Letter prices in Europe Up-to-date international letter price survey. March 2014 13th edition
1 Summary This is the thirteenth time Deutsche Post has carried out 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 Euro pean Free Trade Area (EFTA) countries of Iceland, Norway and Switzerland. As in previous studies, the nominal prices in the different countries were compared and contrasted for the reference year 2014. The price of a do mestic standard letter has increased in 14 of the countries under review. Based on the euro pean average, postage rates for domestic letters have risen by 0.03 year-on-year. The postage rate for letters sent within Europe also increased in 14 countries. Letters sent within Europe now cost 0.07 more on average than they did when last year s study was conducted. A purely nominal approach by itself would not allow for an objective assessment of the letter prices charged in the countries under review. For this reason, other economic factors were taken into account in the study which are vital to ensuring the comparison is both informative and realistic. For that reason macroeconomic factors including the development of inflation rates in the countries under review were taken into consideration.
Letter prices in Europe 3 In Germany the postage rate for standard letters rose by 0.02 to 0.60 on January 01, 2014. The consolidated comparison of postage rates adjusted for differences in labor costs and purchasing power proves nonetheless that Deutsche Post charges very affordable 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 six generally much smaller states, whereas postal custom ers in 23 countries have to pay more than postal customers in Germany. Contents 1 Summary 2 2 Comments on methodology 4 3 Nominal price comparison 3.1 Domestic letter mail 6 3.2 Letter mail within Europe 8 4 Price developments since 2004 10 5 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 As in the previous years, eastern european states dominate among the ten countries charging the highest postage rates. The highest postage rate for standard letters continues to be charged in Bulgaria whereas the country charging the lowest letter price in Europe is Slovenia. The average letter price factored for macroeconomic conditions is 0.04 higher than it was last year at 0.86. When adjusted for inflation, postage rates in Germany have fallen by just under 8 percent since 2004. Prices have only decreased more sharply in Portugal, Cyprus and under special conditions in Croatia. By contrast, the average postage rates in Europe have risen by one-fifth when the impact of inflation is taken into account. Published by Editor Design Photography March 2014 Deutsche Post AG Headquarters Corporate Public Policy and Regulation Management 53250 Bonn www.dp-dhl.com Alexander Rometsch-Steinmann, Regine Stöldt +C Kommunikationsdesign Caroline Gärtner Deutsche Post DHL, An Post, Die Schweizerische Post, Itella Oyj, Stefan Abtmeyer In Germany, the average number of minutes employees need to work to cover the cost of a standard letter is also particularly low.
Letter prices in Europe 5 2 Comments on methodology This survey 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. This survey considers the fastest letter mail 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. This approach in combination with the inclusion of key macroeconomic 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, Sweden and Slovenia (only for letters within Europe) the survey 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 in the various countries. This survey considers standard letters only, as this product represents 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 2004 to 2013, adjusted for inflation. In addition, 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 surveyed, taking factors such as labor costs and purchasing power parity into account. For each country, the value of the factor they are adjusted for, is shown relative to the corresponding value in Germany. The calculated ratios are then multiplied by the nominal letter prices of the relevant countries which results in the adjusted letter prices. This survey is based on the postage rates that are valid on April 1, 2014. The data were 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 utilized data from the Cologne Institute for Economic Research, namely the hourly wages of a worker in the manufacturing industry (as at: October 2013). Exchange rates also had an impact on letter prices this year. The result was, for instance, that although domestic postage rates in Switzerland and postage rates for letters sent within Europe remained the same in local currency, they actually decreased by 0.02 in nominal terms.
6 Letter prices in Europe 3 Nominal price comparison 3.1 Domestic letter mail A comparison of nominal prices for a domestic standard letter shows that Germany continues to rank in the mid-range of the countries surveyed. The postage rate for standard letters in Germany has been 0.60 since January 01, 2014. This is 0.02 below the european average which has risen by 0.03 to 0.62. Postage rates have increased in 14 european countries since the last study was carried out. The price increases range from minor increases of 0.02 in Germany and Slovenia, 0.03 in France and Portugal to major increases of 0.10 in the Netherlands and even 0.20 in Finland. Postage rates also increased by over 10 percent in Denmark. In Spain postage rates remain stable following increases for the seventh consecutive time and in Belgium postage rates remain stable after postage rates increased for the sixth consecutive time. The postage rate remained stable in Switzerland, but when the amount is converted into euro it becomes evident that it actually dropped by 0.02. The rise of the postage rate in Great Britain from 0,60 to 0,62 nevertheless means that converted into euro it dropped by 0,01. As in the past few years, the highest letter prices in Europe in nominal terms can still be found in Norway and Denmark. However, the sharp rise in postage rates in Denmark has led to a difference of just 0.07 in the postage rates charged by the two countries, with converted amounts of 1.28 and 1.21 respectively, compared to 0.15 last year. It must, however, be noted that 25 percent value-added tax is included in the cost of postage in Norway.
