1 Letter prices in Europe Up-to-date international letter price survey April th edition
2 1 Summary This is the fourteenth time Deutsche Post has carried out a study, drawing a comparison between letter prices charged in Europe. This study covers letter prices in all 28 Member States of the European Union and in the European Free Trade Area (EFTA) countries of Iceland, Norway and Switzerland. As in previous studies, the nominal prices in the different countries were compared for the reference year The price of a domestic standard letter has increased in fifteen of the countries under review since the last study was carried out. On average, postage rates for domestic letters have risen by 0.04 year-on-year. The postage rate for letters sent within Europe increased in 16 countries. Letters sent within Europe now cost 0.06 more on average than they did a year ago. However, a purely nominal approach would not allow for an objective assessment of the letter prices charged in the countries under review. For this reason, other economic factors were taken into account in the study. They include macro-economic factors and the development of inflation rates in the countries under review. The postage rate for standard letters in German y rose by 0.02 in nominal terms to 0.62 on January 01, The consolidated comparison of postage rates adjusted for differences in labor costs and purchasing power proves nonetheless that Deutsche Post charges very
3 Letter prices in Europe 3 affordable postage rates that are way below the average postage rates charged in all the countries under review. The postage rate for letters is only more affordable in five general ly much smaller States, whereas postal customers in 24 countries have to pay more than postal customers in Germany. The highest consolidated postage rates for standard letters continue to be charged in Eastern Europe. This shows that the highest postage rate for standard letters can still be found in Bulgaria whereas the country charging the lowest letter price in Europe is Malta. The average consolidated letter price is 0.04 higher than it was last year at Contents 1 Summary 2 2 Comments on methodology 4 3 Nominal price comparison 3.1 Domestic letter mail Letter mail within Europe 8 4 Price developments since Work in minutes per letter price 12 6 Adjustment for labor costs 14 7 Adjustment for purchasing power parity 16 8 The consolidated result 18 When adjusted for inflation, postage rates in Germany have fallen by a good 4 percent since Prices have only decreased more sharply in Switzerland, Luxembourg, Poland and under special conditions in Croatia. By contrast, the average postage rates in Europe have risen by more than one-fifth when the impact of inflation is taken into account. When comparing the average number of minutes employees need to work to cover the cost of a standard letter in the countries surveyed, German letter prices are extremely competitive. Only in Switzerland do workers have to work less to earn the postage rate of a standard letter. Published by Editor Design Photography April 2015 Deutsche Post AG Headquarters Corporate Public Policy and Regulation Management Bonn Alexander Rometsch-Steinmann, Regine Stöldt +C Kommunikationsdesign Caroline Gärtner Deutsche Post DHL: Tobias Schult, Post Danmark: Lars Schmidt, Österreichische Post AG, La Poste France, Stefan Abtmeyer (letters) Dobro Došao / herzlich willkommen! Welcome! Lobrovic Niko Put Osmina Zagreb Republika Hrvatska
5 Letter prices in Europe 5 2 Comments on methodology This survey begins by comparing and contrasting prices for standard domestic letters and letters within Europe in the 28 Member States of the European Union and in the EFTA countries of Iceland, Norway and Switzerland. This survey considers the fastest letter mail product in all countries under review, which according to current product specifications generally carries a next-day delivery target (D+1). The only letter products included were those with quality criteria enabling them to be compared to one another. This approach in combination with the inclusion of key macro-economic factors is designed to provide an objective and scientifically sound picture of European letter prices. In countries where value-added tax (VAT) is levied on the letter services considered for this comparison Norway, Sweden and Slovenia (only for letters within Europe) the survey uses the gross price, i.e., the letter price including VAT. This is because the most relevant factor in such a comparison is the actual price that the consumer has to pay for a letter in the various countries. This survey considers standard letters only, as this product represents the lion s share of all letters sent by private customers and therefore best reflects actual consumer behavior in the letter market. Nominal letter prices in Europe will be presented first, followed by the development of letter prices from 2005 to 2014, adjusted for inflation. In addition, the study also calculates the average number of minutes industrial employees have to work in the individual countries to earn the price of a standard letter. Finally, the study compares the letter prices of each country surveyed, taking factors such as labor costs and purchasing power parity into account. For each country, the value of the factor they are adjusted for is shown relative to the corresponding value in Germany. The calculated ratios are multiplied by the nominal letter prices of the relevant countries which results in the adjusted letter prices. This survey takes into account all postage rates that were known at the time of going to print on April 01, The data on the individual countries surveyed were taken from Eurostat and the postal companies in the countries surveyed. To adjust the letter prices so that they reflect labor costs, statistical data was used that most closely corresponds to the sector under consideration here (postal, courier and express services). In order to calculate the work in minutes per letter, the study utilized data from the Cologne Institute for Economic Research, namely the hourly wages of a worker in the manufacturing industry (November 2014). Exchange rates also had an impact on letter prices this year. The result was, for instance, that in Iceland domestic postage rates and postage rates for letters sent within Europe remained the same in local currency even though in nominal terms they increased by 0.13 and 0.09 respectively.
