What does the future hold for Europe's postal sector?

A divided market, changing consumer needs, new digital possibilities and a new focus on sustainability. Markus Ferber asks whether it is time to re-evaluate the postal sector status quo.
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By Markus Ferber

Markus Ferber (DE, EPP) is rapporteur of Parliament’s Application of the Postal Services Directive report

24 Oct 2020

The extraordinary circumstances caused by the Coronavirus pandemic have demonstrated, once again, the huge importance of the European Postal Sector. Delivery Services have replaced many of our errands and have become an essential part of dealing with the lockdown, both in creating possibilities for purchases to take place and in making citizens’ lives easier at a time of great psychological stress.

It is therefore an opportune moment to have a look at European legislation on the postal sector. What have we achieved? What are the current developments? What kind of European Postal Sector do we want in the future? The Postal Service directive aimed to enhance competition by liberalising the market.

We introduced the legislation enabling this liberalisation in 2008, but in truth, even today, we do not see the competition we envisaged at the time. We have not yet managed to establish an internal market for postal services. Instead, the market remains strongly divided, perhaps even more than before the Postal Service Directive; we still have 27 internal national postal markets.

At the same time, two influential and rapid developments are dramatically changing the European Union’s postal sector; digitisation and the rapid growth in e-commerce. In other words, we send fewer letters and receive more packages. The requirements for Universal Service Providers (USPs) date from 1997.

“The extraordinary circumstances caused by the Coronavirus pandemic have demonstrated, once again, the huge importance of the European Postal Sector”

The Universal Service Obligation, as defined by European legislation, is rather short and to the point, with low minimum requirements. The broad and detailed scope of the national Universal Service Obligations stems from national legislation. Obviously, we need to make sure the vulnerable consumer is at all times protected.

Nevertheless, when it comes to the Universal Service Obligation, Member States would have been well advised to focus on those areas where the market actually fails to provide certain services and to be very cautious when it comes to strengthening the monopolies held by USPs. After all, the taming of the monopoly was the objective that kicked off the legislative process on postal services more than two decades ago.

In today’s policy debate on postal services, there is a trending idea to delegate even more activities to the USPs - particularly those using new technologies - in order to help them handle the growing unit costs. At this point, I propose taking a step back and asking: “Do we need to keep the current structures of our USPs at all costs? Is it really in the public’s best interest to strengthen the monopolies of USPs?”

This is particularly the case when it comes to digital technologies, where innovation cycles are rapid, and we need streamlined structures to keep up with technological development. Here, I dare to question the effectiveness of delegating more activities to USPs. Experience tells us that big, state-owned companies are not the fastest of movers when it comes to introducing new technological solutions.

Therefore, we need to create a competition-driven, innovation-friendly environment for companies to be able to succeed at a European level. The question remains; what can we do to create an integrated internal market, rather than 27 national internal postal markets? The purpose of the Universal Service Obligation is to promote effective competition while ensuring provision of universal services. We should not neglect either of these goals. However, we need to look out for hindrances to new companies seeking to enter the sector.

Now, more than ever, we strongly need innovative approaches and we need to encourage competition of ideas and business models. This is particularly important given the considerable opportunities for increasing efficiency through new technologies and the growing impact of the sector on the environment. We also need to be aware of the aspect of sustainability; postal policies also create an environmental footprint.

Finally, yet importantly, transparency is a pivotal aspect that we need to consider. The regulation on cross-border parcel delivery from 2018 aimed to strengthen competition by enhancing transparency in the parcel delivery sector. It is still too early to judge whether the progress sought has been achieved.

“Every crisis is a challenge and a call for change. It is our role as policymakers to encourage that change and make it work for us”

Either way, enabling consumers to be able to make good, informed choices needs to remain one of our priorities when discussing policies for the European Postal Sector. The pandemic has shown us that many of the things we deemed impossible were actually possible after all. We found new solutions, new ways of holding meeting and new ways of working together.

We realised those meetings that were actually important and those which are not. We need this creative attitude, openness to change and innovative drive in the postal sector. Every crisis is a challenge and a call for change. It is our role as policymakers to encourage that change and make it work for us.

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