Sending a letter in Germany used to be such a simple thing. You put your letter in an envelope, slapped on a stamp, and popped it in the familiar yellow Deutsche Post mailbox. End of story.
But not for much longer. Deutsche Post is about to lose its monopoly on the postal service. And after that, customers will be able to choose from new green, red and blue postboxes on the street as well as old yellow.
As part of a European Union move to introduce greater competition in letter delivery services, Germany on Jan. 1, 2008 will abolish Deutsche Post’s exclusive right to deliver letters under 50 grams — the last monopoly left for what used to be the only game in town.
Putting their Stamp on the Business
Firms are lining up to get a piece of the action — and it is considerable. Around 72 million letters are posted each working day in Germany — almost one for each member of the population — and the domestic letter delivery market is worth a total of €23 billion ($31.4 billion) a year, according to the German Association for Post, Information Technology and Telecommunication (DVPT). Delivery of letters under 50 grams — the segment affected by the end of Deutsche Post’s monopoly next year — accounts for just over €10 billion of that total.
Deutsche Post’s competitors have been multiplying — and growing in strength — over the last few years as the postal services market has become incrementally liberalized. The former monopolist currently has a staggering 750 competitors for letter delivery, who have about a 10 percent share of the market for letters under 50 grams. At the moment they can only deliver this class of letters under strict conditions — for example, they must offer extra services, such as collecting mail directly from the sender.
Most of the competing firms are small regional operators. In terms of the big boys, analysts expect that only one or two companies will be able to succeed in competing with Deutsche Post on the national level. The contenders are Luxembourg-based Pin Group, whose green-clad employees are already a familiar sight in Berlin, and TNT Post, a joint venture between the former Dutch monopolist TNT Post BV and the German Hermes Logistics Group.
Both groups are currently building up their postal networks in Germany, buying up regional operators and integrating them under their brands to ensure blanket coverage.
And Deutsche Post is taking them seriously. The firm has warned analysts that it could lose up to 20 percent of its market share by 2009 or later. To cover lost revenues in the future, it is expanding into other European markets and offering value-added products such as direct marketing services.
The company is also slashing costs. And in an industry where personnel costs make up 60 percent of total expenditures, that can easily translate into job losses — which is why tens of thousands of Deutsche Post employees took to the streets in Berlin in May to call for the company’s monopoly to be retained if other EU states did not open their markets.
EL ONLINE that the firm is hoping to avoid making any job cuts. But if the company can’t make up its lost market share elsewhere, then heads will have to roll. And 20 percent lost market share means 20 percent fewer staff — in other words, 30,000 jobs from Deutsche Post’s 150,000 staff in Germany are potentially at risk.
Hate Mail
There is little love lost between the former monopolist and the new competitors. For Deutsche Post, the newcomers are money-grabbing exploiters, while the new kids in town see Deutsche Post as a lumbering dinosaur with high prices and outdated bureaucracy.
All the companies say that they just want a level playing field — but they differ about what that means. In the Deutsche Post corner, Klasen complains about competitors engaging in “wage dumping.” “Many of our competitors pay very low wages of €5-€6 per hour,” he says, pointing out that an employee starting out at Deutsche Post makes €10.40 an hour. Similarly, German services union Ver.di recently accused TNT Post of using “
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