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Figure 2: Annual rate of decline in letter volume since 2001; three-year average since
2003.
PostNord's volumes continue to fall faster than the market as a whole, and the
rate of decline reaches a new record level with a decline of 6.4 per cent to just
over 1.9 billion mail items. This means that PostNord is not only losing
volumes due to digitalisation of the information flow, but also to some extent
to its competitors. It is namely the case that the other postal operators' total
volume increases by 3.3 per cent to almost 380 million mail items (see also
Figure 3 and Table 2), and this volume increase represents about 0.52 per cent
of total letter volumes.
17
Figure 3: Development of letter mail volumes since 1997
Number of
distributed letters
(millions)
2015 (2014)
PostNord
Bring Citymail
Operators
1,934.0 (2,066.6)
356.1 (349.8)
17.3 (11.7)
belonging to
MTD
Other operators
Total
5.1 (4.9)
2,312.5 (2,433.0)
Table 2: The postal operators' distributed volumes. Figures in parentheses pertain to 2014.
PostNord still has a very dominant position in the letter market. However,
PostNord's market share continues to decrease somewhat, but still amounts to
18
90.9 per cent in terms of value (i.e. turnover), and 83.6 per cent in terms of
distributed items of correspondence.12
Share of turnover
2015 (2014)
Share of cleared
letters
2015 (2014)
Share of
distributed
letters
2015 (2014)
90.9 % (92.3 %)
81.2 % (83.3 %)
83.6 % (84.9 %)
Bring Citymail
7.8 % (6.6 %)
17.0 % (15.3 %)
15.4 % (14.4 %)
Operators
0.3 % (0.2 %)
0.74 % (0.48 %)
0.75 % (0.48 %)
1.0 % (0.9 %)
1.02 % (0.75 %)
0.22 % (0.20 %)
100 %
100 %
100 %
PostNord
belonging to
MTD
Other operators
Total
Table 3: The postal operators' market shares by value (turnover) and by distributed and
cleared volume. Figures in parentheses pertain to 2014.
The biggest competitor Bring Citymail, including distribution by morning
paper deliverers in the Stockholm area, increases its volume by 1.8 per cent to
356 million mail items, representing a market share in terms of value of about
7.8 per cent. The morning paper distributors in Morgontidig Distribution
(MTD) continue to grow rapidly in the letter segment. The letter volumes that
the MTD companies distribute together with morning papers increase very
sharply (by 49 per cent) to 17 million items. Other operators, mainly operating
in various local markets, together reach just over 5 million mail items, an
increase of 2.4 per cent. For the first time, these smaller operators reach a
market share of 1.0 per cent in terms of value. For further details, see Table 3,
The reason for differences in market shares depending on whether we calculate these in terms of value
or volume is that the various operators have significantly different product offerings and business
models, and thereby a substantial difference in earnings potential per letter.
12
19
which besides market shares in terms of value and share of distributed letters
also contains market shares in terms of cleared letters.13
In order to make a comparison with PostNord's nationwide service, we have in
appendices 1-4 chosen to illustrate the areas of coverage for Bring Citymail,
operators belonging to MTD, Svensk Direktreklam (SDR) and other local
postal operators.
1.5
The parcel market and e-commerce
Today, no particular licence is required to distribute parcels. Beyond what is
included in the universal postal service, parcel distribution is in no way
regulated in the Postal Services Act. This being the case, there is also no clearcut legal definition of the term parcel.
1.5.1
The service network
The service network is the physical structure of various service points in the
form of business centres, postal agents and service points through which
PostNord and other distributors make their products and services available to
users.
The system for PostNord's service points for mail underwent a change in the
early 2000s. At that time, Posten, now PostNord, replaced its post offices with
agents and special Business centres. Since then, PostNord has signed agency
agreements with several actors, mainly in the basic consumables sector.
In 2015, PostNord has renegotiated both central and local agency agreements.
These renegotiations have led to only minor changes in the network of agents.
Besides Postal agents, PostNord's service network also covers Business
centres, Delivery points and Stamp agents14.
The data for development of volumes and market shares in the Swedish parcel
market as a whole is more limited compared with the corresponding data for
The difference between distributed and cleared letters is due to some operators engaging other
operators for final distribution. This mainly involves cases where one postal operator, A, deposits letters
going to areas where operator A does not have its own distribution to another operator, B. It is thus in
this case operator A that has the customer relationship with the sender. In cases where PostNord is
operator B, the one finally distributing the letters, PostNord classes operator A as a consolidator (see
Section 1.2 above on the bpost ruling concerning the relationship between consolidators and PostNord).
14 Stamp agents are not included in the points of contact and access points that PostNord as designated
provider is required to provide to a degree that takes into account the needs of users (see Postal Services
Act (2010:1045), Chapter 3, Section 1). In December 2015, the number of stamp agents was around
2,300.
13
20
the letter market15. Since postal operations covering mail items over 2 kg do
not require a permit and only the designated provider PostNord has a societal
assignment covering addressed mail items up to 20 kg, PTS has no opportunity
to retrieve data from all the relevant actors. There are also no reliable market
statistics available from other sources, but this section only discusses access to
parcel services, external factors and market development in general.
As regards agents for postal services, PostNord has the biggest agent network,
but DB Schenker and DHL have their own agent networks with virtually the
same geographical spread as PostNord's network. What primarily distinguishes
PostNord is the additional services, besides the service provided by agents,
which are offered through the rural postal service in the more sparsely
populated parts of the country.
The exact number of agents is difficult to determine as there are continuous
changes due to agents closing and new ones joining. What may be noted is that
developments are largely positive and that there is competition in the parcel
segment which in principle reaches the whole country (see more in the section
on collaborations below). The table below states the number of agents in
February 2016.
PTS's supervision and market surveillance mainly focus on the part of the parcel market serving the
general public (B2C and C2X, which also includes small businesses and associations), rather than pure
business transport (B2B and other more large-scale transport services).
15
21
Distributor
Number of
agents
Cash
payment
Maximum
weight16
Packing
materials
Booking and
freight
documents
PostNord
Agents: 1531
Agents - only
delivery: 72
Business
centres: 261
Yes
>20 kg
Customer/
Distributor
Home
page/At
agent
DB Schenker
(privpak)
1436
Yes
>10 kg17 Customer/
>20 kg18 Distributor
Home
page/At
agent
DHL
(Service
Point)
1,382
Yes
>20 kg
Only
distributor
Only home
page
Bussgods
473
Yes
>20 kg
Customer/
Distributor
Home
page/At
agent
Table 4: Parcel agents in Sweden.
In addition to the parameters touched upon in the table, all distributors offer a
wide and varied range of parcel services, including the possibility of home
delivery. See also appendices 5-8 for maps of each actor's agent network.
1.5.2
Collaboration pushes competition far across the country
PostNord is the actor that is established throughout the country through an
agent network and rural postal service. Through various forms of
collaboration, competing actors also reach far into sparsely populated parts of
the country. For example, DB Schenker has an agent network that is only
marginally smaller than that of PostNord, and also engages PostNord to reach
the most distant recipients, which means delivery can be offered to all mail
recipients in Sweden. DHL has a cooperation agreement with Bussgods, which
Due to weights up to 20 kg being the limit of the definition of the concept postal service in the Postal
Services Act, PTS has only examined the possibility of sending mail items weighing up to 20 kg.
17 >10 kg (>20 kg) at some of the 28 terminals.
18 The service Blocketpaketet in cooperation with Blocket, up to 20 kg via agent.
16
22
uses Länstrafiken (the county coach services) to reach into many sparsely
populated regions 19.
In remote areas, it is also common for a third party to handle delivery to the
agent jointly on behalf of the various actors, which may be considered the
most cost effective solution for maintaining an agent network that reaches
across the country.
1.5.3
Parcel lockers
Thus far, the existence of parcel lockers has been extremely limited in Sweden,
which distinguishes the Swedish market from most other European markets
(see table 5 below). Several pilot tests have been carried out, but have not yet
resulted in any more permanent establishment of parcel stations.
Table 5: Parcel lockers in Europe (Source: Copenhagen Economics, “Principles of ecommerce delivery prices”
http://www.copenhageneconomics.com/publications/publication/principles-of-ecommerce-delivery-prices)
It can also be noted that from 1 April 2016 DHL's Swedish parcel operations will be part of a joint
initiative for parcel delivery in the Nordic and Baltic countries in cooperation with Finnish Posti and
Bring. The idea is to be able to offer faster transit times, advanced delivery time notifications, parcel
delivery on Saturdays, higher weight limits (up to 31.5 kg) and more flexible returns management. The
product for this collaboration is called Parcel Connect and is already established in Austria, Holland,
Belgium, France, Luxembourg, Czech Republic, Slovakia, Poland and Germany).
