Letter prices in Europe. Up-to-date international letter price survey. March th edition

Transcription

1 Letter prices in Europe Up-to-date international letter price survey March th edition

2 1 Summary This is the fifteenth time Deutsche Post has submitted 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 year The price of a domestic standard letter has increased in eighteen of the countries under review since the last study was carried out. On average, postage rates for domestic letters have risen by 0.14 year- on-year. The postage rate for letters sent within Europe increased in 17 countries. Letters sent to another European country now cost 0.19 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 macro-economic factors were taken into account in the study such as inflation, labor costs, purchasing power, and the working minutes required to cover the cost of postage for a letter.

3 Letter prices in Europe 3 The postage rate for standard letters in Germany rose by 0.08 to on January 1, The consolidated comparison of postage rates adjusted for differences in labor costs and purchasing power clearly indicates once more that Deutsche Post charges very affordable letter 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 seven generally much smaller states, whereas postal customers in 20 countries have to pay more than postal customers in Germany. Contents 1 Summary 2 2 Comments on methodology 5 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 The highest consolidated postage rates for standard letters are charged in Italy and Denmark, followed by a series of Eastern European states. The country charging the lowest letter price is Malta. The average consolidated European letter price is 0.13 higher than it was last year and is now at When adjusted for inflation, postage rates for letters in Germany have gone up by approx. nine percent since The average letter prices in Europe, however, have risen by more than 37 % during this period when the impact of inflation is taken into account. When comparing the average hours employees need to work to cover the cost of a domestic letter in the countries surveyed, German letter prices are very competitive. Only in Switzerland and Malta do workers have to work less to earn the postage rate of a letter. Published by Editor Design Photography March 2016 Deutsche Post AG Headquarters Corporate Public Policy and Regulation Management Bonn Regine Stöldt, Alexander Rometsch-Steinmann +C Kommunikationsdesign Caroline Gärtner Deutsche Post DHL Group, Kay Herschelmann, Stefan Abtmeyer (letters), CTT Correios de Portugal, SA, Le Groupe La Poste, Post Danmark, Post NL, Posten Norge, AS, Håvard Jørstad

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5 Letter prices in Europe 5 2 Comments on methodology This study 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. It considers the fastest letter 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, in particular with regard to transit time. This method is also applied to countries like Denmark or Italy that have in response to substitution-related reductions in demand significantly raised their prices for letters with a transit time of D+1 compared to those with longer transit times. The aim of the methodological approach chosen for the comparison 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 and Slovenia (only for letters within Europe) the study 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. This study considers standard letters only, as this product represents still 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 2006 to 2015, adjusted for inflation. Following this, 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 under review, adjusted for factors such as labor costs and purchasing power parity. The relevant values for Germany and the other countries are compared as required by the respective factors to be adjusted for. The calculated ratios are multiplied by the nominal letter prices of the relevant countries which results in the adjusted letter prices. This study takes into account all applicable postage rates or bindingly announced price changes in the countries under review at the time of going to print on March 1, The data on the individual countries surveyed was 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 used data identified by the Cologne Institute for Economic Research, namely the hourly wages of a worker in the manufacturing industry. Exchange rates also had an impact on letter prices this year. The result was, for instance, that in Switzerland domestic postage rates remained the same in local currency even though in nominal terms they increased by 0.12.

6 6 Letter prices in Europe 3 Nominal price comparison minor increases of 0.02 in Slo venia, Belgium, and Ireland. In France, letter prices increased for the seventh consecutive time, most recently by Prices went up by 0.10 in Estonia, Germany, Luxembourg, and Finland. In Denmark, the price almost doubled from DKR 10 in 2015 to the current rate of DKR 19. In Italy, the price for a standard letter the letter that carries a next-day delivery target has risen drastically from 0.80 to The option for simplified shipment tracking was introduced in conjunction with this product. In Sweden, the letter price will go down from SKR 8 to SKR 6.5 on April 1, 2016 as public postal services and postage stamps become exempt from VAT (25%). A price reduction has not been found in any other country, and in twelve states the price remained the same. 3.1 Domestic letter mail A comparison of nominal prices for a domes tic standard letter shows that Germany continues to rank in the mid-range of the countries surveyed (ranked no. 14 out of 31). The postage rate for standard letters in Germany has been since January 1, This is significantly below the European average which has meanwhile risen to 0.80 compared to 0.66 last year. The price of a domestic standard letter has increased in eighteen of the countries under review since the last study was carried out. There were Fluctuations in currency have meant, for instance, that domestic postage rates in Norway converted into euro dropped even though the actual postage rates were moderately increased. By contrast, in Switzerland, prices are 0.12 higher when they are converted into euro even though the postage rate for a standard letter remained the same in Swiss francs. The highest price for a domestic standard letter in Europe is currently payable in Italy at The previous leader Denmark now ranks second with the converted amount of With the converted amount of 1.23, Norway is now in third place.

