how PostNL must “inevitably” raise prices

Sending New Year’s cards will again be a little more expensive in 2023: the price of a stamp will rise to 1.01 euros. Breaking the 1 euro limit could well symbolize the difficult period PostNL is going through.

What problems does the company face?

According to PostNL, rising stamp prices are “inevitable”, because we have been sending fewer postcards and letters for years. As a result, maintaining mail delivery is becoming more and more expensive.

The price of a stamp has risen steadily in recent years, and has even doubled in ten years:

A small exception has been the last two years, where we have had to deal with more blocks. At the time, people were sending far more postcards to each other, and the government dropped a large number of coronavirus vaccination calls on doormats.

But it was only a short-lived recovery: in the last quarter, the number of letters sent fell again by more than 9 percent compared to the previous year. This is expected to continue decreasing in the coming years.

And this is difficult, given the role PostNL plays as a “universal postal service”. This means that the company has a legal duty to deliver 95% of mail on time throughout the Netherlands.

Since 2014, this has been less and less successful. In 2019, PostNL failed to reach that percentage for the first time, after which it was fined 2 million euros by the regulator ACM. The fine was challenged in court, but the court ruled last week that the sentence was justified.

A new competitor has also entered the letter market – DHL. The Deutsche Post subsidiary also wants to deliver letters nationwide from April. This ends PostNL’s dominant market position.

DHL wants to focus on profitable postal items over 50 grams, which are the slightly heavier items that still fit through the letterbox. It is not yet known what fees the company will charge for this.

Competition on the parcel market has already been much greater than on the letter market for some time now. PostNL is also the market leader here, holding 50 percent of the market. DHL follows with 30% and the rest of the market is split between smaller players, such as UPS, GLS and Budbee.

Meanwhile, package delivery costs are soaring, partly due to high fuel prices. Prices are therefore also rising for all the main players: on PostNL, a domestic parcel franked online will go from €6.75 to €6.95.

Costs could rise for PostNL now that collective bargaining agreements for couriers and parcel sorters are under tension. The unions gave PostNL an ultimatum in early December. They demanded, among other things, a minimum wage of 14 euros an hour and a 10% wage increase.

PostNL maintained a maximum wage increase of 4.5% and the unions then announced a strike on the week of Black Friday, one of the busiest times of the year. There they remitted after a court ruling a line across. PostNL therefore decided to unilaterally increase wages, at the hands of the unions. They’re threatening strikes again in the new year.

Then there is the Czech billionaire Daniel Kretínský. He has continued to expand his interest in PostNL over the past year, which has now risen to about 30 percent, just below the percentage at which a mandatory takeover bid is required.

This leads to rumors in the business world. Kretínský also has a large stake in the British postal company Royal Mail and could merge the two companies to enter the European postal market. He would face a major obstacle for this, because such a takeover is not possible without the permission of the Dutch state.