19
23
DHL recently established around 60 stations and are about to install a further
40 in Willys stores around the country, but these are currently only linked to
DHL Express and not to DHL Service Point.20
This area is currently the subject of research at Lund University; “Parcel
lockers in urban and rural areas located at workplaces and authorities”, a
project funded with support from Vinnova21.
1.5.4
E-commerce, development and capacity in the distribution
networks
E-commerce continues to grow rapidly and, according to the e-barometer,
turnover passed SEK 50 billion in 2015, with a growth rate of 19 per cent
(compared to +5.7 per cent for the retail trade as a whole). However, ecommerce constituted only 6.7 per cent of the total retail trade, so the potential
for development is great.
The system of agent networks is certainly popular and well established on the
Swedish market. It is also a model that allows a lower price level than if the
established delivery form had been home delivery (especially in light of
Sweden's geographical conditions). But e-commerce's rapid rate of growth is
likely to lead to extensive changes over the next few years in how parcels are
distributed, even if the agent model will form the backbone of parcel
distribution for the foreseeable future.
We are already seeing that developments so far have led to the emergence of
some capacity problems in the agent networks (mainly in major cities), and
with today's growth rate turnover will also have more than doubled by the year
2020. Therefore, developments are likely to take the form of various and more
flexible solutions for home delivery, especially as regards large parcels which
demand a lot of storage capacity at the agents. But a parallel development with
the establishment of parcel stations is also likely.
“The expanded/extended parcel mailbox” – in the form of communal
letterboxes with compartments for depositing and delivering parcels in multi
dwelling units; parcel mailboxes at individual properties or collection boxes in
rural areas – is another possible supplement to the distribution chain that may
need to be developed, both to manage capacity pressure and to meet the needs
DHL Express covers domestic and international express services. DHL Service Point is the agent
network for domestic parcels.
21 http://www.vinnova.se/sv/Resultat/Projekt/Effekta/2013-00117/Paketautomat-i-stad-och-glesbygdpa-foretag-och-myndigheter/
20
24
of users. The user survey22 commissioned by PTS shows that private
individuals are prepared to accept a certain cost for access to a mailbox or
communal letterbox that makes it possible to receive some parcels and larger
letters where their live instead of at an agent. This can be seen as confirmation
that this type of solution is in increasing demand among households.
E-commerce growth
20%
11%
14%
17%
16%
2013
2014
19%
10%
0%
2011
2012
2015
Figure 4: E-commerce growth in Sweden (Source: the e-barometer 2011-2015)23
1.5.5
Shipping platforms and access to delivery options for ecommerce consumers
As we have noted, there is widespread competition in the Swedish market for
parcel delivery to consumers. However, it is still the case that many e-retailers
only offer delivery with one actor, and where choice is available, this covers
more than just choosing which actor will deliver the parcel. Although this can
create an opportunity for the customer to choose delivery point, the
opportunity for Swedish e-commerce customers to choose service level based
on individual preferences and willingness to pay is at present fairly
undeveloped compared with the situation in some other countries.
These include an actor in England, MetaPack, which is established in several
countries24. In brief, MetaPack offers e-retailers a platform that can host their
agreements with various parcel operators and enables them to offer their
customers shipping options based on price and desired level of service, rather
than on primarily choosing distributor. The end of 2015 saw the establishment
of a new Swedish actor, Shipwallet, with a similar solution targeting the
See the report Användares behov av posttjänster [The postal service needs of users], PTS-ER-2016:7, and
Section 3.6, “The population's need and use of postal services” in the present report.
23 About the e-barometer: “PostNord in cooperation with Svensk Digital Handel [Swedish Digital Commerce
Association] and HUI Research monitors Swedish retail developments in e-commerce. The e-barometer is a quarterly
publication based on two consumer surveys and one business survey. E-commerce is defined in the e-barometer as the sale of
goods via the internet to be delivered to the home of the buyer, to a pick-up point, or to a store, stockroom or delivery point
for collection by the consumer. This means that the following is not defined as e-commerce in the e-barometer: » Purchases in
a store that have first been booked via the internet » Sales of services (e.g., travel sales, hotels and concert tickets) conducted
over the internet » Downloads of, for example, music files, films and applications » Sales via the internet between businesses
» Sales via the internet between private persons”
24 United Kingdom, Germany, France, Holland, Poland, United States and Hong Kong
22
25
Swedish e-commerce market. If this development takes off, it could eventually
lead to an even tougher competitive pressure in the market and more advanced
consumer choice.
1.5.6
The sharing economy - alternative forms of delivery
The global platform Uber for local “taxi journeys” is a well-known example of
a modern sharing economy, in which a commercial (internet-based) service
enables the pooling of private cars.
During the year, at least a couple of actors have appeared on the Swedish
market (Freelway and Baghitch) with various solutions to match, among other
things, the parcel conveyance needs of private individuals with free transport
capacity.
The question is what long-term significance this might have for postal/parcel
operators and the e-commerce market (e.g. with regard to the development of
home delivery services in urban areas and service solutions in rural areas). In
2013, DHL launched the service MyWays. The idea is for DHL's platform to
facilitate “last-mile”/home delivery services by means of private individuals
handling the final link of the transport chain for each other. However, the
service never gained a foothold on the market and is no longer active at
present. This development also raises questions of insurance, reliability and
integrity, and it can also be noted that some of the negative aspects of the
sharing economy are receiving attention in an ongoing government inquiry
about the taxi industry25. The conditions for users in the sharing economy are
also the subject of another government inquiry.26
1.6
Development - digital mailboxes and My Messages
Previous editions of “The Swedish Postal Services Market” have shed light on
the development of the digital mailbox My Messages and secure digital mail.
The slow growth rate picked up speed in 2015, with the number of private
subscribers tripling during the year (see Figure 4). However, in relation to the
population as a whole, the number of subscribers remains very low, which has
been noted by both the Digitalisation Commission and the responsible
minister Mehmet Kaplan, which have called for measures to speed up this
process.
N 2015:05 Utredningen om anpassning till nya förutsättningar för taxi och samåkning (The assignment for
adaptation to new conditions for Taxi and car sharing community); ToR 2015:81
26 Användarna i delningsekonomin (The users in the sharing economy) ToR 2015:136.
25
26
Recently27, the Swedish Tax Agency published a report on the present situation,
putting forward a number of proposals to speed up the process.
“Against this background, the Swedish Tax Agency proposes that the Government take
sufficiently robust measures to induce a sufficient number of senders and recipients to subscribe
to My messages. The aim is to bring about a jump in the use of digital mail at least up to the
Danish level. These measures should encourage and steer subscription for both senders and
recipients.”28
If these and any other initiatives are realised, the rate of decline in the total
number of sent letters will probably increase, but it is difficult to predict by
how much and also how fast this will go.
Number of profiles in My
Messages
350 000
300 000
250 000
200 000
150 000
100 000
50 000
Företag
Privat
Totalt
0
Figure 5: Change in number of profiles in 2015 (Source: Swedish Tax Agency)
01/03/2016
Report of the Swedish Tax Agency’s assignment to monitor government agencies’ accession to “Mina
meddelanden” (My Messages) (N2015-3779-EF) and to promote corporate accessions. Ref. no. 131
340553-15/113
27
28
27
2
Competition and pricing
2.1
The competition situation in the letter market
As the letter market is heterogeneous in terms of function, it needs to be
broken down when conducting market analyses. Earlier market analyses have
often broken the market down into the sub-markets bulk mail and single
letters. However, it is appropriate to break it down even further when
conducting a more detailed analysis, primarily in the following dimensions:





priority of the letter services (i.e. overnight delivery or not),
sorted and unsorted bulk mail respectively,
single letters from office mail and letterbox mail respectively,
break-down in relation to geographical coverage,
structure/adaptation of various services for different customer groups,
such as consumers vis-à-vis corporate customers.
In schematic terms, the most important dimensions (or sub-markets) for the
letter market are described in accordance with Figure 6.
Figure 6: Diagram of the letter market 2015
28
The sub-market with the greatest volume and the greatest importance for the
competition situation is bulk mail not sent overnight, which constitutes
approximately 63 per cent of all letters. Bulk mail in total corresponds to
around 80 per cent of the total letter market in terms of volume.
With respect to single letters (which in total cover approximately 20 per cent of
the letter market), letters delivered overnight account for 7 of 10 single letters.
2.1.1
Bulk mail
The market segment called bulk mail (or industrial mail) comprises mail in the
form of series of items which are deposited at the same time. They are usually
produced industrially and with the help of computer support. The sender can
send mail items for a substantially lower price compared to the postage for
single mail items, provided the sender attains the cost-saving volume required
for the postal operator to classify it as ‘bulk mail’.
