Will changes to PostNord mean more expensive post in Denmark?
A new deal announced by politicians this week will result in postal services in Denmark costing more, company PostNord has said in response to the announcement.
The new postal law, agreed between the government and four opposition parties, means that PostNord faces losing millions of kroner in state support, and will no longer be obliged to fully offer postal coverage to every address in Denmark.
READ ALSO: PostNord loses state support and obligation to deliver to all of Denmark
“The coverage guarantee [Danish: befordringspligt, ed.] which we at PostNord have provided for the state has ensured a guarantee of uniform service and prices for post distribution for all Danes whether you love in Copenhagen, Thyborøn or Rudkøbing,” PostNord’s CEO Peter Kjær Jensen told news wire Ritzau in a written comment.
“With the new deal, payment for identical services and prices in Denmark lapses, and with it disappears the guarantee and security Danes have had up to now.
“That will probably make the postal service in Denmark more expensive – both for the public and for the state,” he said.
The obligation to distribute post to the entirety of Denmark has given PostNord repeated annual losses in recent years, with the state supporting the company to the tune of hundreds of millions of kroner. Both the obligation and the state support are ended by the political agreement, which will take effect in January 2024.
PostNord is not a monopoly in Denmark, but has around a 90 percent market share when it comes to letters, delivering around 180 million a year according to Jensen.
Due to its coverage obligation, PostNord has also been VAT (moms) exempt, meaning it could charge lower prices for letter delivery than competitors like DAO, GLS and Bring.
DAO, which currently delivers around 10-11 million letters annually in addition to its parcel and newspaper services, argues that the new post law will not necessarily mean higher prices.
“We hope it can give a better market share to us and that the competition situation will make for competition at lower prices,” the CEO of DAO, Hans Peter Nissen, said in a comment.
“We have had to add VAT and that means we’ve been 25 percent [the rate of Denmark’s VAT or moms, ed.] more expensive on letters. And that’s been the most significant anchor we’ve had the entire time in relation to sending letters,” Nissen said.
GLS and Bring, which currently only offer parcel delivery, both told Ritzau they have no plans to enter letter distribution. Both companies said the move would not be profitable and they do not have the necessary setup.
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The new postal law, agreed between the government and four opposition parties, means that PostNord faces losing millions of kroner in state support, and will no longer be obliged to fully offer postal coverage to every address in Denmark.
READ ALSO: PostNord loses state support and obligation to deliver to all of Denmark
“The coverage guarantee [Danish: befordringspligt, ed.] which we at PostNord have provided for the state has ensured a guarantee of uniform service and prices for post distribution for all Danes whether you love in Copenhagen, Thyborøn or Rudkøbing,” PostNord’s CEO Peter Kjær Jensen told news wire Ritzau in a written comment.
“With the new deal, payment for identical services and prices in Denmark lapses, and with it disappears the guarantee and security Danes have had up to now.
“That will probably make the postal service in Denmark more expensive – both for the public and for the state,” he said.
The obligation to distribute post to the entirety of Denmark has given PostNord repeated annual losses in recent years, with the state supporting the company to the tune of hundreds of millions of kroner. Both the obligation and the state support are ended by the political agreement, which will take effect in January 2024.
PostNord is not a monopoly in Denmark, but has around a 90 percent market share when it comes to letters, delivering around 180 million a year according to Jensen.
Due to its coverage obligation, PostNord has also been VAT (moms) exempt, meaning it could charge lower prices for letter delivery than competitors like DAO, GLS and Bring.
DAO, which currently delivers around 10-11 million letters annually in addition to its parcel and newspaper services, argues that the new post law will not necessarily mean higher prices.
“We hope it can give a better market share to us and that the competition situation will make for competition at lower prices,” the CEO of DAO, Hans Peter Nissen, said in a comment.
“We have had to add VAT and that means we’ve been 25 percent [the rate of Denmark’s VAT or moms, ed.] more expensive on letters. And that’s been the most significant anchor we’ve had the entire time in relation to sending letters,” Nissen said.
GLS and Bring, which currently only offer parcel delivery, both told Ritzau they have no plans to enter letter distribution. Both companies said the move would not be profitable and they do not have the necessary setup.
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