6 6 Letter prices in Europe 3 Nominal price comparison Domestic postage rates have increased in 15 European countries since the last study was carried out. The price increases range from minor increases of 0.02 in Germany and 0.05 in Spain, Portugal and Slovenia to major increases of 0.08 in Ireland and 0.10 in France, Italy, Estonia and Finland. In France, postage rates increased for the sixth consecutive time. There were no reductions in postage rates in any of the countries surveyed. Fluctuations in currency have meant, for instance, that domestic postage rates in Hungary converted into euro dropped even though the actual postage rates did not change. By contrast, in Iceland, prices are 0.13 higher when they are converted into euro even though the postage rate for a standard letter remained the same in Icelandic Krona. 3.1 Domestic letter mail A comparison of nominal prices for a domestic standard letter shows that Germany continues to rank in the mid-range of the countries surveyed. The postage rate for standard letters in Germany has been 0.62 since January 01, This is 0.04 below the European average which has meanwhile risen to 0.66 compared to 0.62 last year. As in the past few years, the highest letter prices in Europe in nominal terms continue to be found in Denmark and Norway. It must, however, be noted that 25 percent valueadded tax is included in the cost of postage in Norway. Finland continues to rank third in the comparison of domestic letter mail prices.
7 Letter prices in Europe 7 Nominal price for a domestic standard letter in Denmark Norway Finland Iceland Switzerland Italy UK Belgium Sweden France Greece Netherlands Austria Ireland Slovakia Germany Croatia Luxembourg Latvia Poland Estonia Portugal Czech Republic Hungary Lithuania Bulgaria Spain Cyprus Romania Slovenia Malta 0.26 Average Postage rates increased in all three countries in recent months, by around ten percent in Finland and Denmark and by around five percent in Norway. The position of another Scandinavian country, namely Iceland, has deteriorated. It now occupies 4th position ahead of Switzerland and Italy. The latter has moved up from 9th place to 6th place. The sharp increase in postage rates in Ireland means that Ireland has moved to 14th position in the ranking from 17th position last year. Owing to a price increase of 0.10 a good 22 percent Estonia has moved from position 25 in the ranking up to 21nd. Greece and Slovakia improved their positions in the ranking, moving to 11rd place and 15th place respectively. The postage rate for a standard letter remained stable in both countries. Spain, Cyprus, Romania and Slovenia which charge very low postage rates for a standard letter remain in the lower range of this ranking. The country charging the lowest letter price in nominal terms is the Iceland-state of Malta which comes last in the ranking.
8 3.2 Letter mail within Europe Prices for standard letters within Europe have risen in 16 countries under review. The prices have increased in thirteen countries that also increased their domestic postage rates. By contrast, Sweden and Austria only increased domestic postage rates whereas Belgium, Lithua nia and Poland only increased postage rates for European letters. The average price of a standard letter within Europe has risen by 0.06 to There were sharp price increases, for instance, in Portugal where the average price of a standard letter within Europe rose from 1.90 to 2.35 (+24 percent), in Estonia where the price increased by 0.20 to 1.20 (+25 percent), in Spain where the price increased by 0.15 to 0.90 (+20 percent) and in Cyprus where the price increased from 0.51 to 0.64 (+25 percent). Minor price increases of around 10 percent were implemented, for instance, in Hungary, Ireland and Italy. Currency fluctuations also impacted the postage rates for letters sent within Europe. The price converted into euro dropped by 0.05 in the Czech Republic even though it remained the same in the national currency. Finland charges a uniform rate for domestic letters and letters sent within Europe. In all other countries, it is more expensive to send a letter within Europe than it is to send a domestic letter. However the rates vary greatly. Postal customers in Portugal and Slovenia have to pay four times the domestic rate to send letters within Europe. Customers in Poland, Croatia and Hungary have to pay twice as much whereas post age rates vary moderately in Germany, Norway, Romania, Greece and France where prices are approximately 1.3 times more expensive. Customers in Portugal still have to pay the highest rates for a European letter in nominal terms. It is followed by Denmark, Norway and Sweden. Slovakia now ranks 16th and has moved three places down the ranking since last year, as have Latvia and Bulgaria which now occupy 26th and 27th position in the ranking. Estonia has risen four places in the ranking, now ranking 10th whereas Italy (18th position), France (19th position) and Spain (22nd position) have moved three places up the ranking. Like last year, Romania continues to charge the lowest postage rate for a European letter in nominal terms at 0.47 when converted into euro, after Malta and Cyprus. Although Germany increased its postage rate from 0.75 to 0.80 to send letters within Europe, it still has a stable ranking in the lower 25 percent, occupying 25th position.