Bulk mail can also be broken down into two categories: ‘unsorted’ and ‘sorted’.
Unsorted bulk mail is significantly more expensive than sorted. However, bulk
mail is usually produced so that it has already been sorted when handed over to
the postal operator, for which the sender receives a further discount for having
performed this service; a ‘sorting discount’. In these cases the level of sorting
can vary from the deposited mail items having been sorted by postcode to mail
items being sorted in the order in which the mail should be delivered for each
individual postman’s route (‘sorting in delivery route order’).
Since 1993, development in large parts of the bulk mail segment has been
characterised by tough competition between PostNord and Bring Citymail.
Competition was largely based on pricing. Based on the lower price levels this
has brought about with regard to bulk mail, it is probable that it is the large
postal customers that are, and have been, the ones to benefit most from the
competition (see Section 3.1)
2.2.1.1 Market for bulk mail sent overnight (first class bulk mail)
There has been a decline in the demand for first class bulk mail, i.e. bulk mail
deposited for sending overnight. In recent years, however, the proportion of
bulk mail being sent as first class mail has remained fairly constant at around
20 per cent (calculated in letter volume). PostNord has a virtual monopoly for
first class bulk mail, as its major competitors focus mainly on letters with a
longer distribution time (lower priority), known as economy class bulk mail.
29
2.2.1.2 Market for bulk mail not sent overnight (economy class bulk mail)
PostNord and Bring Citymail are currently the two major competitors in the
market for economy class bulk mail (i.e. bulk mail that is not sent overnight).
PostNord covers the whole country, while geographically Bring Citymail’s
delivery operation focuses on the Stockholm region and the Mälar Valley in a
broad sense, large parts of West Sweden, western Skåne and Gotland,
corresponding to approximately 55 per cent of all mail recipients in Sweden.
PostNord still has more than three times the volume of Bring Citymail with
regard to economy class bulk mail.
In recent years, the businesses that distribute morning papers have made a
breakthrough, even where letters deposited as economy bulk mail are
concerned. These newspaper distribution companies that cooperate within
MTD have increased their total letter volume in 2015 by 49 per cent to 17.3
million items, representing just over 1 per cent of the sub-market. In this submarket, Bring Citymail also shows continued growth in volume (1.8 per cent)
in a generally declining market. On 1 January 2016, Bring Citymail and MTD
initiated a more formalised cooperation, whereby Bring Citymail now sells
volumes for the distribution companies within MTD. MTD thus distributes
volumes in areas where Bring Citymail does not have its own distribution, and
in areas where both actors are found, they also cooperate by means of codistribution, for example. Bring Citymail/MTD can therefore now be seen as a
joint competitor of PostNord.
The fact that cooperation between Bring and MTD does not reach the entire
country is due to Tidningstjänst AB (TAB), which handles morning paper
distribution in much of northern Svealand and southern Norrland, choosing to
remain outside MTD's letter operations (and thus also the cooperation with
Bring). TAB is a subsidiary of PostNord, which means that PostNord
completely controls both distribution channels of paper deliverers and
postmen in those parts of Sweden.
For a long time the market for economy class bulk mail has been characterised
by a tough competitive climate between PostNord and Bring Citymail.
Leverage effects arise, as all of those customers who want to reach the whole
of Sweden have to use PostNord, and PostNord’s pricing for that part of the
volume that goes with PostNord changes if the customer chooses to send parts
with Bring Citymail. This means that it is not enough for Bring Citymail to
have better offers for those volumes that both companies are competing for,
but must also compensate for the discounts lost on that part that can only be
sent with PostNord. The cooperation with MTD considerably strengthens
Bring Citymail's offering while reducing sensitivity to the leverage effects.
30
2.1.2
Single letters
Single letters refers to letters delivered one at a time (or at least in a smaller
amount) in letterboxes, to a post outlet or the like. Formally, letters are
considered single if they are deposited in fewer numbers than the operators'
defined limits for qualifying as bulk mail. Single letters can also be broken
down into office mail and letterbox mail.
The office mail segment normally comprises mail from companies that is
stamped using a franking machine or marked “postage paid”. Office mail
constitutes around 11 per cent of the total volume in the letter market.
PostNord has a very strong position in terms of nationwide office mail.
Mailworld Office, which has been operating for a few years and whose
business concept is to collect office mail and convert it into bulk mail, is also
on its way to becoming an established actor in this sub-market and cleared just
over 18 million mail items in 2015, which after sorting and conversion to bulk
mail had been transferred to Bring Citymail, PostNord or MTD for final
distribution. PostNord has attempted to limit the competition from Mailworld
Office in this sub-market by classifying the company as a consolidator with
poorer price conditions. (The different treatment of consolidators was banned
by PTS on 8 December 2015, see also Section 1.2 above).
Competition at a local level comprises just over twenty or so postal operators,
with relatively small volumes. But, here too, morning paper distributors are
increasingly penetrating the market, winning a number of municipal
procurements, for example. In Luleå, the morning paper distributor
Norrbottens Media Distribution AB (belonging to MTD) has now acquired
Luleå Mail HB, which for a number of years has been the largest local postal
operator with an annual volume far exceeding 1 million mail items.
The Letterbox mail segment is mail posted in letterboxes – usually stamped –
and distributed as single mail items. The number of stamped letters still
constitutes just over 6 per cent of all mail items.
PostNord has a virtual monopoly on all nationwide letterbox mail, regardless of
delivery priority. The marginal competition that exists relates to local mail in a
small number of localities.
31
2.2
Barriers to market entry in the letter market
The formal barriers to entry in the Swedish postal services market are low.
Licences for postal operations are granted by PTS if applicants may be
expected to conduct operations in accordance with the requirements of the
Postal Services Act. The requirements of Chapter 2, Section 6 of the Postal
Services Act mean that operations must be conducted in such a way that the
protection of the personal privacy of senders and recipients is maintained. The
Act also contains provisions on the duty of confidentiality.
However, there are significant financial barriers on account of the market
largely being dominated in such a significant way by PostNord. Another
general barrier to entry of a more practical nature is that a new operator must
build up its own address register as the address registers of PostNord (and
other established operators) are not publicly available. This poses particular
problems in non-urban areas, where there is sometimes a lack of direct
connection between addresses and the actual location of letterboxes.
An important prerequisite for a new actor to be able to establish themselves is
naturally to be able to build up a sufficient customer base in order to either
directly, or further down the line, start their own distribution operation. In the
latter case, an operator can initially start operations as a consolidator in order
to build up volumes and establish a customer base. In the first phase, other
established operators are thus used for the distribution. The different price
conditions regarding quantity discounts that PostNord has attempted to
introduce, with reference to the bpost ruling discussed in Section 1.2, can in
this case create an additional barrier to entry if PostNord finally gains the
opportunity to introduce such. If the operator cannot exploit its total volume
to obtain discounts from PostNord, the ability to establish itself in the letter
distribution market through consolidation is made more difficult.
When an actor is well established with its own distribution operation, it has
become increasingly important, in order to develop its customer base, to be
able to offer the customer the service of also handling that part of their mail
for distribution outside one's own distribution area. This requires that the
transfer of letters to another postal operator (most often PostNord) takes place
as simply and efficiently as possible, and also not be impeded by conditions
that treat operators differently.
2.2.1
Bulk mail sent overnight
Apart from locally distributed bulk mail (e.g. within a municipality), purely
economic barriers to entry must be considered to be high in this segment. The
reason is primarily that the distribution network in this case must be adapted,
32
firstly for deliveries each working day, and secondly for rapid intermediate
transports to be able to encompass the entire area of coverage in one night. It
is more natural for competitors to focus instead on less time-critical mail items
when building up their networks. Furthermore, it is obviously difficult for a
new competitor to challenge PostNord’s strong position, with its well-known
brand, long since established contacts with all postal customers and strong
business concept that covers the whole of Sweden overnight.
2.2.2
Bulk mail not sent overnight
Market entry in this segment also involves substantial investments for
stakeholders seeking to enter this section of the market, as it requires an
extensive distribution network. These large investments militate against
potential new operators that do not have some pre-existing form of logistics
network being able to achieve any major geographical coverage at the initial
stage. Consequently, it is crucial for competition legislation and sector-specific
postal services legislation to prevent dominant stakeholders from, for example,
applying an improper and selective geographical pricing strategy against
potential competitors. The size and financial strength of a dominant
stakeholder, together with its nationwide distribution, afford it considerable
opportunities to eliminate any competition. However, PTS still considers that
there is potential for the bulk mail market to be penetrated by operators that
can use other existing distribution networks. One example of this is MTD,
which entered this market a few years ago.
