The reform of the outdated postal law has not yet been completed, but it is already clear that consumers have to adapt to changes.
Starting next year, sending letters in Germany will take longer than before. The responsible board member of the DHL postal group, Nikola Hagleitner, said on Wednesday in Bonn that new government rules are expected from January 2025. These rules are intended to ease the time pressure when sending letters. However, they will not immediately switch to a “maximum term extension”, but will do so gradually. Current operating procedures would be changed accordingly. “We want to extend the flexibility over the next few years.”
Outdated rules for the carriage of letters
So far, Deutsche Post, as the globally operating group DHL calls itself in its domestic core business, is obliged to deliver at least 80 percent of the letters posted today on the next working day, including Saturday. 95 percent must reach the recipient the next working day. This rule dates back to the 90s, when the Internet only played a minor role. Meanwhile, the demand for letters has fallen rapidly as people rely on digital communication, whether emails or chats.
Politicians are currently working on reforming the postal law, which has largely remained unchanged since 1998. The amendment is not expected to be completed until spring. However, there is already a broad political consensus to weaken the letter deadlines in view of the changed demand. In the future, 95 percent of the letters posted today should not arrive until three working days later.
However, the new transit time specifications would not apply when the law comes into force, rather they are linked to the usual postage procedure of the Federal Network Agency, which is carried out every three years – and that takes effect in January 2025. From this point on, the post office will most likely be able to charge higher postage and follow the reduced running time specifications. So it will be more expensive to send a letter and it will take longer on average for the letter to reach the mailbox.
If it is important to you that a letter arrives as quickly as possible, you can send a so-called priority letter. It already exists, but it has a niche existence and costs a surcharge of 1.10 euros. It is still unclear what this type of shipment will cost in the future.
Board member Hagleitner now made it clear that they did not want to rush into implementing the new requirements. “We still have a lot of operating procedures to adjust, so it won’t be a hard change from one day to the next.”
Mixed group figures
DHL published annual figures for 2023 on Wednesday, which were mixed due to the weak global economy. Compared to the record year of 2022, group sales fell by 13.4 percent to 81.8 billion euros, and group profits even fell by almost a third to 3.7 billion euros. The prospects are mediocre, there is no recovery in sight soon – DHL shares were deeply in the red on the stock exchange on Wednesday.
While the global express and freight business lost ground, the core business Post & Parcel Germany, with around 160,000 full-time positions, at least recorded a mini increase in sales. However, the costs rose significantly, also due to an expensive collective bargaining agreement with additional costs of around 400 million euros per year. The operating result in the Post & Parcel Germany division fell by almost a third to 870 million euros.
This division plays only a minor role in the globally active group with around 594,000 full-time positions: domestic letter and parcel delivery accounts for around a fifth of the group’s business. The operating result is only about a seventh – so the core business is significantly less profitable than other divisions.
The postal law reform is now intended to free the former Federal Postal Service from some of the cost ballast in its core business. These include night planes, which are still used to carry letters. This is due to the aforementioned regulatory time pressure – from Monday to Friday, three planes fly back and forth between Hanover and Munich, Hanover and Stuttgart as well as Stuttgart and Berlin, with only letters on board. This is also questionable when it comes to climate protection. This should end at the end of March.
Reduction in the volume of letters is accelerating
The annual report presented on Wednesday shows strong signs of slowdown in the mail business, which is, in a sense, the root of the postal service. According to company information, the volume of shipments fell by 5.6 percent to around 12.6 billion last year. In 2022 there was only a decrease of 0.3 percent; in previous years the decline was in the range of 2 to 3 percent. However, demand for parcels is increasing; in 2023, DHL transported around 1.7 billion such shipments in Germany, 3.8 percent more than in 2022. The logistics company is the market leader in Germany in the letter and parcel business.
And what are the prospects for the mail business, which largely consists of advertising mail? According to board member Hagleitner, things continue to decline. Compared to other EU countries, where postal rules have long since been relaxed and digitalization is more advanced than in Germany, the volume of letters is only 25 to 30 percent compared to the respective historical peak.
When asked where in Germany they were, she said that in 2000 80 million were transported per day and now there are 46 million. As a result, it is currently around 58 percent compared to the “golden” letter days. Hagleitner expects the German letter volume to also fall to 25 to 30 percent in the future.
Does the global corporation DHL still need its domestic core business? Yes, absolutely, said CFO Melanie Kreis. The area is currently going through a “transformation process” in which money has to be earned for investments. But you have a clear perspective. “We have the leading parcel service provider in Europe’s largest economic region.” The statement makes it clear where the music plays: with packages – and no longer with letters.
“There are fewer letters, but every letter is very important to us,” said Hagleitner, the board member responsible for Post & Parcel Germany.
Source: Stern
