After 15 years at the top of the group, Frank Appel is on his last day at Deutsche Post. In parting, he points to the importance of an upcoming reform.
Deutsche Post wants to continue to deliver letters and parcels everywhere in Germany in the future, but calls for the appropriate framework conditions.
The outgoing CEO Frank Appel said at the Post AGM in Bonn that the company wanted to continue to be a universal service provider in the future. This includes the nationwide delivery obligation – i.e. also in rural areas, where delivery is relatively expensive. However, Appel made it clear that an exit would be possible in the event of adverse conditions. “If the legislature forces us to take other measures, then we have to look at that and see what happens.”
The 61-year-old manager, whose term of office ended, was referring to the reform of the postal law, which has not been significantly amended since 1999. So it comes from a time when letters were much more important than they are today and the internet only played a minor role. Since then, the post office has had to comply with obligations such as the requirement that 80 percent of the letters posted must be with the recipient the next working day. In addition, there must be a post office in every larger village, which is usually a retailer with a post office counter. In addition, mailboxes must be easily accessible.
“Fundamental modernization of the postal legal framework”
The Federal Ministry of Economics is currently working on a draft law that is to be presented by the summer. At the beginning of the year, the ministry presented a key issues paper that announced a “fundamental modernization of the postal legal framework”. Overall, the announcement was still quite vague.
Appel called the content of the paper “mixed”. “It’s a bit of squaring the circle: you want universal service to continue. You don’t want prices to go up. You want the best working conditions and there should also be competition – and that in a segment where profits are shrinking.” In particular, the planned “further steps” to strengthen the Post’s competition in the mail market, where the Bonn company has a market share of 85 percent, caused dissatisfaction in the post office. In addition, the Post points out that postage in Germany is relatively cheap compared to other EU countries.
Postage prices would change significantly
With his statement on universal service, Appel addresses a sensitive topic. Because it is clear that no other company would be ready to deliver letters nationwide. If the post were to get out, the Federal Network Agency could oblige them to continue their delivery. In all likelihood, however, the prices for postal mail would then change significantly.
Long-standing group leader Appel emphasized that the exit from the universal service was “clearly not” the intention of the group. His reference to the previously only theoretical possibility of opting out is to be understood as a pointer to politicians not to put Swiss Post in a worse position than before in the forthcoming reform.
At the Annual General Meeting, shareholder representatives also emphasized the importance of the forthcoming reform. “The cost situation in the letter and parcel sector should lead to more flexible delivery in the Postal Act,” said Marc Tüngler from the German Protection Association for Securities Ownership (DSW).
He was referring to the idea of lowering the 80 percent quota and allowing two-class mailing – then most letters would take longer to reach the recipient and some more expensive letters would arrive faster. “The customer can choose whether he would like a letter to be delivered to its destination quickly or less quickly,” said Tüngler. That makes sense if the longer delivery time is cheaper than what is offered today.
Apple in the future at Telekom
Appel, who in future wants to concentrate on his role as head of the Telekom supervisory board, developed the Bundespost, which was privatized in the 1990s, into a major global corporation that now only generates a sixth of its operating profit in its core business – i.e. domestic letter and parcel shipping. The earnings pearls are global express services and freight business.
Appel’s successor will be 47-year-old Tobias Meyer, who, like his predecessor, used to work for the management consultancy McKinsey. The 47-year-old has been on the Post board of directors since 2019 and is now moving to the top. He recently announced that he intends to stick to the course of his predecessor.
With around 600,000 employees worldwide, a good third of them in Germany, Swiss Post can look back on years of strong growth. This year, however, profits are expected to fall due to the weakening economy.