9 Nominal price for letter mail within Europe in Portugal Denmark Norway Sweden Croatia Slovenia Poland UK Belgium Estonia Iceland Switzerland Netherlands Finland Hungary Slovakia Ireland Italy France Czech Republic Greece Spain Luxembourg Lithuania Germany Latvia Bulgaria Austria Cyprus Malta Romania 0.47 Average
10 10 Letter prices in Europe 4 Price developments since 2005 In order to obtain a well-balanced comparison of letter prices charged in the European countries, it is essential to take the rate of inflation in the individual European countries into consideration. A letter price that is nominally unchanged, for instance, actually changes annually at the rate of inflation when that price is viewed in real terms. A comparison of the price trends in the 31 countries under review over the past ten years adjusted for inflation highlights the impact the rate of inflation has had on prices. The average rates of inflation in the individual countries varied greatly in the period between 2005 and In Switzerland, the average rate of inflation was just under 0.5 percent, in Germany and in the Netherlands it was a mere 1.7 percent and in Slovenia and Poland it was around 2.5 percent. By contrast, much higher inflation rates were recorded in Hungary where prices increased on average by 4.1 percent, in Latvia by 4.8 percent, in Romania by 5.4 percent and in Iceland where prices increased by 6.2 percent. When adjusted for inflation, the price of a standard domestic letter in the European countries surveyed has risen on average by one-fifth (22.5 percent) since Postage rates for standard letters have dropped in real terms in just seven countries but have risen in 24 countries. The high drop in postage rates for standard letters in real terms in Croatia can be attributed on the one hand to the fact that VAT which was charged on postage rates up to 2009 was abolished in On the other hand, the price of domestic standard letters was reduced significantly in In Romania, the postage rates for a standard letter when adjusted for inflation almost doubled, in Denmark, Latvia, Iceland and Great Britain they have risen by more than 50 percent in real terms since In Portugal and Austria postage rates increased only slightly when adjusted for inflation. Postage rates when adjusted for inflation decreased by 4.2 percent in Germany. This means Germany currently occupies 27th position in this ranking list. The only countries in which postage rates are cheaper when adjusted for inflation are Switzerland, Luxembourg, Poland and Croatia.
11 Inflation-adjusted change in letter prices in % Romania Denmark Latvia Iceland UK Netherlands Slovenia Czech Republic Finland Norway Estonia Malta Ireland Bulgaria France Belgium Spain Greece Sweden Italy Lithuania Hungary Portugal Austria Cyprus Slovakia Germany Switzerland Luxembourg Poland Croatia Average 22.5 %
12 5 Work in minutes per letter price The European Union s Postal Services Directive determines that prices for universal services have to be affordable. In order to be able to assess the affordability in the individual European countries, the different wage levels need to be taken into account. Establishing how long a person has to work in the individual countries in order to pay the postage rate of a standard letter has proven to be a good benchmark for this assessment. This calculation is based on the hourly wage of an industrial worker. Once again, the hourly rates established by the Institute for Economic Research for workers in the manufacturing industry have been used as consistent and reliable data for the calculation of the work in minutes per letter price (November 2014). The first ten countries in the ranking in which a person has to spend the most working time to earn enough to cover the respective postage price are exclusively countries that have joined the European Union since Bulgaria continues to be posi tioned at first place in this ranking where a person has to work just over 10 minutes to cover the postage rate of a letter. It is fol lowed by Latvia, Romania, Lithuania, Poland, Slo vakia, and Croatia where the number of minutes a person has to work to cover the postage rate of a letter ranges between 7.5 minutes to 5.5 minutes. In all the countries ranking at the top of this table, there is a visible trend indicating that workers have to work fewer minutes to cover the postage rate of a standard letter in Romania and Croatia around 30 seconds less than last year. Workers in Europe have to work an average of 3.41 minutes to earn enough to cover the post age rate of a standard letter, slightly longer than the previous year (3.40 minutes). Switzerland is at the end of this scale where workers only have to work 1.27 minutes to earn enough to cover the postage rate of a standard letter. Germany ranks second last in this ranking where workers only have to work 1.29 minutes to earn enough to cover the postage rate of a standard letter.