7 Letter prices in Europe 7 Nominal price for a domestic standard letter in Italy Denmark Norway Finland Iceland Switzerland UK Croatia France Belgium Netherlands Greece Ireland Germany Luxembourg Sweden Austria Slovakia Estonia Portugal Latvia Poland Czech Republic Hungary Lithuania Spain Bulgaria Cyprus Romania Slovenia Malta 0.26 Average It must, however, be noted that 25 % valueadded tax is included in the cost of postage in Norway. Places four and five are taken up by Finland and Iceland with letter prices in excess of All five states at the top of the table experienced price increases in the past few months. A price increase by well over 40 % had the effect that Croatia went up nine places in this overview compared to the previous year and is now in 8th place. The price reduction in Sweden has resulted in a significantly improved ranking, down from 9th place to 16th place. Austria and Slovakia improved their positions in the ranking by four and three ranks, moving to 17th place and 18th place respectively. The postage rate for a standard letter remained stable in both countries. Bulgaria, Cyprus, Romania, and Slovenia, which charge very low nominal letter prices, remain in the lower range of this ranking. The country charging the lowest letter price in nominal terms is the island-state of Malta which thus comes last in this table.

8 8 Letter prices in Europe 3.2 Letter mail within Europe currency but went up slightly when converted to euros. Prices for standard letters within Europe have risen in 17 of the countries under review. Fourteen of these countries also increased their domestic postage rates. By contrast, Norway, Slovenia, Iceland, and Croatia only increased domestic postage rates whereas Austria, Switzerland, and Hungary only increased postage rates for European letters. Sweden is the only country where the price for a letter within Europe went down due to the VAT exemption, while the postage rate did not change in thirteen states. The average price for letters within Europe is 1.28 and has thus increased by 0.19 year-on-year. The postage rate for letters sent within Europe almost quadrupled in Italy (from 0.90 to 3.50). In Romania, the price went up by approx. 90 % compared to the previous year, and in Denmark the increase amounted to 72 %. There were also sharp price increases in Spain and Estonia where prices rose from 0.90 to 1.15 (+28 %) and from 1.20 to 1.40 (+17 %), respectively. Moderate price increases of 0.10 in each case took place in Finland, the Netherlands, Luxembourg, Germany, and Austria. Currency fluctuations also had an impact on letters within Europe: in Iceland and Croatia, for example, prices for letters sent within Europe remained stable in the local In all countries, it is now more expensive to send a letter within Europe than it is to send a domestic letter. Until last year, Finland still had a standard rate for both offerings, but now charges for sending mail to another European country have gone up. On average, letters within Europe now cost 1.8 times as much as a standard 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 Spain, Romania, Malta, Estonia, and Hungary have to pay twice as much whereas prices in Germany, Denmark, Norway, and Greece are only 1.3 times more expensive than domestic postage. Due to their price increases, Italy and Denmark also take up the top spots for letters within Europe in this table. Portugal, where customers previously had to pay the highest rates for a European letter in nominal terms (since 2003), has now dropped to 3rd place. Norway, Great Britain, and Croatia are clearly much further down in the ranking. Sweden and Slovenia each moved up five places in the ranking and now occupy 9th and 11th position. Places 13 and 15 are taken up by Poland and Belgium, each of which has risen six places in the ranking while Spain dropped six ranks to 16th place. Last year, Romania charged the lowest postage rate for a European letter in nominal terms but, as a result of the price increase, it climbed up 8 ranks and now occupies 23rd position in the ranking. With the lowest postage rate of 0.59 for a European letter in nominal terms, Malta takes up last place. Although Germany increased its postage rate from 0.80 to 0.90 to send letters within Europe, it still has a stable ranking in the lower part of the table, occupying 25th position.

