Ref. Ares(2015)5326593 - 24/11/2015 Main developments in the postal sector (2006- 2008) Final report The authors take full responsibility for the contents of this report. The opinions expressed do not necessarily reflect the views of the European Commission. Client: European Commission, DG Internal Market and Services ECORYS Nederland BV Dr. Nick van der Lijn (Team Leader) Patrick de Bas, Garry Carter Frederik van Doorn, Nicolai van Gorp Hans Kok, Judith Mathijssen Lars Meindert, Peter Vis Rotterdam, 11 September 2008 ECORYS Nederland BV P.O. Box 4175 3006 AD Rotterdam Watermanweg 44 3067 GG Rotterdam The Netherlands T +31 (0)10 453 88 00 F +31 (0)10 453 07 68 E [email protected] W www.ecorys.com Registration no. 24316726 ECORYS Macro & Sector Policies T +31 (0)31 (0)10 453 87 53 F +31 (0)10 452 36 60 DaK/NvdL AR16760rap01 Preface It has proven an enormous task to collect all the relevant data for the broad range of topics and the large set of countries included in the Terms of Reference of this study. Competition in the European postal markets is in its infancy stage. Moreover information that used to be available in the public domain is now considered confidential commercial information. This has not made the task of the project team any easier. ECORYS has been in close contact with a large variety of stakeholders whose input has been vital for this study. The development of the 33 country reports has to a large extent been an interactive process with substantial inputs from a variety of stakeholders, but also various sections in the Final Report benefited from the information, opinions and the feedback received from many people. The project team would therefore like to thank all postal operators, policy makers, postal sector regulators, customers, industry experts and other organisations that have contributed to this study. With regard to the web- questionnaire on customer needs, ECORYS highly appreciated the support from FEDMA, EMOTA, the VGP (the Netherlands) and the NRAs in Ireland, Belgium and France to encourage postal customers to fill in the questionnaire. ECORYS is also grateful for the constructive cooperation with the entire Postal Unit within the European Commission, DG Internal Market and Services. We want to thank Mr. Jörg Reinbothe, Mr. Hughes de la Motte and the other members of the Postal Unit for their detailed comments and support. ECORYS takes full responsibility for the contents of this report. We reiterate that the opinions expressed in this report do not necessarily reflect the views of the European Commission. Nick van der Lijn, Team Leader August 2008 DaK/NvdL AR16760rap01 Table of contents Preface 5 List of abbreviations 11 Country abbreviations 13 Executive summary 15 1 Introduction 37 1.1 Introduction and objective of the study 37 1.2 Policy context 37 1.3 Sources of information and activities undertaken 38 1.4 Structure of the report 39 2 Developments in the regulatory framework 41 2.1 Introduction 41 2.2 The universal service 41 2.2.1 Collection and delivery 42 2.2.2 The postal network 44 2.2.3 Postal products in the universal service 45 2.2.4 Designated postal operator 51 2.2.5 Future of the USO 52 2.3 The reserved area 54 2.3.1 Future steps 56 2.4 Licensing and authorisation 57 2.4.1 Licence conditions 59 2.5 Access to postal networks 61 2.5.1 Forms of access 62 2.6 Quality of service 64 2.6.1 Transit time for priority mail 64 2.6.2 Monitoring 67 2.7 Summary of main findings, analysis and conclusions 67 3 Implementation of the regulatory framework 71 3.1 Introduction 71 3.2 Transparency of NPO accounts and price regulation 71 3.2.1 Transparency of NPO accounts 71 3.2.2 Price regulation 76 3.2.3 VAT exemptions of the NPOs 79 DaK/NvdL AR16760rap01 3.2.4 Price performance in the Member States 80 3.3 The practice of NRAs 82 3.3.1 Mandate of the NRAs 83 3.3.2 Emerging themes 86 3.4 Cost and financing of the USO 89 3.4.1 USO cost estimates and funding provisions 90 3.4.2 Directive 2008/6/EC 94 3.4.3 The cost of (elements of) the USO in the UK 96 3.4.4 The cost of the USO in Denmark 97 3.5 Summary of main findings and conclusion 100 4 The mail market, market structure and competition 103 4.1 Introduction 103 4.2 Mail volume developments 103 4.2.1 Addressed mail volume per capita 103 4.2.2 Development of mail volumes per market segment 105 4.2.3 Conclusions: expected developments of mail volumes per market segment 110 4.3 Development of competition 113 4.3.1 General developments 113 4.3.2 Development of competition: frontrunners in Europe 114 4.3.3 Developing competition in a number of new Member States 117 4.3.4 Development of competition in the UK 119 4.3.5 Business models of competitor postal operators 122 4.4 Parcel mail and express 124 4.5 Barriers to the development of competition 