13 Letter prices in Europe 13 Work minutes per letter price in minutes Bulgaria Latvia Romania Lithuania Poland Slovakia Croatia Estonia Hungary Czech Republic Iceland Greece Portugal Italy Finland UK Denmark Cyprus France Norway Belgium Slovenia Austria Sweden Ireland Netherlands Spain Malta Luxembourg Germany Switzerland Average
14 14 Letter prices in Europe 6 Adjustment for labor costs Switzerland with the EU Member States in Eastern Europe where wages are much lower can only be made if the varying labor costs are factored in. As such, it is taken into consideration that staff costs only comprise a certain proportion of the overall costs of mail delivery. As a result, only this proportion is factored into the cost adjustment, while the rest remains unaffected. Compared to other industries, labor costs continue to be a major factor in mail delivery operations, above all in the last mile delivery, despite the high level of automation involved. This is also reflected in the large proportion of staff costs to overall costs. Labor costs in the surveyed countries, however, vary greatly. This means that the individual European postal companies have to shoulder differing cost burdens in terms of staff expenditure. A meaningful comparison of letter prices in high-wage economies such as Germany and For the adjustment, ratios are calculated using the labor costs for Germany and the respective countries which are then multiplied by the share of the letter price accounted for by staff costs. As such, it was possible to use statistics on the cost of labor in the postal, courier and express services sector in the countries surveyed. The average European price adjusted for labor costs is currently 1.05 and is once again 0.43 more than the price charged in Germany as in the previous year. Bulgaria once again charges the highest postage rate adjusted for labor costs at a stable 2.28 followed once again by Latvia, Lithuania
15 Letter prices in Europe 15 and Slovakia. Croatia now ranks fifth, having switched places with Estonia which occupies 7th position in the ranking list. The price of a letter adjusted for labor costs has risen sharply from 0.57 to 0.76 in Cyprus, moving the island state up ten places in the ranking to 19th position. The price of a domestic letter adjusted for labor costs has also risen sharply in Greece from 0.89 to 1.03, meaning it has moved from 17th position up to 13th position. By contrast, the price of a letter adjusted for labor costs has fallen by 0.20 in Portugal from 1.07 to Portugal has improved its position in the ranking by three places and now occupies 17th position in the ranking list. In Belgium, the price of a letter adjusted for labor costs has fallen by 0.06 to 0.65 meaning that Belgium has improved its ranking from 18th position to 25th position. Germany continues to hold its own in this group with a postage rate of 0.62, occupying 28th place in the ranking. Spain, Malta and Slovenia are the only countries where the price of a letter adjusted for labor costs is lower. Letter prices adjusted for labor costs in Bulgaria Latvia Lithuania Slovakia Croatia Romania Estonia Poland Iceland Hungary Denmark Finland Greece UK Czech Republic Norway Portugal Italy Cyprus France Luxembourg Sweden Netherlands Ireland Belgium Switzerland Austria Germany Spain Malta Slovenia Average
16 16 Letter prices in Europe 7 Adjustment for purchasing power parity Levels of income and social prosperity vary great ly in European countries which explains why it is important to take the factor of national purchasing power compared to letter prices in the individual countries into account. Only this way a reliable on the affordability of postage rates in the individual countries is possible. By taking the purchasing power into account, the different macroeconomic conditions in the countries under review are taken into consideration. Purchasing power parity therefore also compensates for the differences in price levels in each country which emerge when currencies are converted. Letter prices are divided by the countries purchasing power relative to Germany in order to take purchasing power parity into account. This means that letter prices in countries with a relatively high purchasing power, compared to Germany, are cheaper and vice versa. The calculation is based on purchasing power parities published by the EU statistical office, Eurostat. The comparative price levels are used as a basis and represent the actual price of the same representative basket of consumer goods and services in each country in a comparable currency unit. The average price of a standard domestic letter adjusted for purchasing power parity in the 31 European countries under review on average is 0.75 which is 0.05 more than the previous year. This indicates that the price of a standard letter in Germany at 0.62 is way below the European average even when the difference in purchasing power parity is taken into account. By contrast, 15 countries charge higher prices. Denmark and Poland charge the highest postage rate adjusted for purchasing power where the price of a standard letter adjusted for purchasing power parity is exactly 1.03 in both countries. In Denmark, the price increase also led to a sharp rise in the price of a standard letter adjusted for purchasing power parity of 0.12 converted into euro compared to the previous year. Estonia has deteriorated by moving five places up the ranking, now occupying 13th position. The price of a standard letter adjusted for purchasing power parity in Estonia has increased by 0.14 to 0.79 since the previous year. In Iceland (which ranks 9th), it has also risen by 0.12 to In Italy and France, the increase in the price of a standard letter adjusted for purchasing power parity is very noticeable in this ranking. In Italy, it has risen