Letter prices in Europe 7 Nominal price for a domestic standard letter in Norway Denmark Finland Switzerland Iceland Belgium UK Greece Italy Sweden France Slovakia Netherlands Austria Croatia Luxembourg Ireland Germany Latvia Poland Czech Republic Portugal Hungary Lithuania Estonia Bulgaria Spain Romania Cyprus Slovenia Malta 0.81 0.81 0.77 0.73 0.72 0.70 0.69 0.66 0.65 0.64 0.62 0.61 0.60 0.60 0.60 0.57 0.56 0.50 0.50 0.49 0.45 0.45 0.44 0.37 0.36 0.34 0.29 0.26 Average 0.62 1.00 1.28 1.21 The 20 percent increase in postage rates in Finland means it now ranks third in the comparison of domestic letter mail prices in nomi nal terms, albeit by a significant margin. Switzerland improved to 4th place with converted postage rates of 0.81. A price increase of 0.10 caused Greece to make a remarkable leap from 13th place up to eighth place in this ranking. The Netherlands deteriorated in this ranking, moving from 19th place up to 13th place. Domestic postage rates continue to be particularly low in Spain, Romania, Cyprus and Slovenia. And last but by no means least, the country charging the lowest letter price despite an increase of 0.06 is the islandstate of Malta, where the postage rate for a domestic letter is just 0.26.
3.2 Letter mail within Europe Prices for standard letters within Europe have once again risen in 14 of the countries under review. The prices have increased in eleven countries that also increased their domestic postage rates. By contrast, Germany, Norway and Iceland only increased domestic postage rates whereas Belgium, Sweden and Poland only increased postage rates for letters sent within Europe. The average price of a standard letter within Europe has risen by 0.07: whereas the average price of a standard letter within Europe was 0.96 in 2013, it is now at 1.03. This trend has been driven by sharp price increases, for instance, in Finland where the average price of a standard letter within Europe rose from 0.80 to 1.00, in the Netherlands where the price increased by 0.15 to 1.05 and in Malta where the price increased from 0.37 to 0.59. Finland continues to charge a standard rate for domestic letters and letters sent within Europe. In all other countries, it is more expensive to send a letter within Europe than it is to send a domestic letter, although the rates vary great ly: whereas the price of letters sent within Europe is just 1.1 times more expensive than domestic letters in Austria, it is 1.3 times more expensive in Germany and twice as expensive in Spain, Hungary and Sweden. By contrast, postal customers in Portugal have to pay 3.8 times the domestic rate to send letters within Europe and customers in Slovenia have to pay 4.1 times the domestic rate. Customers in Portugal have to pay the highest charge for a european letter in nominal terms. Denmark now ranks second followed by Norway and Sweden. Hungary man aged to enhance its position in this ranking, moving down three places to 16th position. Luxembourg, Italy and France all slipped down four places and now rank 20th to 22nd. Minor price increases were recorded in both France and Slovenia which increased prices by 0.03 to 0.83 and 1.19 respectively and Belgium where prices rose from 1.13 to 1.17. The price of a standard letter within Europe converted into euro dropped in Switzerland and Norway although it remained the same in local currency. The country now charging the cheapest postage rate for letters within Europe in nominal terms is Romania at 0.48. Malta has been displaced from this position for the first time since 2007 and now ranks 29th, charging a postage rate of 0.59. Germany charges 0.75 to send letters within Europe and has a stable ranking in the lower 25 percent, occupying 26th position.