130 4.6 Developments in the legal status of NPOs 133 4.6.1 Legal status of NPOs 133 4.6.2 The role of private capital 137 4.7 Summary of main findings and conclusion 138 5 Customer needs 143 5.1 Introduction 143 5.1.1 Web-based customer needs questionnaire 144 5.2 Customer satisfaction 144 5.2.1 Satisfaction with the services of postal operators 144 5.2.2 Frequent issues in the relationship with the NPO 146 5.2.3 Treatment of complaints 147 5.3 Customer needs regarding QoS and universal service 148 5.3.1 Trade off between speed and price 148 5.3.2 Frequency of collection and delivery 150 5.4 Actual and expected benefits of competition 152 5.4.1 Benefits of competition 152 5.4.2 Impact of competition on the behaviour of postal operators 153 5.5 Specific issues 155 5.5.1 Solutions rather than standard products and services 155 5.5.2 Cross-border mail 155 5.5.3 Liberalisation and level playing field 155 5.6 Summary of main findings and conclusion 156 6 Technological developments and environment 159 6.1 Introduction 159 6.2 Impact of application of technology on labour intensity 160 6.3 Restructuring of mail processing: automated sorting 164 6.4 Development of hybrid mail solutions 172 6.4.1 Introduction 172 6.4.2 UPU and hybrid mail 173 6.4.3 Impact of hybrid mail for stakeholders 175 6.4.4 Hybrid mail developments in European countries 177 6.5 Development of new and value added postal services (VAS) 185 6.6 Environmental and sustainability policies 189 6.6.1 Context 189 6.6.2 Information from selected countries 190 6.6.3 Concluding 194 6.7 Summary of main findings and conclusion 194 7 Developments in employment, wages and working conditions 197 7.1 Introduction 197 7.2 Employment and social aspects in the postal directives 198 7.3 Development of employment 199 7.3.1 Introduction 199 7.3.2 Evolution of postal employment in the EU 199 7.3.3 Evolution of employment levels in NPOs and CPOs 200 7.3.4 Breakdown of NPO staff by market segment 208 7.3.5 Share and evolution of civil servants in NPO and total postal sector employment 209 7.3.6 Contribution of NPOs to total EU employment 210 7.3.7 Productivity of NPOs and the sector 211 7.3.8 Productivity of CPOs 213 7.4 Developments in contracts, wages and working conditions 214 7.4.1 Development of contractual conditions 214 7.4.2 Development of wages and working conditions 218 7.4.3 Role of social partners, trade unions and sector based collective agreements 222 7.4.4 Case study: minimum wage in the German postal sector 224 7.4.5 Training and investment in training 227 7.5 Likely impact of postal sector liberalisation on employment, wages and working conditions 229 7.6 Summary of main findings and conclusion 230 8 Interrelations between postal regulation and market developments 233 8.1 Introduction 233 8.2 Impact of regulation on the development of competition 233 8.2.1 Impact of the new threshold of 50 grams (as of January 2006) on competition 236 DaK/NvdL AR16760rap01 8.2.2 Impact of distinct market segments that have been liberalised on competition 236 8.2.3 Impact of the access regime on the pattern of competition 237 8.3 Impact of regulation on mail volumes 239 8.3.1 Impact of QoS performance on addressed mail volumes per capita 240 8.3.2 Bulk mail prices and addressed mail volume per capita 242 8.3.3 Direct mail growth and market opening 242 8.4 Contribution of EC directives and national policies on developments in the postal markets 243 8.5 Regulatory asymmetry and the potential impact on the internal market 251 8.6 Summary of main findings and conclusion 251 References 255 Annex I Appendices 257 Appendix 1 Price regulation in the Member States 259 Appendix 2 Overview of NRAs 263 Appendix 3 Summary results of the customer needs: Delphi opinion survey 265 Appendix 4 Ratio staff cost of total cost with NPOs 269 Appendix 5 Industrial relations in the mail service sector 271 Appendix 6 Regression results 279 Appendix 7 Development of competition 283 List of abbreviations b (as in € 8b) Billion B2B Business to business (sender and receiver of mail, respectively) B2C Business to consumer B2X Business to either business or consumer C2B Consumer to business C2C Consumer to consumer C2X Consumer to either business or consumer C3 (etc) The combined market share of the three (etc) largest market players CPO Competitor postal operator CSR Corporate social responsibility EC European Commission FMO Full market opening GDP Gross domestic product GNP Gross national product m (as in € 10m) Million NRA National regulatory authority (the organisation that fulfils the role of postal sector regulator) NPO National postal operator; used by ECORYS to denote the incumbent/ current USP OPA Other postal agent QoS Quality of service PPP Purchasing power parity USP Universal service provider