17 Letter prices in Europe 17 Letter prices adjusted for purchasing power parity in Denmark Poland Slovakia Croatia Bulgaria Finland Greece Latvia Iceland Hungary Norway Italy Estonia Lithuania Romania UK Portugal Czech Republic Belgium France Netherlands Ireland Austria Germany Sweden Switzerland Luxembourg Spain Cyprus Slovenia Malta 0.35 Average 0.75 by 0.11, meaning it has worsened its position by three places. It now occupies 12th position in the ranking. In France, it has risen by However, France remains in 20th position in the ranking, charging The price of a standard letter adjusted for purchasing power parity has dropped in five countries, noteworthy, however, only in Bulgaria where it fell by 0.04 which is the first time it has fallen below the 1.00 threshold. Bulgaria which has had the highest price of a standard letter adjusted for purchasing power parity for many years, occupies 5th position in the ranking list this year. The price of a standard letter adjusted for purchasing power is particularly low in Spain, Cyprus and Slovenia. These countries occupy 28th, 29th and 30th position in the rank ing, where the price of a standard letter is less than Malta comes last in the rank ing once again this year. It continues to have the most affordable letter price in Europe where the price of a standard letter adjusted for purchasing power parity is just 0.35.
18 18 Letter prices in Europe 8 Consolidated results In this final step, the letter prices are adjusted for the macro-economic factors of both labor costs and purchasing power and are then consolidated into an overall result. The value determined using this method is therefore particularly reliable and informative. From this perspective, the European average of consolidated letter prices is now 0.90, 0.04 more than last year. In thirteen countries, the letter price is higher than this average, in 18 countries it is lower. After many years, Bulgaria continues to charge the highest letter prices, with a letter price of Latvia, Slovakia, Croatia and Lithuania follow in the ranking list with a consolidated postage rate of over 1.30 respectively. The trend in Croatia is striking where the consolidated letter price converted into euro has risen by around 0.20 to 1.32, meaning that the country in the Adriatic has moved from 6th position up to 4th position in the ranking. Estonia remains in 8th position despite the increase by 0.11 to 1.16, Italy has worsened its position by three places in this ranking owing to an increase in the consolidated letter price by 0.10 to 0.81, moving from 19th position up to 17th position. And Cyprus currently ranks 25th with a consolidated letter price of 0.62, 0.14 more than last year. The consolidated letter price dropped in Lithuania where it fell by 0.10 to 1.31, meaning that Lithuania has moved two places down the ranking list and now occupies 5th position. Norway also saw a significant decrease in the consolidated letter price in this survey. With a letter price of 0.88 when
19 Letter prices in Europe 19 Weighted consolidated postage rates in Bulgaria Latvia Slovakia Croatia Lithuania Poland Romania Estonia Iceland Denmark Hungary Finland Greece Norway UK Czech Republic Italy Portugal France Belgium Netherlands Ireland Sweden Austria Cyprus Germany Switzerland Luxembourg Spain Slovenia Malta Average converted into euro, the Scandinavian country now occupies 14th position in the ranking list having ranked 12th in The consolidated letter price also fell by 0.05 in Portugal where it is now 0.81, meaning Portugal has improved its ranking from 15th to 18th position. And Belgium ranks 20th, two positions lower down the ranking list where the consolidated letter price also fell by 0.04 to Germany has improved its position and is now placed at 26th in this ranking with the letter prices charged by Deutsche Post, clearly positioning itself in the lower range. The consoli- dated price of a letter is only cheaper in the generally much smaller countries of Luxembourg, Spain, Slovenia and Malta. By contrast, in 24 countries, it is more expensive than the postage rate charged in Germany. It becomes particularly apparent by European standards when prices take the factors of labor costs and purchasing power into account that although Deutsche Post increased its postage rate by 0.02 in nominal terms on January 01, 2015, it is actually charging a very affordable price and is offering excellent value for money with the mail service it provides.
20 Deutsche Post AG Headquarters Corporate Public Policy and Regulation Management Bonn Germany April 2015