Nominal price for letter mail within Europe in Portugal Denmark Norway Sweden Croatia Poland Slovenia Belgium UK Switzerland Iceland Netherlands Slovakia Estonia Finland Hungary Czech Republic Ireland Greece Luxembourg Italy France Latvia Bulgaria Spain Germany Lithuania Austria Malta Cyprus Romania 0.59 0.51 0.48 1.24 1.19 1.17 1.14 1.14 1.08 1.05 1.00 1.00 1.00 0.99 0.96 0.90 0.90 0.85 0.85 0.83 0.78 0.77 0.75 0.75 0.71 0.70 Average 1.03 1.45 1.66 1.62 1.90 1.88
10 Letter prices in Europe 4 Price developments since 2004 In order to obtain a well-balanced comparison of letter prices charged in european countries, it is necessary also to take monetary developments in the individual european countries into consideration. A letter price that is nominally unchanged, for instance, actually decreases 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 the rate of inflation has on prices. To stay in line with common practice, the assessment of postage rates adjusted for inflation is based on the changes taking place within a period of ten years rather than eleven years in previous studies. The average rates of inflation in the individual european countries under review varied greatly in the period between 2004 and 2013: in Switzerland where prices tend to be particularly stable, the average rate of inflation was just under 0.6 percent, in Germany and France it was a mere 1.8 percent and in Italy 2.2 percent. By contrast, much higher price increases were recorded in Bulgaria where prices increased on average by 5 percent, in Latvia by 5.4 percent, in Iceland by 6.3 percent and in Romania by 6.5 percent.
Letter prices in Europe 11 Inflation-adjusted change in letter prices 2004 2013 in % Romania 121.5 Denmark 67.1 Iceland 65.0 UK 62.5 Latvia 59.8 Czech Republic 59.5 Norway 43.8 Poland 42.5 Netherlands 40.3 Finland 29.4 Malta 27.5 Belgium 25.9 Bulgaria 16.1 Greece 12.5 Slovenia 9.9 Ireland 9.8 Lithuania 7.9 Estonia 7.5 France 5.0 Slovakia 4.5 Spain 3.1 Hungary 2.5 Italy -5.0 Switzerland -5.2 Sweden -5.4 Luxembourg -6.5 Austria -7.0 Germany -7.8 Portugal -8.2 Cyprus Croatia -62.4-20.0 Average 19.2 % When adjusted for inflation, the price of a standard domestic letter in the surveyed countries has risen on average by just onefifth (19.2 percent) since 2004. Postage rates for standard letters have dropped in real terms in just nine countries, and have increased in 22 countries. The high drop in postage rates for standard letters in real terms in Croatia can be attributed on the one hand to the fact that the VAT charged on postage rates up to 2009 was abolished in 2010. On the other hand, the price of domestic standard letters was reduced significantly in 2010. In Romania, the postage rate for a standard letter when adjusted for inflation has more than doubled, having increased by over 120 percent. In Denmark, Iceland, Great Britain, Latvia and the Czech Republic the postage rate for a standard letter has risen by more than 50 percent. By contrast, postage rates when adjusted for inflation increased only slightly in Slovakia, Spain and Hungary. Germany currently occupies 28th place in the ranking in terms of the postage rate for a standard letter when adjusted for inflation. Portugal, Cyprus and Croatia are the only countries in which the postage rate for a standard letter is lower.
5 Work in minutes per letter price The European Union s Postal Services Directive says that the Member States are obliged to ensure universal postal services are affordable. As such, the varying levels of wages in european countries are a key factor in assessing this criterion of the Directive in the individual countries in real terms. Establishing how long a person has to work in the individual countries in order to pay the postage rate of a standard letter has proven to be a good benchmark for this assessment. This calculation is based on the hourly wage of an industrial worker. Once again, the hourly rates established by the Cologne Institute for Economic Research as per October 2013 for workers in the manufacturing industry were taken as a basis to get consistent and reliable data for the calculation of the work in minutes per letter price.
