Swiss Post to increase letter prices moderately for the first time in 18 years whilst supporting companies
In agreement with the price regulator, Swiss Post will increase the price of A Mail letters by 10 centimes and B Mail letters by 5 centimes as of January 2022. This is the first increase in letter prices in 18 years. The prices for parcels will remain unchanged. Swiss Post is leaving these prices as they are in order to support Swiss companies in these financially difficult times. Swiss Post also pledges to grant price benefits to private customers and SMEs. The moderate price measures are one of four strategic thrusts in Swiss Post’s new strategy, which it has been implementing gradually since the beginning of the year. The other three strategic thrusts – efficiency measures, investments and targeted growth – are also on track after the first half of the year. Through its new strategy, Swiss Post is aiming to guarantee that it can provide its public service from its own resources in the long term.
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Swiss Post has agreed on an increase in letter prices in consultation with the price regulator: as of 2022, an A Mail letter in standard format will cost 1.10 Swiss francs (previously 1 Swiss franc), and a B Mail letter will cost 90 centimes (previously 85 centimes). Letter prices have remained unchanged for 18 years. The structural costs for the universal postal service – in other words, for the processing of a declining number of letters – have risen significantly during this period. This is due firstly to general inflation, and secondly to the increase in households and hence in the number of private letter boxes in Switzerland. By way of comparison, since 2004, Swiss salaries have risen by an average of around 17 percent, living/energy costs by around 22 percent and health insurance premiums by 45 percent.
A package of measures covering prices and services
The negotiations with the price regulator involve far more than changes to letter prices. Following their discussions, both parties have agreed on a complete package of measures concerning prices and the expansion of services. They have also decided jointly on various price changes. These additional modifications to prices concern P.O. Boxes, mail forwarding due to a change of address and international letter mailing (details are given in the table below). In conjunction with the price regulator, Swiss Post has also agreed on price benefits for customers. Private customers who frank their parcels online will benefit from an online discount of 15 percent, for instance. PostPac Priority parcels weighing between two and ten kilograms are an exception to this. Upon request, mail carriers will in future collect up to five parcels free of charge from every SME in Switzerland during their delivery round. Business customers who frank their parcels online will also receive a discount of ten percent on the list price. List prices are prices applicable to private customers and SMEs who send fewer than 750 parcels per year and who have not negotiated individual prices with Swiss Post. The list prices for parcels remain unchanged. With these accommodating measures, Swiss Post wants to offer support and ease the burden on companies in Switzerland during these financially difficult times. Most parcels are sent by these very companies. “Thanks to its good interim results, Swiss Post is able to leave the current parcel prices unchanged, in turn supporting SMEs and satisfying the price regulator,” explains CEO Roberto Cirillo.
Public service: consistent implementation of the “Swiss Post of tomorrow” strategy
The price measures are just one of four strategic thrusts in Swiss Post’s new strategy, which it has been implementing gradually since the beginning of the year. “Our primary goal is to provide a high-quality universal service for the whole of Switzerland at the same price throughout the country. We want to continue financing the universal postal service from our own resources in the future, without any subsidies or money from taxpayers. To do so, we are consistently following four strategic thrusts and have been implementing them gradually since the beginning of the year. We want to continue to connect people and companies in Switzerland in the future,” says CEO Roberto Cirillo. As well as prices, the four strategic thrusts of the “Swiss Post of tomorrow” comprise efficiency measures, investments and targeted growth.
Strengthening from within thanks to efficiency gains
In implementing its new strategy, Swiss Post is also taking strong internal action in the form of efficiency measures. The company reached one particular efficiency milestone at the start of the year: combining parcel and letter logistics in one large unit. This was one of the largest mergers in the history of Swiss Post – involving more than 20,000 employees. The merger went very smoothly thanks to the great dedication shown by staff members. The results of the 2021 employee survey are particularly encouraging in these circumstances. The results remain stable at a high level, and some have even improved. The scores in relation to scope for decision-making and team values have risen, for example. Due to the ongoing pandemic and the organizational and structural changes resulting from the new strategy, the past few months have proved particularly challenging for many employees on various levels. Since the beginning of the year, Swiss Post has pooled synergies from the two previously separate letter and parcel logistics units in the newly created Logistics Services unit. The company is safeguarding jobs and will be able to continue offering attractive positions in the future. At present, mail carriers already deliver around half of all parcels.