The competition authorities have reason to focus on all anti-competitive
behaviour to ensure that both existing and new potential competitors cannot
be inappropriately excluded. This may involve, for example, offers of an
exclusivity or loyalty creating nature.
2.2.3
Market for the nationwide distribution of single letters
PostNord is basically the only operator that delivers single letters nationwide.
Already before the amendment to the VAT rules exempting PostNord's
stamped letters from VAT (see Section 1.1), PTS assessed that it is unlikely
that more operators will establish themselves in this segment of the market, as
the costs associated with establishing a national infrastructure suitable for
clearance, sorting and distribution throughout Sweden are probably so great
that they are unjustifiable from a business perspective. The additional barrier to
entry of PostNord's stamped letters now being VAT-free would probably rule
out competition for single letters for consumers, who are not able to deduct
the VAT of any new competitor. On the other hand, due to the segment's
relatively high price level, there is scope for further actors, in addition to the
aforementioned Mailworld Office, to use new sorting technology to transform
33
single letters in VAT-liable payment forms into bulk mail and then engage
some of the existing operators for the final distribution of these letters. This
presupposes, however, that PostNord does not obtain the right to treat such
operators differently in terms of price.
2.2.4
Market for the local conveyance of single letters
In the market for the local conveyance of single letters, the conditions
necessary for competition are significantly better than for nationwide
distribution. It has been observed that most local postal undertakings are
established in small towns or in the countryside. However, market
establishment in this segment also requires a great deal of effort, which has
meant that recent entrants have been distributors of morning papers that
already have an existing distribution network.
One of the greatest potential threats to local postal undertakings is if the
regulations governing uniform prices for the universal postal service were to be
rendered less effective in some way. If such a situation were to arise, PostNord
would be able to offer disproportionately low prices to certain key customers
in districts where there is competition from local postal undertakings with a
view to eliminating existing competition. Due to the local operators often also
offering services such as collection and distribution of all the customer's mail,
it is also important that PostNord is not given opportunity to cross-subsidise
similar peripheral postal services.
2.3
Price developments in the postal services market
PTS has the task of monitoring price developments within the postal services
sector. Overall, PTS is able to note that in 2015 there were no, or only modest,
price changes for the main postal services. Price increases as exemplified below
can be compared using the Service Producer Price Index (SPPI) for transport
services, which increased by 1.3 per cent in the corresponding period.29
In the case of letter services especially adapted to consumers and small
businesses, known as single letters (letterbox and office mail), PostNord has
not made any price changes at all in 2015. As regards the various services for
bulk mail, PostNord raised prices by between 1.3 and 1.6 per cent compared
with 2014. For postal services regarding newspaper distribution (maildistributed daily press and the Periodicals service), where PostNord has long
been showing annual deficits, the prices were raised a little more, 1.9 per cent.
The Varubrev service, which is important for e-commerce and distance
commerce, had its bulk mail prices raised by about 2 per cent, while the price
Statistics Sweden: http://www.scb.se/sv_/Hitta-statistik/Statistik-efter-amne/Priser-ochkonsumtion/Prisindex-i-producent--och-importled/Tjansteprisindex-TPI/12610/12617/27047/
29
34
for single Varubrev items remained unchanged. Certain special and additional
services, such as Business reply mail, Proof of receipt, and Personal delivery,
underwent some price adjustments.
For parcels, there were no price changes for the cash-paid postal services sold
at agents or over the internet. However, on 1 April 2015, there was a price
increase of 3.9 per cent for the business-oriented parcel service, MyPack.
Otherwise, prices for some additional services were raised at the same time; for
example, the price for Cash on Delivery was raised by 12 per cent.
On 1 April 2016, PostNord introduced new prices for the services that became
VAT-exempt in the revised Value Added Tax Act. In general, this has meant
lower prices for consumers. For example, the new price for a stamped first
class letter (up to 50 grammes) is now SEK 6.50, a reduction of SEK 0.50, or
about 7 per cent. The corresponding postage for Economy Mail is also reduced
by SEK 0.50 (about 8 per cent) to SEK 6.00. A domestic postal parcel
weighing 3 kg now costs SEK 140, compared with the previous SEK 155, a
reduction of about 10 per cent. That not all the saving on the previous VAT
amount (20 per cent of the previous total price) is passed on to consumers is
due to the new VAT rules also entailing that PostNord is no longer allowed to
deduct all its input VAT, which leads to a significant increase in cost for the
group.
2.4
Price regulation in Section 9 of the Postal Services
Ordinance
There is a price cap on single letters delivered overnight. Under Section 9 of
the Postal Services Ordinance, the operator providing a universal postal service
(i.e. PostNord) may not increase the price for domestic overnight delivery of
single mail items (first class letters) weighing a maximum of 500 grams by more
than the alteration in the consumer price index between July of the
immediately preceding year and July of the year prior to that. As stated in the
previous section, PostNord has not in 2015 raised the prices regulated by the
price cap, and has thus complied with the price cap provision.
PTS's interpretation of the Postal Services Ordinance is that it is the change of
the final price (previously including VAT) that is currently regulated. As noted
in the previous section (2.3), the price reduction in connection with VAT
exemption (from SEK 7.00 to SEK 6.50; up to 50 grams) does not consist of
the entire previous VAT amount. This means that the price excluding VAT
actually increases (from SEK 5.60 to SEK 6.50), but this fact does not, in
PTS's view, constitute a price increase that is affected by the provisions of the
Postal Services Ordinance.
35
2.5
Compliance with Chapter 3, Section 2 of the Postal
Services Act
The regulatory work with a bearing on compliance with Chapter 3. Section 2 of
the Postal Services Act, which PTS presented under this heading in last year's
edition of “The Swedish Postal Services Market”, was postponed in the second
half of 2015. This was done partly to release resources to assist in the ongoing
revision of the Postal Services Act, and partly because any amendments to the
Postal Services Act might have a significant impact on the positions taken by
PTS in its work to draft provisions. PTS intends to resume this work as soon
as possible.
PTS's other supervisory activities in this area have during the year mainly
focused on the changed conditions for consolidators that PostNord
announced ahead of 2016, as reported in Section 1.2 The bpost ruling.
2.6
Review of PostNord's internal accounts
In accordance with Chapter 1, Section 2 and Chapter 3, Section 2 of the Postal
Services Act and with PostNord AB's licence conditions, PostNord's
accounting and calculations should be structured in order to enable supervision
of that the prices of the services included in the universal postal service are
reasonable, non-discriminatory and cost-oriented. PTS therefore on a yearly
basis requests and examines PostNord's internal accounts for each relevant
service.
The purpose of this annual review is to examine that the right costs are
allocated to the right services in the right way. This is to prevent crosssubsidisation between regulated and non-regulated services and between
services within the universal postal service. Another purpose is to follow the
development of volumes and profitability over time. The calculation data
reported also constitutes the basis for PTS's assessment of PostNord's
finances, and forms a basis for virtually all financial supervision.
PTS received the information requested within due time. As in previous years,
the former business areas of Mail & Communication and Logistics are reported
separately. In addition to PTS's already ongoing work to clarify the accounting
provisions of the Postal Services Act30, as PTS and PostNord have differing
views on cost allocation in the postal network, PTS has on the basis of its 2015
review no objections regarding the work out of PostNord's internal accounts
for each relevant service. The following is a brief report of other observations:
30
This is included in the ongoing regulatory work mentioned in Section 2.5.
36



Domestic letter services remain profitable
The result for PostNord's Swedish operations is burdened more by
other services. Continued and probably increasing drops in volume,
combined with hard pressure on the distribution organisation from
hitherto implemented efficiency improvements, might affect this
situation.
International mail items continue to have a strong negative impact on earnings31.
Losses deriving from international mail items are largely a problem
outside PostNord's control in that the tariff system, which is in part
controlled by UPU32 regulations, places Sweden at a great disadvantage
in the form of compensation levels that are lower than actual costs.
Negative result for the service category eBREV
The service has had declining results for a few years and shows a loss
for 2014. There may be reason to draw attention to this fact because
the service has a direct link to the mail-related services offered by
PostNord's subsidiary Strålfors in competition with other companies. 33
PostNord has considerably higher margins on cash-paid parcel services
primarily aimed at consumers, associations and small businesses, than it has on
pure business services. However, PTS can note that the prices for these cash
services have remained unchanged for a few years, which is probably a result of
increased competition also in this market segment.
See also “The Swedish Postal Services Market 2015”, PTS-ER 2015:3
The Universal Postal Union
33 Now an integrated part of PostNord's operations in the new business area of Communication Services,
see also Section 1.2 The bpost ruling.
