letters
How much is postage for letters? Post wants a hefty price premium
Sending a standard letter in Germany still costs 85 cents. Because it will probably be more expensive in January. But how much can the postal service raise its prices? There is a dispute about this in Bonn.
If postal management has its way, consumers will have to pay significantly more for sending letters next year than previously planned. The Federal Network Agency had proposed a “margin for price increases” of 10.5 percent for the turn of the year – this means that postage for all letters and postcards that are expected to be sent in the next two years can become more expensive by this percentage.
Since the postal service wants to apply this leeway to the different types of mail “approximately evenly,” the standard letter could cost 95 cents from January instead of the previous 85 cents. The postal service will only determine the exact postage after the Federal Network Agency has finally decided on the scope for increases – this is expected in the coming weeks.
Now Post boss Tobias Meyer speaks out and doesn’t give the regulatory authority’s previous proposal a good rating. He advocates for a significantly higher price premium.
The legislature has granted the postal service a profit margin that is far from being achieved with the authority’s current proposal. At a press conference, Meyer calculated that the group only earned around 100 million euros in its post and parcel business in Germany in the third quarter after deducting one-off effects. According to his reading of the postal law, it would have to be around 330 million euros.
Dispute could end up in court
According to Meyer, the regulatory authority’s plan is not legal. When asked whether the postal group DHL, which is called Deutsche Post in its mail business, would go to court if the Federal Network Agency stuck with the 10.5 percent, Meyer said: “We will consider whether we sue against it or not. ” A lawsuit would also have formal hurdles and risks for the company, he pointed out.
The postal service is not allowed to set the postage for letters itself, but must have it approved by the Federal Network Agency. The mail business has been shrinking for a long time: In the Internet age, the volume of letters is falling because people and companies are relying more on digital communication.
Calculation problem for letter postage increase
The postage increase is calculated based on cost increases and certain assumptions. The logistics group and the regulatory authority disagree about which costs are to be assessed and how. The previous letter postage will expire at the end of the year, and new postage will apply from the beginning of 2025 – this time for two years and not three years as before.
How high that will be is still unclear. The last postage increase to date occurred at the beginning of 2022, at that time by 4.6 percent. The timing was unfavorable for the postal service because inflation only rose sharply after the Federal Network Agency’s decision at the time.
That’s why the postal service applied for an early price increase last year, but this project hit a brick wall with the Federal Network Agency. This caused trouble at the corporate headquarters, the Posttower – which is located in Bonn just a few streets away from the regulatory authority.
Meyer emphasized that there is a lot of catching up to do when it comes to postage increases. “There is no other European country where letter postage has increased more slowly than inflation; the only country is Germany,” said the manager. The manager did not specifically answer the question of what percentage markup he wanted. He only pointed out that, according to the law, the surcharge should not be higher than 17 percent.
Federal Network Agency rejects criticism
CFO Melanie Kreis emphasized the high level of investment that DHL needs on its sustainability course for the expansion of its electric fleet and other measures. The recently amended Postal Act will result in a significantly higher price increase. With regard to the 10.5 percent, she said: “It is mathematically very, very clear that we will never reach the level that was politically desired in the postal law.”
The management’s statement caused a lack of understanding at the Federal Network Agency. “We cannot understand the Post’s criticism,” said a spokesman for the Federal Network Agency. “Increased costs due to inflation are taken into account and recognized in the cost base – there is no gap when considering inflation.”
The economy is causing problems for DHL
The DHL postal group’s business is currently going worse than he had expected, and he had to revise his annual forecast downwards. The global logistics company is struggling with the weak economy. In the first nine months of this year, the operating result fell from 4.7 billion to 4.0 billion euros.
According to the company, the reasons for the negative development are a less lucrative freight business and a significantly weaker mail business: In the third quarter, the volume of advertising mail in Germany fell by 18.9 percent. Although the volume of parcels increased, this could not compensate for the increased material and personnel costs as well as the losses in the mail business. The number of normal letters also fell, although only by 2.9 percent.
dpa
Source: Stern