9 Nominal price for letter mail within Europe in Italy Denmark Portugal Norway UK Croatia Switzerland Estonia Sweden Finland Slovenia Netherlands Poland Iceland Belgium Spain Hungary Ireland Slovakia France Luxembourg Czech Republic Romania Greece Germany Lithuania Austria Latvia Bulgaria Cyprus Malta 0.59 Average

10 10 Letter prices in Europe 4 Price developments since 2006 In order to perform a meaningful comparison of letter prices charged in the European countries, it is essential to take the various price developments into consideration. A letter price that is nominally unchanged in a country, 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 of the rate of the various price increases. The average rates of inflation in the countries surveyed varied greatly in recent years: high average rates as in Iceland (6.0 %) or Romania (4.5 %) occurred alongside low rates of 1.5 % in Germany, France, or the Netherlands. In Ireland (0.9 %) and Switzerland, which experienced a particularly high level of price stability (0.4%), the average rate of inflation over the last ten years was even below 1 %. Taking inflation into account, the price of a standard domestic letter in the European countries surveyed has risen on average by more than one-third (36.8 %) since It only dropped in five states in real terms but rose in 26 countries. The high drop in postage rates for standard letters in real terms in Croatia by over 45% 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 this overview, Italy and Denmark once more occupy the top two positions due to the recent unusual price increases. In Italy, the letter price has almost quadrupled since 2006 when adjusted for inflation, while it more than tripled in Denmark. In Romania, which used to lead this ranking for a long time, the postage rates still almost doubled. Postage rates when adjusted for inflation increased by 9.6 % in Germany since This means Germany currently occupies 21th position (bottom third) in this ranking list of letter prices that were adjusted for inflation.

11 Letter prices in Europe 11 Inflation-adjusted change in letter prices in % Italy Denmark Romania Iceland Estonia UK Slovenia Netherlands Czech Republic Finland Norway France Belgium Spain Ireland Greece Malta Luxembourg Portugal Lithuania Germany Bulgaria Hungary Sweden Austria Cyprus Slovakia Switzerland Poland Latvia Croatia Average 36.8 %

12 5 Work in minutes per letter price According to the European Union s Postal Services Directive, prices for universal service products have to be affordable in the member states of the European Union. In order to be able to assess compliance with this criterion in the individual European countries, the different income levels need to be taken into account. A good indicator for this involves establishing how long a person has to work in order to earn the equivalent amount of money for a standard letter. This calculation is based on the hourly wage of an industrial worker. Once again, the hourly rates communicated by the Cologne Institute for Economic Research and the Postal Companies for workers in the manufacturing industry have been used as a consistent and reliable database for the calculation of the work in minutes per letter price. The top third of the table of letter prices adjusted in this way predominantly lists countries that have joined the European Union since With Italy, a founding member of the EU now takes up 2nd place. Here, customers now have to work more than eight minutes to be able to afford the postage rate for a letter. Bulgaria is still in 1st place in this ranking where a person has to work almost 10 minutes to cover the postage rate of a letter. In Croatia, Latvia, Romania, Lithuania, Estonia, Poland, and Slovakia, a person still has to work over 5 minutes to be able to afford the postage for a letter. In many Eastern European countries, however, the minutes of work required to afford the postage for a letter tend to go down year after year. Workers in Europe have to work an average of 3.71 minutes to earn enough to cover the postage rate of a standard letter, which is 0.3 minutes longer than the previous year (3.41 minutes). Malta is at the end of this scale where workers only have to work 1.35 minutes to earn enough to cover the postage rate of a standard letter. Germany is the third from the bottom in this ranking with a value of 1.42 minutes and offers a particularly affordable letter price in line with this criterion too.

13 Letter prices in Europe 13 Work minutes per letter price in minutes Bulgaria Italy Croatia Latvia Romania Lithuania Estonia Poland Slovakia Hungary Czech Republic Denmark Portugal Greece Iceland Finland UK Cyprus France Norway Slovenia Belgium Netherlands Ireland Spain Austria Luxembourg Sweden Germany Switzerland Malta Average 3.71 minutes

14 14 Letter prices in Europe 6 Adjustment for labor costs Germany 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 must be taken into consideration that staff costs only make up a certain proportion of the overall costs of mail delivery. Accordingly, only this proportion is factored into the cost adjustment, while the rest remains unaffected. 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 that depends on staff costs. As such, it is possible to use statistics on the cost of labor in the postal, courier and express services sector in the countries surveyed. Compared to other industries, labor costs continue to be a major factor in mail delivery operations. It is obvious that this is also reflected in the large proportion of staff costs to overall costs. Labor costs in the countries under review vary greatly though. This means that the individual postal companies have to shoulder differing cost burdens. A meaningful comparison of letter prices in high-wage economies such as The average European price adjusted for labor costs is currently 1.18 and is therefore now 0.48 higher than the price charged in Germany. Eleven countries rank above the average value and 18 countries below it. With a value of 2.77, Italy now also heads this table of letter prices adjusted for labor cost. Croatia and Denmark are now in second and third place.