31
32
37
3
Service and quality
3.1
Development of complaints
3.1.1
Complaints received by PTS
With respect to postal issues, by far the most common reason for the public to
refer to PTS is to make complaints about shortcomings regarding delivery;
either mail items not arriving for some reason or the receipt of someone else’s
letters. Other common complaints are disagreements with PostNord regarding
the location of letterboxes and how PTS's general advice on the distribution of
mail (PTSFS 2008:6) should be interpreted. If the authority finds there to be
reason, PostNord is contacted to investigate the root of the problems in the
case in question and what needs to be done to address them. Sometimes, the
complainant may also be advised to turn to PostNord's central council for
distribution issues for a review of the local organisation's decision.
In 2015, approximately 850 requests (around 650 the previous year) were
received in different types of mail-related matters, including complaints. In
PTS's assessment, the increase in complaints regarding delivery problems is
due to the various changes that PostNord has made to its letter conveyance
during the year. These have led to a lower quality of delivery, which appears to
be a problem that is not yet resolved. Only in the first three months of 2016,
PTS received about 450 complaints, which corresponds to approximately 53
per cent of the total number of complaints PTS received in the whole of 2015.
In 2015, PTS commenced several supervisory cases with reference to the
greater deficiencies in mail distribution quality and has had regular follow-up
meetings with PostNord in order to pursue a restoration of quality in the
postal service.
PTS also receives complaints from the public regarding postal operators other
than PostNord. Bring Citymail and Tidningsbärarna have been in cooperation
since November 2015, which means that some of Bring's mail is already
distributed in the morning. As a result of this new delivery routine, PTS has
received some complaints and comments from recipients regarding mail being
delivered earlier in the day. PTS has drawn Bring Citymail's attention to the
importance of informing mail recipients in good time about changes to their
distribution operations. The operator has notified PTS that it now sends an
information letter to the mail recipients concerned during the first few days of
distribution, which is then followed up with a reminder letter.
38
3.1.2
PostNord's reporting of complaints
Chapter 4, Section 10 of the Postal Services Act (2010:1045) on dealing with
complaints stipulates that those who are licensed to conduct postal operations
must have procedures to deal with the users' complaints. PostNord has
assigned the responsibility for this task to its Customer service.
Since PostNord is the largest player in the market, it is vital that the company
has an effective customer service that can handle all customer queries in a way
that inspires confidence among the public. Customer service was previously
divided into two separate units, one for Mail & Communication and one for
Logistics (parcels), but in conjunction with PostNord's reorganisation in 2014,
it was decided to merge these two units.
PostNord distinguishes between customer comments and complaints. The
latter refers to complaints about specific services included in PostNord's range
of products and for which the customer, under certain conditions, may
demand compensation if PostNord has not fulfilled its commitments under the
specific product and service conditions. The grievances reported in Appendix
9 refer specifically to complaints within the universal postal service and that are
reported according to the template given in the European CEN standard EN
14012.
Customer comments cover all forms of response from consumers. This can be
anything from inquiries, comments and praise to grievances that are not
classified as complaints.
PostNord registered about 103,000 customer comments during 2015 in respect
of letter and parcel distribution, which is an increase of about 35 per cent
compared to the previous year. The majority of comments, just over 68,000
(approx. 67 per cent), concern distribution-related complaints regarding letters
and parcels. This is a sharp increase of approximately 55 per cent compared
with the previous year. Around 2,000 customer comments were received in the
form of ideas and praise. As a result of other postal operators increasing their
volumes (and coverage) on the market, PostNord receives a number of
complaints which in fact relate to other postal operators.
PostNord's trend in complaints: 2011-2015
Below, PTS has compiled the trend in the number of complaints relating to
domestic and international letter services as well as domestic and international
postal parcels for the past five years (2011-2015).
39
Figure 7: Complaints, Domestic letters
The complaints pertaining to domestic letters peaked in 2011 and then
amounted to about 29,000. Subsequently, the number of complaints dropped
until 2014 and then increased again in 2015 to around 22,000. This is a
significant increase (around 13 per cent) compared with 2014. The number of
complaints in relation to the quantity of mail has, however, remained
unchanged during the period in question, amounting to approximately 0.001
per cent.
The complaints relate mainly to missing mail items, which represents between
approximately 58-66 per cent during this period, while a smaller percentage
relates to delayed mail items (approx. 6-7 per cent) and damaged mail items (also
about 6-7 per cent).
Figure 8: Complaints, International letters
The number of complaints pertaining to international letters has increased on
the previous year by about 21 per cent, this year amounting to around 8,000.
This is the highest figure in this five-year period. The number of complaints in
relation to the quantity of mail has seen a marginal increase in 2015 to 0.027
per cent, compared with the years 2013 and 2014 when the figure was 0.024
40
per cent34. As with domestic letters, the complaints primarily refer to missing
mail items, which represent about 78-89 per cent of the complaints.
Figure 9: Complaints, Domestic postal parcels
The number of complaints concerning domestic postal parcels has increased
during this five-year period, the most being between 2011-2013, when they
increased by approximately 34 per cent. In 2015, the number of complaints
amounted to about 30,000, which was an increase of approximately 6 per cent
on the year before. Despite complaints having increased over the entire fiveyear period, the number of complaints in relation to the volumes has declined
gradually during this period; from approximately 0.2 per cent in 2011 to just
under 0.1 per cent in 2015. This may thus be considered an improvement in
quality when it comes to domestic postal parcels.
Unlike the domestic and international letter, there is a smaller percentage of
parcel service complaints relating to missing mail items (approx. 43-62 per cent),
while a larger percentage relates to damaged mail items (8-17 per cent).
In 2011, the share of complaints amounted to approximately 0.018 per cent, and in 2012 the figure was
approximately 0.019 per cent.
34
41
Figure 10: Complaints, International postal parcels
The number of complaints relating to international postal parcels fell sharply
between the years 2012 and 2014, but in the past year these have increased by
around 9 per cent, amounting to about 13,500 mail items. At the same time,
the number of missing mail items has decreased, which is attributable to
PostNord's improved conditions for searching for traceable items in general.
In contrast, the number of complaints in relation to the total volumes of
international postal parcels has decreased marginally compared with 2014,
from about 0.13 to 0.12 per cent.
The complaints here relate mainly to missing mail items (which have decreased
from approximately 75 per cent in 2011 to approximately 51 per cent in 2015),
while a smaller percentage relates to damaged mail items (approx. 3-12 per
cent) and delayed mail items (approx. 4-8 per cent).
3.2
Complaints - Bring Citymail
The complaints that Bring Citymail has reported to PTS for 2015 regarding
domestic letters35 amounted to 8,256, which can compared the previous year's
6,605. In comparison with 2014, this is an increase of about 25 per cent. The
company distinguishes between complaint cases and information cases. In the first
case it involves, among other things, wrongly delivered mail, while in the
second case it can involve questions about addresses and entry code changes,
etc.
Complaints primarily increased in the second half of the year and are partly
linked to the operator's change to a new production model that separates
sorting and distribution. However, for the units that underwent this change in
2015, the operator is now seeing a declining trend in the number of
complaints. Another significant factor in this context is that Bring Citymail has
35
Bring Citymail does not handle parcels
42
begun to handle and distribute letters overnight, which has also generated an
initial increase in the number of complaints.
3.3
Undeliverable letters
PTS concludes that there is a skewed relationship between the number of
undeliverable letters and the total amount of letters. The undeliverable letters
are not decreasing in number at the same pace as the total number of letters
sent in the country is diminishing.
From Figure 11 we understand that while PostNord's letter volumes have
diminished since the start of the 21st century from 3.26 billion to 1.93 billion,
the number of letters arriving at PTS has increased from about 270,000 to
approximately 375,000 per year.
Figure 11: Undeliverable letters and the total amount of letters
At the start of the 21st century, one in every 12,000 letters was classed as
undeliverable, while the corresponding rate today is one in 5,200 letters. There
may be several reasons as to why the undeliverable letters are increasing in
number. One explanation may be that the general public no longer possesses
the same knowledge as before regarding the importance of writing the correct
recipient address and also stating who the sender is on the envelope. A second
explanation may be that many businesses and associations do not have up-todate address registries for yearly dispatches. A third explanation may be that
increasing numbers of letters are directed to PTS without further investigation
of the address by the operator. Finally it may be the case of a lack of
knowledge on the part of the operator's employees concerning what an
undeliverable letter is and how it should be handled. In the case of
undeliverable registered letters (i.e. letters for which the sender has paid an extra
43
fee to ensure delivery), the agents' lack of knowledge may be a reason for no
sender or incomplete information being indicated on the letters.
To increase public awareness of how to send a letter, the importance of stating
sender and using the correct postage, PTS launched an information campaign
in autumn 2015. It targets a broad public and will run between December 2015
and May 2016. PTS hopes that more users will become aware of how to
address a letter properly in order for it to reach its recipient or, if it does not
arrive, how to report it as missing via the PTS website.
