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POSTAL SERVICE

PostNord loses state support and obligation to deliver to all of Denmark

The government and several opposition parties have agreed to make changes to postal services that will see PostNord lose its obligation to deliver post to all of Denmark. Instead, market forces and competition will be relied on to ensure that all parts of the country can receive post.

Published: 28 June 2023 12:04 CEST
Postnord
The deal means that millions of kroner of annual state support for PostNord will be cut. Photo: Mads Claus Rasmussen/Ritzau Scanpix

Of all shipping services that operate in Denmark, only PostNord has the obligation to deliver post to all parts of the country, but this will be revoked.  

Although PostNord’s obligation to offer national coverage will be revoked, the transport ministry will continually monitor postal services and step in if there is not sufficient coverage. The deal means that millions of kroner of annual state support for PostNord will be cut.  

READ ALSO: Why Denmark’s postal services could undergo major change  

The parties that will join the government in voting for the new postal laws are the Liberal Alliance, Conservatives, Social Liberals, Alternative and Nye Borgelige (New Right).

Delivering 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.

“It’s good news that there is now broad agreement on a postal law suitable for current times which encompasses our political desire for uniform prices across the country and free choice of letter and parcel delivery services for the public in all of Denmark,” Transport Minister Thomas Danielsen said in a press statement.

Concerns have been raised that the deal would result in a lack of post coverage in remote parts of the country. The Denmark Democrats walked out of talks to back the new post law earlier in the week, citing this issue.

“It’s been crucial for us in these negotiations that all Danes in all of the country will still be able to send and receive letters,” Social Democrats transport spokesman Thomas Monberg said in the statement.

The libertarian party Liberal Alliance praised the decision to entrust the post to market forces.

“This is the end of sending tax revenues after a delivery obligation which the market can fulfil without any problem. Danes can now look forward to others doing it better. I’m in no doubt that this will give a better service for the right prices,” the party’s transport spokesperson Jens Meilvang said.

The deal includes a special arrangement for small islands which the parties say will improve postal services in such remote locations. Investment will be made in post infrastructure on the islands to facilitate free choice of services for residents, according to the agreement.

Air mail and post facilities for visually impaired people will continue to receive state support. The changes to the post laws will come into effect on January 1st 2024 but with transitional arrangements in place in some areas.

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POSTAL SERVICE

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.

Published: 28 June 2023 17:17 CEST
Will changes to PostNord mean more expensive post in Denmark?

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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