15 Letter prices in Europe 15 Bulgaria, which led this ranking for many years, now occupies 4th position with a postage rate adjusted for labor costs of 2.19, compared to 2.28 last year. The downward cost trend can be noticed in many Easter European states in this study. This also caused Latvia, Lithuania, Slovakia, Romania, Poland, and Hungary to drop several places in this ranking. In Switzerland, on the other hand, the letter price adjusted for labor cost has risen by 0.09 to The Swiss Confederation improved its position in the ranking by five places and now occupies 21st position. Germany is still in the bottom quarter with a postage rate of, occupying 24th place in the ranking. At 0.49 and 0.52, Malta and Slovenia offer the most favorable letter prices adjusted for labor costs. Letter prices adjusted for labor costs in Italy Croatia Denmark Bulgaria Latvia Estonia Lithuania Slovakia Romania Iceland Poland Finland Hungary Greece UK Czech Republic Portugal Norway Luxembourg Cyprus Switzerland France Netherlands Germany Ireland Belgium Spain Austria Sweden Malta Slovenia Average

16 16 Letter prices in Europe 7 Adjustment for purchasing power parity Levels of income and social prosperity vary greatly within Europe, and consequently purchasing power also differs between the states. This is a critical factor when asking how affordable postage rates are in the individual countries. By taking the purchasing power into account, the macro-economic 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 adjustment 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 0.89 which is 0.14 more than the previous year. This indicates that the price of a standard letter in Germany at is 0.19 below the European average when the difference in purchasing power parity is taken into account. By contrast, ten countries charge higher prices. Italy and Denmark charge the highest postage rate adjusted for purchasing power. The top group also includes Croatia in 3rd place. This value has significantly risen by another 0.15 in Estonia, which now occupies 9th place in the ranking at 0.94, i. e., four places up from last year. A similar trend can be observed in Iceland where the letter price adjusted for purchasing power has risen by 0.14 (converted from local currency), so that this country has moved up three places in the ranking and now occupies 6th position. After adjustment for purchasing power, letter postage rates fell in five countries: in Poland, Romania, Cyprus, and Malta by 0.01 each and in Sweden as a result of the VAT exemption by Germany is still in the bottom part with a postage rate of, occupying 21st place in the ranking. The price of a standard letter adjusted for purchasing power is particularly affordable in Spain, Cyprus, and Slovenia. These countries, where the price of a standard letter is around 0.50, occupy 28th, 29th, and 30th position in the ranking. Malta, where the price of a standard letter adjusted for purchasing power parity is just 0.34, continues to have the most affordable letter price in Europe.

17 Letter prices adjusted for purchasing power parity in Italy Denmark Croatia Slovakia Poland Iceland Finland Bulgaria Estonia Greece Latvia Hungary Norway UK Czech Republic Lithuania Portugal France Romania Belgium Germany Netherlands Switzerland Ireland Austria Luxembourg Sweden Spain Cyprus Slovenia Malta 0.34 Average

18 18 Letter prices in Europe 8 Consolidated results In this overview, 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 average letter price consolidated in this way has now exceeded the one-euro mark. It amounts to 1.03, which is 0.13 more than in Twelve member states rank above this average, and 19 below it. First to third place are taken up by Italy, Denmark, and Croatia. The amount of the consolidated letter price went up significantly in all three states. In Estonia (+14), Iceland (+15), and Luxembourg (+10) this value increased by amounts in excess of 0.10, causing these countries to move up the ranking. Germany occupies a solid 23th position in the bottom third of this ranking. Despite the latest price increases, Germany therefore continues to be among the countries with the most affordable postage rates for letters in Europe. Only countries that tend to be much smaller such as Ireland, Cyprus, Slovenia, and Malta achieved a more affordable consolidated letter price. In 20 countries, however, postage is more expensive than in Germany. With its Standardbrief letter price, Deutsche Post has been offering excellent service at a very affordable price for many years, as has been clearly demonstrated once again in this Europe-wide comparison. Lower amounts for the consolidated letter price can be found, in particular, in Latvia (-7), Lithuania (-9), and Sweden (-6) so that these three countries were able to improve their position in this table significantly.

19 Letter prices in Europe 19 Weighted consolidated letter price in Italy Denmark Croatia Bulgaria Latvia Slovakia Estonia Iceland Lithuania Poland Romania Finland Hungary Greece UK Norway Czech Republic Portugal France Switzerland Netherlands Belgium Germany Luxembourg Ireland Austria Cyprus Spain Sweden Slovenia Malta Average

20 Deutsche Post AG Headquarters Corporate Public Policy and Regulation Management Bonn Germany March 2016