3.4
Challenges of access to postal services in rural and
sparsely populated areas
Postal operations must continually adapt to changing conditions. As regards
distribution in rural areas, PostNord stated three main reasons in 2013 why
changes in rural delivery might need to be made, changes that sometimes entail
an inferior postal service for residents in rural areas.
1. To be able to fulfil its operations in rural areas, PostNord in some
cases makes use of local contractors. The cause behind the most direct
changes to conditions for the rural postal service is when these
contractors discontinue or alter their operations. This also forces
PostNord to review and change its operations.
2. For many decades, rural and sparsely populated areas have been
undergoing demographic change, almost always entailing a lower
number of households along PostNord's rural postal service routes.
Ultimately, the population base might become so small that a rational
rural postal service will be difficult to maintain.
3. Like most postal operators elsewhere in the world, PostNord is
struggling with declining letter volumes which are likely to continue
declining for the foreseeable future. Declining volumes also mean
declining revenues. This forces PostNord to review and rationalise its
operations, which could lead to changes in the rural postal service. 36
This development means continuing challenges for mail distribution in rural
and sparsely populated areas. At the same time, the parcel market is changing
through bigger parcel volumes and greater competition. The increase in parcel
volumes is largely due to an increase in e-commerce, which plays a particularly
important role in sparsely populated areas where other commercial offerings
may be limited.
See the PTS report Undersökning av avstånd till postlådor utanför tätort [Survey of distances to
mailboxes outside the urban area], PTS-ER 2013:13
36
44
Increasing parcel volumes, the growing importance of e-commerce and the
establishment of parcel distributors that compete with PostNord have also
contributed to parcel distribution issues attracting greater interest from
regional and local actors, including within the framework of the regional
service programmes.37
In recent years, PTS has monitored mail distribution developments more
closely, in part through regular follow-up meetings with PostNord.38 Although
the actual changes have been limited during these years, PTS is able to note
that the challenges regarding the future of mail distribution especially in
sparsely populated areas are in any case not diminishing.
Meeting these challenges requires, among other things, greater collaboration
between public actors at the municipal, regional and national levels. This
expanded cooperation also needs to embrace non-profit and commercial actors
at the local level as well as organisations and commercial actors at the national
level.
Follow-up by the Swedish Agency for Economic and Regional Growth
(Tillväxtverket) of the work with the regional service programmes in 2014
finds mail and parcels to be a priority area in the counties' service programmes.
However, Tillväxtverket notes that no initiatives in this area had been
implemented in 2014.39
PTS's work in the area of basic payment services has provided experience of
collaboration with regional actors in the service area. This experience has
demonstrated, among other things, the importance of effective multi-level
collaboration. The possibility of collaboration is central when conditions for
regional actors change, e.g. when implementing initiatives in a new area, and
where explicit regional mandates need to be developed together with skills,
approaches and methods. Another decisive experience from PTS's work with
basic payment services is that individual service types, such as basic payment
Read more about regional service programmes on the website of the Swedish Agency for Economic
and Regional Growth, http://www.tillvaxtverket.se.
PTS has also conducted interviews with a sample of RSP managers at the county level, see the report
Regionala serviceprogram och postservice – resultat från intervjuundersökning.
38 This dialogue with PostNord has included follow-up of PostNord's Commitment of September 2013.
See Appendix 2 of “The Swedish Postal Services Market 2014”, PTS-ER-2014:2.
39 See Tillväxtverket's interim report, Regionala serviceprogram delrapport 2014, rapport 0187. As far as
PTS is aware, initiatives in 2015 were also very limited in the area of mail and parcels. In February 2016,
at the invitation of the County Administrative Board of Dalarna, PTS visited Gagnef municipality with
reference to a local initiative concerning postal services. This may lead to initiatives in 2016.
37
45
services or postal services, should be treated in a context of joint regional
service.40
At present, PTS has limited collaboration with central and regional actors on
postal issues. However, PTS has recently commenced discussions with
PostNord, Tillväxtverket, the Swedish Agency for Growth Policy Analysis
(Tillväxtanalys) and individual county administrative boards on the need and
potential for developing such operations.41
To promote broader and deeper collaboration on postal issues, including both
letter and parcel services, there is a need for clarifying and developing the roles,
above all, of the various public actors at the municipal, regional and national
levels.
There is also a need for building up knowledge and skills. This includes the
design of effective forms of consultation and collaboration. There is also a
need for developing knowledge of how postal services can be managed in a
context of regional service and, where necessary, coordinated with initiatives of
regional growth policy and rural development programmes.
Against this background, there is reason to consider more closely how central
government agencies can best collaborate to achieve the desired effects. The
agencies that PTS in the first instance has identified as relevant for such work
are – besides PTS – Tillväxtverket, Tillväxtanalys and the county administrative
boards.
3.5
The population's need and use of postal services
Within the framework of the PTS regulatory activities, the authority carries out
periodic user surveys. The purpose of the surveys is to, among other things,
describe the Swedish population's use of postal services and their views on the
quality of PostNord's service in the company's capacity as designated provider
of the universal service.
The latest survey to map the population's mail habits was conducted in early
201642. The survey shows that 75 per cent of the population are satisfied with
their mail delivery, compared with the 2011 survey when 84 per cent were
satisfied. Although a large proportion of people are still satisfied with their mail
delivery today, we see that there has been a deterioration over the latest fiveRead more about PTS's work with basic payment services in documents including PTS's report back to
the Ministry of Enterprise and Innovation in February 2016, Ref. no. 16-1382.
41 See, for example, the PTS report, Strategi för PTS medverkan i regionalt tillväxtarbete 2014-2020, PTSER-2015:14.
42 PTS-ER-2016:6
40
46
year period. The most common reasons for dissatisfaction are receiving mail
that is not even one's own and mail not arriving at the set time. Less than half
(about 44 per cent) of those interviewed report that they at some time during
the past three months had received someone else's mail.
As regards e-commerce, the survey shows that just over four in ten (44 per
cent) had the opportunity to choose distributor when ordering online. This
means that consumers therefore have the opportunity to choose actors other
than PostNord alone. PTS believes that it is important for consumers to
continue to have greater choice since this benefits competition and contributes
to continued growth in e-commerce and to the creation of user-friendly
services.
In 2015, PTS commissioned a survey of how users perceive their current and
future needs for postal services.43 The survey covered private individuals across
the country, as well as smaller companies in sparsely populated areas. Together
with other information, the results will form a basis for PTS's analysis of how
the future universal postal service should be designed.
The survey shows that both residential customers and companies still consider
postal services to be important to everyday life and business operations. But
the results also show that needs and conditions change, thus giving rise to a
need to review and possibly change the content of the universal postal service.
One example that may be mentioned is that users of postal services, both
residential customers and companies, often prioritise features of postal services
other than overnight delivery, such as stable prices and proximity to the place
where mail items are received (such as an agent or mailbox). The ongoing
revision of the Postal Services Act has also recently submitted a proposal to
amend the regulation in this area.44
Delivery on five working days a week is still important to many users of postal
services. But the survey on future needs shows that for most companies and
private individuals a functioning place for receiving mail items is more
important than delivery on five working days a week. This is also confirmed by
the 2016 survey of the population's mail habits. According to this survey, 41
per cent respond that they are dependent on having mail delivered five days a
week, a decrease of four percentage points compared with the 2014 survey.
43
44
Användares behov av posttjänster [The postal service needs of users], PTS-ER-2016:7.
“Som ett brev på posten”, SOU 2016:27.
47
The survey also indicates differences in needs and priorities between people of
different ages. For example, there are differences between age groups in terms
of how many letters they send, their need for delivery on five working days per
week and of the time of day they think letters should be delivered. Older
people also prioritise the close proximity of agents to a higher degree than
other groups and are less interested in future forms of distribution, such as
automated parcel stations and secure digital mailboxes.
Differences between age groups, like differences between other user groups,
present a particular challenge with regard to creating conditions for future
postal services that correspond to users' needs. While there is reason to
promote the development of new distribution solutions, access to postal
services needs to be secured for older people and other groups that might still
need to send and receive physical items. For this reason, advanced work to
facilitate digital and other postal/distribution services that are available to all
might be an important factor in creating conditions for postal services that
correspond to the needs of a digitalised society.
3.6
Residential customers without five day deliveries
One of the fundamental requirements of the universal service is that PostNord
shall be able to deliver mail to recipients on every working day regardless of
where in the country they live. However, an exception may be made from five
day deliveries owing to circumstances or geographical conditions approved by
the licensing authority. The number of mail recipients without five day
deliveries was approximately 97045 at the end of 2015, which is on a par with
201446. There are around 220 residential customers that are without five day
deliveries for only some parts of the year.
