The Swedish Postal Services Market 2016 - report number PTS-ER-2016:3

07/06/2016

The report “The Swedish Postal Services Market” provides a follow-up and analysis of the situation on the postal services market in Sweden. It is rooted in the assignments that PTS has for presenting an annual report to the Government about the current conditions on the market in question. In order to put the information requested by these government assignments in their context, we have this year chosen to compile it under four headings, namely

  1. Developments in the Swedish postal services market,
  2. Competition and pricing,
  3. Service and quality, and
  4. Looking ahead.


The chapter entitled Developments in the Swedish postal services market begins with an account of three significant events in 2015 that might have a major impact on the Swedish postal services market. The first is the European Court of Justice's “VAT ruling”, which has forced Sweden to abolish obligatory VAT for certain parts of the universal postal service. The second relates to the “bpost ruling” concerning annual quantity discounts where another ruling by the European Court of Justice has been used by PostNord to justify the introduction of a model of annual quantity discounts, which in the view of PTS would entail an impermissible difference in treatment with respect to a particular group of clients. The issue is still the subject of judicial examination. The third event concerns the deficiencies in the quality of distribution that have arisen due to the rationalisation measures taken by PostNord in response to the effects of fewer and fewer letters being sent. The same chapter continues with a report on the development of volumes and market shares in the letter market. Partly in light of the steadily growing e-commerce, we then provide a more detailed treatment of prevailing conditions on the parcel market and of what can be discerned with regard to the development of this sub-market over the next few years.

Under the heading of Competition and pricing we begin with an account of the competitive situation in the letter market broken down into six “sub-markets”. The section “Barriers to market entry in the letter market” describes the conditions for establishing a competing letter conveyance service in Sweden, also broken down into a number of relevant sub-markets. The section “Price developments in the postal services market” discusses price development in general and PTS's follow-up of compliance with price regulation within the postal services sector. This mainly relates to the obligation for PostNord's pricing of the universal service to be transparent, non-discriminatory and cost-oriented, and to the “price cap” for single mail items.

Service and quality is the title of the chapter discussing complaints trends in the postal services market. This involves statistics on complaints received by PTS, PostNord and Bring Citymail, which show that complaints against these postal operators have increased, rather significantly, in 2015. In connection with the section on complaints, there is also a report of how PTS handles
“undeliverable letters” (letters that the postal operator has for some reason not been able to deliver to the addressee and has also not been able to return to the sender but has instead sent to PTS). The most remarkable aspect in this context is that at the beginning of the year 2000, one in every 12,000 letters was classed as undeliverable, while the corresponding rate today is one in 5,200 letters. The section “Challenges of access to postal services in rural and sparsely populated areas” describes the conditions for efforts to maintain a good postal service in such areas despite declining letter volumes. We also present the user surveys carried out by PTS to obtain a better basis for the considerations that need to be made, for example as regards the scope of the universal postal service.

The concluding chapter Looking ahead discusses the international conditions on the postal services market that affect opportunities for employing regulation and other means to promote good national development in the sector. The discussion is divided into EU-related and UPU-related issues. At the EU level, PTS works mainly in the context of the European Regulators Group for Postal Services (ERGP), and at the global level, the activities of the UN agency, the UPU, are of interest. The chapter presents the issues that are currently of greatest relevance to these two organisations. And in a special section, we discuss the European Commission's initiatives to bring to completion an internal market also for parcel delivery.