A PYMNTS Company

The impact of increasing competition for non-contract parcels on postal prices and efficiency decisions

 |  June 21, 2018

The impact of increasing competition for non-contract parcels on postal prices and efficiency decisions

By Philippe De Donder, Frank Rodriguez & Soterios Soteri

Letter volumes in countries with advanced postal networks have been in decline for many years and generating increasing pressure on postal universal service providers (USPs) to seek new revenue streams and increase efficiency to meet their regulatory and financial obligations. The increase in online shopping over the past decade and associated increased demand for parcels has provided postal USPs with a much needed boost to counter balance some of the challenges they are confronting. However, as the parcel market expands and evolves to meet changes in consumer patterns this brings forward new threats as well as opportunities for USPs. For example, while competition in some parts of the parcels market is already quite intense, especially the domestic bulk contract segments within some European countries, USPs face the threat of increasing competition in the single piece or noncontract parcel segment, especially from competitors that may potentially be operating at the margin of regulatory requirements. In particular, private individuals and small businesses, both of whom have traditionally sent parcels via USP Post Office outlets, are being offered an increasing range of options to send them via other parcel operators using alternative acceptance points, such as local convenience stores, retail outlets and locker banks.

Continue Reading…