The political objective for the number of households without five day
deliveries not to increase is set forth in the Government Bill 1997/98:127 (p.
23). At that time, there were 1,600 residential customers that did not have five
day deliveries.
It may be the case that voluntary agreements about forgoing daily delivery (in exchange for the mail
recipients receiving mail delivered closer to home) are not included among the approximately 970
recipients that do not have five day deliveries. The is due to data being gathered from PostNord's various
regions, and different regions having assessed differently whether or not households who voluntarily
renounced five day delivery were to be included in the report or not.
46 PTS-ER-2015:3
45
48
3.7
Communal letterboxes
The trade association Forum for Communal Letterboxes (FFF) noted a slight
increase during 2015 in the proportion of households in multi dwelling units
receiving mail distributed to communal letterboxes. Nearly 990,000 households
in multi dwelling units, approximately 39 per cent of all such households, today
receive their mail in communal letterboxes, compared with 37 per cent at the
same time in 2014.
The conversion rate from front-door letterboxes to communal letterboxes has
decreased slightly in recent years, which may be due to fewer people working
to promote the transition to communal letterboxes.
Communal letterboxes have in practice become the standard for new
construction and major renovations. This is positive, but it cannot be
considered sufficient to bring about a more general transition to communal
letterboxes within a reasonable period.
49
4
Looking ahead
4.1
International perspective
The focal point of international work within the postal services sector is on EU
issues, while other work relates primarily to activities of the Universal Postal
Union (UPU). Therefore, for the sake of simplicity, the following presentation
of international work is given under the headings of EU-related issues and
UPU-related issues.
4.1.1
EU-related issues
4.1.1.1 The universal postal service
There may be reason to now ask what users within the postal services sector
really need in terms of the range and quality of services. The provisions of the
EC Postal Directive (97/67/EC) on the scope and design of the universal
postal service are essentially based on conditions of the early 1990s in EU
Member States. Since then, the number of Member States has doubled, today
exhibiting a significantly broader spectrum than when the Postal Directive was
designed with respect to factors such as available infrastructure,
communication patterns and structure of industries. At that time, there was
also a steady increase in letter volumes which continued until the turn of the
millennium. Up until the summer of 2015, the European Commission pursued
the issue of revising the Directive. In connection with top priority being given
to initiatives to create a Digital Single Market (DSM), this ambition has had to
take a step back, and we now see that a revised Directive can at best become
reality only after 2020.
Declining letter post volumes are also a general trend in the EU countries,
which is a clear signal that the users' needs have changed and that these
changed needs might have to be met within the framework of the universal
postal service. The assessment of PTS is that the real needs of users are
increasingly deviating from what is ensured by the current Postal Directive.
The declining letter volumes also raise the question of how the universal
service is to be maintained in the long term.
PTS is working actively on EU-related issues within the organisation of
regulators, ERGP47, which is an advisory body to the European Commission.
Together with the Italian regulator, AGCOM, PTS chairs the working group
47
The European Regulators Group for Postal Services
50
that pursues ERGP's work focusing on the future universal postal service. The
work so far done within ERGP in this area has revealed that a key future issue
is greater flexibility to allow adaptations to national conditions and to changes
over time. Many of the views expressed, for example at a workshop held in
connection with ERGPs plenary meeting in November 2014, concern the very
point that regulation of the postal services market must move away from the
notion that “one size fits all and always will”. It may be noted that
amendments have been implemented or considered in countries such as New
Zealand, Australia, Canada and the United States in light of changing
communication patterns and the ambition to create a postal service that is
sustainable in the long term. Italy too is currently adapting to changed
conditions by permitting an increase to the number of exemptions from the
basic requirement of delivery five days a week.
The current efforts of the working group are focused on analysing users' needs
and identifying common basic needs that might need to be met in the context
of a “European” universal postal service. The working group is also to analyse
whether the current scope of the universal postal service corresponds to these
common needs or whether its scope, on the contrary, exceeds this basic level
and is also to assess whether the current Directive provides sufficient room for
adaptations to national conditions.
This work is forward-looking, and both PTS and our Italian counterpart see
the group's efforts as a way to pursue a revision of the Directive and to
provide documentation for further discussion prior to such a revision.
4.1.1.2. Application of Article 12 of the Postal Directive
The judgment of the European Court of Justice in “the bpost case” (C340/13) as discussed above in Section 1.2 also attracts the interest of the
European Commission. It is likely that this interest is based not least on the
Commission's assessment that the interpretation of the Directive's provisions
that the judgment might express is not consistent with the overall principle that
pricing and other conditions are to be applied in a non-discriminatory manner.
In light of the judgment in question, the European Commission requested
ERGP's analysis of how Article 12 is applied in Member States with regard to
special prices and conditions and to the impact that the judgment might have
in Member States. This analysis showed that 19 of 24 countries apply
operational discounts on the total volume deposited by each consolidator. In
terms of the volume-related discounts, which ranged from 0.3 to 60 per cent,
19 of 24 regulators stated that consolidators and the equivalent receive
51
discounts calculated on the basis of total volume regardless of the volumes
specific to each sender.
Most regulators stated that they had not received any indications that the
universal service provider intends to introduce a discount model based on the
volumes specific to each sender.
The majority of regulators (14 of 24) assessed that the present ruling will not
affect the discount principles applied by the universal service provider. The
other regulators believed that the ruling could have an impact of this kind, and
some of them pointed out that this, in turn, could result in consolidators and
the equivalent being driven out of the market. The question then is whether
there is reason to take measures and, if so, which focus these should have?
Five of the 24 countries make the assessment that Article 12 should be revised,
while five regulators believe that no action is called for. Most advocate a
middle way whereby the design and application of the discount schemes are
more closely monitored.
In 2016, ERGP will monitor developments in this area and highlight the
regulatory measures that can be taken to meet the changes in the dominant
actors' pricing strategies and the market impact that might result from the
bpost ruling. The intention is to also highlight the extent to which it might be
justified for a dominant market actor to apply prices and conditions in a way
that directly impacts competing companies and the conditions under which
such behaviour is nevertheless to be considered discriminatory.
4.1.2
UPU-related issues
The Universal Postal Union (UPU) has a key function to secure the global
cross-border conveyance of both letters and parcels.
Every four years, it holds the Universal Postal Union Congress, which is the
organisation's highest decision-making body. 2016 is a congress year, and
Istanbul will host the UPU Congress in September/October.
Among the issues regularly raised at the congress are the compensation
receiving countries obtain from sender countries for delivering mail items to
their recipients. Here, significant asymmetries exist in that less developed
countries pay significantly less to the receiving country compared with what
other countries have to pay. This in turn creates incentives to utilise re-mailing
in order to take advantage of these asymmetries in a way that has not been
intended.
52
One significant future issue that will be discussed at the congress is how the
UPU will be henceforth organised.
At its plenary meeting in February this year, the UPU Council of
Administration (CA) adopted an organisational proposal, which is to be
considered a compromise to be passed on to the congress. The proposal is an
attempt to reconcile a proposal previously drafted by an ad hoc group within
the UPU and an alternative proposal drafted by the UPU International Bureau
(IB).
To some extent, the proposal contains changes for the better, such as shorter
sessions and the introduction of a mid-term congress during the congress
cycle. The same is true of a proposal to undertake more work in task forces
rather than in more permanent working groups. One concern is the parts of
the proposal regarding the merger of the Council of Administration (CA) and
the Postal Operations Council (POC). The proposal would establish a Postal
Business Commission and a Governance and Policy Commission under a joint
body, the UPU Council. An overall question that may be raised in this context
is whether the merger will really lead to a clearer separation of operational and
regulatory issues.
However, the most serious objection concerns the fact that several key issues
of decisive importance to being able to take a position on the proposal will be
handled and decided on at a later stage. These issues include the rotation
principle, that is, the proportion of countries to be elected on each occasion,
how the electoral procedure and the geographical distribution of seats should
be made after 2020. It should be emphasised that, at least on the part of IB,
there is an ambition to reduce the number of seats in the merged council. IB's
previous proposal was for the number of seats to be 48, but later discussions
have mentioned 60 seats, as compared with the present total of 81 seats in
POC and CA. There is a manifest risk of poorer representation for Western
Europe and thus of reduced influence for a group of countries that account for
just over 40 per cent of the UPU's budget.
An appropriate way forward would be to seek support for a two-stage change
whereby the number of seats remains unchanged until further notice, as do the
principles for geographical representation and rotation. An evaluation can then
be made of the other changes implemented, which in turn could form the basis
for assessing whether further changes should be carried out, e.g. regarding the
number of seats, rotation and geographical distribution of seats. Proposals to
this effect were presented at CA's latest plenary meeting but did not gain
sufficient support. More similar initiatives can be expected ahead of the
53
congress. As far as Sweden is concerned, PTS finds reason to have a positive
general attitude to such alternative proposals.