Substantial investments in logistics
Swiss Post has invested a great deal in its logistics in recent years: around 260 million francs since 2017. In the last three years alone, this has enabled Swiss Post to open four new regional parcel centers (in Ostermundigen, Vétroz, Cadenazzo and Untervaz). Without these investments, Swiss Post would no longer be able to cope with the current parcel volumes of up to 900,000 parcels per day. The expansion and modernization of logistics will continue. The future logistics network is planned to consist of at least four locations for letter sorting and at least 15 for parcel sorting by 2030 – i.e. at least seven more sites than at present. As well as the four regional parcel centers that have already been brought into operation, Swiss Post is focusing on additional sites such as Utzenstorf, Bützberg, Pratteln, Buchs (AG) and Rümlang. Härkingen letter center will house a further parcel sorting plant and is set to be expanded. By 2030, Swiss Post intends to invest around 1.2 billion francs more in the expansion of its sorting and delivery infrastructure. The planned capacity expansion will allow it to safeguard existing jobs in sorting and provisionally create around 1,500 additional positions.
Another strategic thrust focuses on generating growth through targeted purchases. To keep pace with the rapidly changing times and remain self-financed in the future, Swiss Post is growing in its existing core areas as well as other related sectors. Whenever possible, growth is achieved from within Swiss Post, i.e. in an organic manner. Swiss Post supplements this growth with carefully selected takeovers of external companies wherever it makes sense to do so.
Swiss Post must scale up its connections to international logistics networks and strengthen its position in the goods logistics market. After all, logistics is becoming increasingly global and does not stop at national borders. “We connect Switzerland with the world and offer companies in Switzerland genuine added value,” says Roberto Cirillo. Swiss Post cannot form these international links within a reasonable timescale without making selective purchases. In the first half of the year, it acquired a number of selected logistics companies (read more in the press release about the interim results).
Furthermore, Swiss Post is providing considerable support to the Swiss economy and the public on the path to an increasingly digital future. For this reason, Swiss Post is also growing in the area of digital communication services. The aim is to transfer the concept of mail secrecy easily and securely to the digital world. Swiss Post has already completed initial takeovers, such as acquiring a majority stake in KLARA Business Ltd, a company which operates in digital communication services. It also acquired the cloud provider Tresorit and the advertising marketing company Livesystems in early July.
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The main changes to prices and services as of 1 January 2022 at a glance
The list prices will be increased by 10 centimes for domestic A Mail letters and 5 centimes for domestic B Mail letters, bringing the price of a standard A Mail letter to 1.10 francs and that of a standard B Mail letter to 90 centimes.
Services and prices for international letters will be modified. Consignments are now classified according to their content (documents and small goods). Letter mail with small goods can be sent in the maxi letter format. For the “Small goods” maxi letter, there are new weight categories (up to 100 g and up to 250 g). Consignments are no longer divided into PRIORITY and ECONOMY. The consignment formats and weights comply with international specifications (standard letter format up to 0.5 cm thick, large letter weight up to 500 g).
The price for entering “Customs data” for international letters and parcels at the counter will be increased from CHF 3 to CHF 5. As before, no costs will be incurred by customers who enter their EAD online themselves.
A P.O. Box “Standard” will now cost CHF 120 per year for all customers (previously free of charge from a minimum of five letters per day; otherwise CHF 240 per year); the cost for a P.O. Box “Separate” (P.O. Box as a separate delivery point) will remain the same (CHF 240 per year); a new P.O. Box “Association” will be created (CHF 120 per year).
Customers now have the option to choose between three different durations. The existing duration of 12 months will become more expensive (previously CHF 30; now CHF 45), and two further durations will be added: six months (CHF 35) and 18 months (CHF 55).
Private customers who frank their parcels online will benefit from reduced prices (except for PostPac Priority weighing between 2 and 10 kg).
Business customers who frank their parcels online at list prices will benefit from a discount of 10 percent per consignment.
Swiss Post will now collect up to five parcels a day free of charge from every SME in Switzerland on its delivery rounds.