PostNL demands mandatory 24-hour delivery law change to three-day delivery instead

PostNL plans to lobby to change the Dutch mail delivery law so that it can eventually deliver mail within three days instead of the current requirement to deliver nationwide within 24 hours. The mail service is struggling with declining volumes, increasing costs, and widespread staff shortages. The company announced its appeal to Dutch politicians to change the law while announcing 92 million euros in earnings last year, up 9.5 percent, on 3.165 billion euros in revenue in 2023.

“Demand is changing,” CEO Herna Verhagen said. “Surveys show that the need for next-day delivery has reduced significantly, visible in a strong decline in 24-hour mail. We strongly believe that the time has come to transform the delivery framework to better fit the needs of our customers and consumers and the current labor market.”

PostNL suggests transitioning toward a service level for standard mail delivery within two days and eventually within three days. “We keep offering priority delivery at a higher price. All this is already common in many other European countries,” Verhagen said. According to her, this is the only way toward a “financially viable postal service in the Netherlands.”

The Dutch postal company has been struggling with reduced mail volumes for years. At the same time, the lower mail volumes don’t mean less work for the postal deliverers, who have to travel the same routes to deliver the mail within 24 hours. The company is getting less income from standard mail while paying higher wages and facing increased costs.

The company’s domestic performance has been problematic for years. Only about 88 percent of mail reached its destination within the required timeframe last year, and the rate fell as low as 82 percent during the last quarter.

PostNL was hit with a fine of 2 million euros in 2019 for not delivering enough mail on time. The postal service is required to deliver 95 percent of domestic mail within 24 hours, but the on-time rate was 94 percent that year, the Consumer and Markets Authority said when issuing the fine.

PostNL expects people in the Netherlands to send fewer letters to each other, with the reduction expected to be between 7 and 9 percent. At the same time, domestic parcel volume should grow by 2 to 4 percent. “Volumes from international customers are expected to show double-digit growth, driven by Asian web shops. Together, this will result in volume growth at Parcels of between 7 percent and 10 percent,” the company said.

The company processed 1.745 billion pieces of mail within the Netherlands last year, a reduction of about 1.9 percent compared to the year before. On the other hand, parcel volume was largely flat in 2023, the first full year after the coronavirus pandemic. Roughly 343 million packages were delivered, compared to 344 million in 2022. The volume reductions were largely attributed to the first nine months of the year.

The company’s pre-tax earnings in 2023 totaled 92 million euros, up from 84 million euros in 2022. Total revenue at the company reached 3.165 billion euros, 21 million euros more than the previous year.

The Dutch postal firm saw earnings from domestic mail slashed from 107 million euros down to 50 million euros, while parcel earnings fell from 56 million euros down to 47 million euros. At the same time, operating losses from other services fell to just 5 million euros in 2023, whereas they accounted for 80 million euros in losses the year before.

To keep costs under control, the company said it planned to continue with the elimination of up to 300 full-time jobs with a look towards 2024. “PostNL assumes €25 million in annualized run-rate cost savings (2023: €5 million) from the reduction of 200-300 FTEs in overhead, mainly at Parcels, and other measures to reduce indirect costs and improve efficiency, as announced last year.”

The company argued that its desire to increase the time it has to deliver mail is crucial to its overall financial sustainability. “The transition towards a service level for standard mail, to be delivered within two days moving towards within three days over time, will allow PostNL to adjust the operational network. This is necessary to be able to achieve a sustainable level of cost savings going forward,” the organization stated.

“PostNL is committed to keeping the postal network in the Netherlands accessible, reliable, and affordable for all Dutch citizens.”