4.2
The DSM parcel initiative
The parcel market can be viewed from different perspectives depending on
which interests are placed in the foreground. In light of the European
Commission's priorities, what is of greatest relevance at the moment is the
importance of parcel deliveries to the development of e-commerce.
The Commission's Green Paper from November 2012, “An integrated parcel
delivery market for the growth of e-commerce in the EU”, stated the most
important problems that must be resolved. Particular emphasis was placed on
the cross-border delivery of parcels, the needs of small and medium enterprises
as well as less developed and less accessible regions. The Green Paper argued
that e-commerce is to be available to all citizens and to all businesses regardless
of size and location. By taking its starting point in e-commerce, the document
not only captures the specific conditions applicable to this segment, but also
that which is relevant to the parcel market as a whole, such as prices,
transparency, delivery solutions and availability.
The European Commission subsequently drafted “A roadmap for completing
the single market for parcel delivery”, dated 16/12/2013, which sets out three
main goals:
- Increased transparency and information for all actors along the e-commerce
value chain
- Improved availability, quality and affordability of delivery solutions
- Enhanced complaint handling and redress mechanisms for consumers
According to the Commission, the main problems identified are:
• That consumers often do not know what delivery options may be available to
them and do not have information on when and how their parcel will be
delivered and how they can return it if they wish. Complaints concern long
delivery times and lack of information about the delivery process. Consumers
frequently consider prices for cross-border delivery, and delivery to rural or
remote areas, as excessive. Consumers also complain about products being
damaged or not delivered at all, and about the delivery of wrong products.
They are also unaware of available complaints and redress mechanisms.
54
• That e-retailers – in particular smaller ones – do not have sufficient
information on the delivery services potentially available to them. They also
have a limited choice and availability of delivery solutions of the quality and
affordability required.
Far from all the problems the Commission believes it has identified can be
resolved through measures by the authority appointed to exercise supervision
over the actors on the postal services market. As regards the consumers'
overview of different delivery options, the responsibility for providing
information naturally rests in large part with the e-commerce companies. The
Commission's roadmap itself refers to the fact that the provision of key
minimum information appears to be in their own interest if they wish to gain
the trust of their potential customers. Also with regard to complaints and
redress mechanisms, this is not least an issue for the e-commerce companies,
particularly where the wrong products are delivered or products are not
delivered at all. There is, however, a regulatory interest when complaints
involve the delivery itself, in the first instance relating to a missing, delayed or
damaged mail item.
In brief, the European Commission particularly indicates the following as tasks
for Member States and regulatory authorities in this context:
- Enhanced provision of information on parcel delivery services and parcel
markets at national level.
- Build on ongoing ERGP work to define statistical framework for collection
of relevant market data on domestic and cross-border parcel delivery from all
postal service providers.
- Set clear quality of service standards for the Universal Service Obligation.
- Annually publish the results of the statistical data and of the measurement of
the quality of service standards.
The European Commission is currently drafting an EU Regulation that will
give regulators an explicit mandate to collect statistical data from parcel
distribution companies of a certain minimum size. According to its plans, the
Commission will have completed work on this Regulation on 18 May 2016,
and it will then probably be able to enter into force in mid-2017. The main
purpose of this data collection is to enable the monitoring of developments in
cross-border delivery, competitive conditions and market actor behaviour and
of market trends with respect to factors such as prices. Even if the Regulation
55
takes immediate effect in Member States, we must in Sweden develop some
type of rules and procedures that make it possible to identify the companies
involved and to ensure that the requested data can be collected.
4.3
What will happen over the next year?
As demonstrated in the present report, 2015 has been a very eventful year as
regards developments on the Swedish postal services market. There is also
much to suggest that 2016 will be an equally exciting year. Among other things,
this involves what will happen regarding:
-
Application of the new VAT rules for postal services – how will these
affect developments on the market?
The judicial examination of PostNord's intended different treatment of
customers that according to its own definition are regarded
“consolidators”.
The proposals of the Postal Services Act revision in its two reports and
the impact they will have on statutory regulation of the postal services
market.
Various measures being taken to rectify the quality problems that
appear to be the effect of various changes being made to streamline the
forms of letter conveyance.
The Universal Postal Union Congress's handling of proposals mainly
concerning changes to UPU's organisational structure and the question
of how to bring about a fairer system of terminal dues.
We hope to report on these and other issues in next year's edition of “The
Swedish Postal Services Market”.
56
Appendix 1: Bring Citymail's area of
coverage
48
48
Dark green areas relate to new areas covered in 2016 through cooperation with MTD
58
Appendix 2: MTD's area of coverage
49
The following companies are part of the letter cooperation: MTD KB; Norrbottens Media Distribution
AB; NTM Distribution AB; Prolog KB; Tidningsbärarna KB; UNT distribution AB; VTD/Västsvensk
Tidningsdistribution KB
49
59
Appendix 3: SDR's area of coverage
60
Appendix 4: Other local postal operators'
areas of coverage
50
The data includes the following companies: B.J. Distribution AB; Boden Mail HB; Kiruna Mail
AB; Luleå Mail HB; Lysekils Lokalpost; Magnus Direktreklam; Mail Company Sweden AB; Mariestads
Brev & Paketservice AB; Neovici AB; Novydux HB; Post & Paketservice i Skaraborg; Postiljohan
Lokalpost i Karlstad AB; Postmästaren AB; Västerviks Lokalpost HB;
Have not reported to PTS/do not have their own distribution operations: Georgsson Mail AB;
Herenco AB; Mailworld office AB; Mediakonsult i Göteborg AB; Portomus AB; Rabattguiden Sverige
AB
50
61
Appendix 5: PostNord's agent network
62
Appendix 6: DHL's agent network
63
Appendix 7: DB Schenker's agent network
64
Appendix 8: Bussgods' agent network
65
Appendix 9 PostNord's report of the
number of complaints, 2015
Number of complaints Domestic
letters
Number of complaints
where compensation
has been paid out
Number of
complaints
All categories
21,567
733
Missing mail items
12,535
263
Delayed mail items
1,313
189
Damaged mail items
1,553
47
Number of complaints International
letters
where compensation
has been paid out
Number of
complaints
All categories
9,202
1,044
Missing mail items
8,160
832
Delayed mail items
401
98
Damaged mail items
259
53
Processing time Domestic letters
All complaints
Number
processed within
30 days
Average processing
time
% processed within 30
days
All categories
8
95%
20,489
Missing mail items
8
94%
11,783
Delayed mail items
9
98%
1,287
10
93%
1,444
Damaged mail items
66
Processing time International letters
All complaints
Number
processed within
40 days
Average processing
time
% processed within 40
days
All categories
30
65%
5,981
Missing mail items
30
55%
4,488
Delayed mail items
20
75%
301
Damaged mail items
30
67%
174
Domestic postal parcels
Number of
complaints
Number of
complaints where
compensation has
been paid out
All categories
29,752
4,375
Missing mail items
18,451
2,496
Delayed mail items
1,280
592
Damaged mail items
3,978
244
International postal parcels
Number of
complaints
Number of
complaints where
compensation has
been paid out
13,524
1,126
Missing mail items
6,878
668
Delayed mail items
661
276
Damaged mail items
972
108
All categories
67
Processing time Domestic postal
parcels
Complaints with
compensation
All complaints
% processed
within 30
days
Average
processing time
Average
processing
time
% processed
within 30
days
All categories
21
82%
28
82%
Missing mail items
24
75%
24
75%
Delayed mail items
12
90%
17
90%
Damaged mail items
11
30%
42
30%
Processing time International postal
parcels
Complaints with
compensation
All complaints
% processed
within 40
days
Average
processing time
Average
processing
time
% processed
within 40
days
All categories
33
45%
34
45%
Missing mail items
34
21%
46
21%
Delayed mail items
27
75%
25
75%
Damaged mail items
30
40%
48
40%
68
Report on complaints, total for 2015
Total compilation
where compensation
has been paid out
Number of
complaints
All categories
74,045
7,278
Missing mail items
46,024
4,259
Delayed mail items
3,655
1,155
Damaged mail items
6,764
452
Number of complaints in relation to quantity of mail
Total number of mail items
Domestic Letters
1,943.6 million
% of total number
with complaints
% of total number
where
compensation
has been paid out
0.001%
0.000%
0.027%
0.003%
33.7 million
International Letters
Domestic Parcels
31.1 million
0.096%
0.014%
International Parcels
11.0 million
0.123%
0.010%
69

The Swedish Postal Services Market 2016

Transcription

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