Letter prices in Europe 13 Work minutes per letter price in minutes Bulgaria Latvia Romania Lithuania Slovakia Poland Croatia Hungary Estonia Czech Republic Greece Portugal Iceland Finland Italy Denmark UK Cyprus Norway Belgium France Austria Netherlands Ireland Slovenia Sweden Luxembourg Spain Malta Switzerland Germany 2.29 2.16 2.09 2.06 1.73 1.71 1.69 1.63 1.53 1.50 1.50 1.46 1.45 1.36 1.35 1.35 1.25 1.25 5.16 4.55 4.07 3.81 3.75 3.65 Average 3.40 6.06 6.04 6.02 6.69 7.72 7.45 10.93 The first ten countries in the ranking in which a person has to spend the most working time to earn enough to cover the respective postage price are countries that have joined the European Union since 2004. Bulgaria continues to be way ahead, positioned at first place in this ranking where a person has to work just under 11 minutes to cover the postage rate of a letter. As in 2013, it is followed by Latvia, Romania, Lithuania, Slovakia, Poland, Hungary and Estonia where the number of minutes a person has to work to cover the postage rate of a letter ranges between just under 8 minutes and around 4.5 minutes. In all eight countries ranking at the top of this table, there is a visible trend indicating that workers have to work fewer minutes to cover the postage rate of a standard letter compared to the previous year. This is above all striking in Latvia where the length of time a person has to work to cover the postage rate of a standard letter has fallen by more than 30 seconds. Workers in Europe have to work an average of 3.40 minutes to earn enough to cover the postage rate of a standard letter, slightly longer than the previous year. Germany and Switzerland are at the end of this scale where workers only have to work 1.25 minutes to earn enough to cover the postage rate of a standard letter: in no other country in Europe do workers have to work as few minutes to earn enough to cover the postage for a domestic standard letter.
14 Letter prices in Europe 6 Adjustment for labor costs Labor costs continue to be a major factor in mail delivery operations despite the high level of automation involved. This also explains why staff costs, especially for delivery, account for such a large proportion of the overall costs incurred by postal companies. Labor costs in the surveyed countries, however, vary greatly. This means that the individual european postal companies have to shoulder differing cost burdens in terms of staff expenditure. A meaningful comparison of letter prices in high-wage economies such as Germany and Switzerland 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. It therefore makes sense to adopt a method that takes the postage rates adjusted for the different labor costs into account. It should be taken into consideration, however, that staff costs only comprise a certain proportion of the overall costs of mail delivery. As a result, 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 accounted for by staff costs. As such, it was possible to use statistics on the cost of labor in the postal, courier and express services sector in the countries surveyed. The adjusted average european price is currently 1.03 0.43 more than the price charged in Germany compared to 0.38 last year.
Letter prices in Europe 15 Letter prices adjusted for labor costs in Bulgaria Latvia Lithuania Slovakia Estonia Romania Croatia Poland Iceland Hungary Denmark Norway Finland Portugal UK Czech Republic Greece Belgium Italy Switzerland Sweden Netherlands France Luxembourg Ireland Germany Austria Malta Cyprus Spain Slovenia 0.71 0.70 0.68 0.67 0.66 0.64 0.63 0.62 0.60 0.58 0.57 0.57 0.53 0.45 1.28 1.28 1.27 1.15 1.14 1.12 1.07 1.07 0.93 0.92 0.89 Average 1.03 1.45 1.45 1.70 2.14 2.04 2.28 Bulgaria is once again the most expensive provider, having been replaced briefly by Latvia in this ranking in 2013, with Latvia now occupying 2nd position. Lithuania, another Baltic country, ranks third. In the first three countries, the price of a letter adjusted for labor costs is just above 2.00. The price of a letter adjusted for labor costs has risen sharply in a number of countries in the mid-range of the ranking: In Denmark, for instance, (which ranks 11th), the price of a letter has risen by 0.18, in Finland (which ranks 13th) it has risen by 0.21, in Portugal (which ranks 14th) it has risen by 0.13, in the Czech Republic (which ranks 16th) it has risen by 0.19 and in Greece (which ranks 17th) it has risen by 0.18. However, the opposite trend has been observed in Italy, Switzerland and Austria: where the price of a letter dropped slightly by between 0.01 and 0.02. Austria now ranks 27th, having improved its position in the ranking by three places year-on-year, making it one of the countries that charges the lowest letter price in terms of prices adjusted for labor costs. Germany continues to hold its own in this group with a post age rate of 0.60, occupying 26th place in the ranking. However, as in the previous year, Slovenia continues to offer the lowest postage rate: the domestic postage rate adjusted for labor costs that Slovenia charges is a mere 0.45.
16 Letter prices in Europe 7 Adjustment for purchasing power parity Levels of income and social prosperity vary greatly in european countries. In order to make a reliable statement on the affordability of postage rates in the individual countries, it is therefore vital to take the differences in purchasing power into consideration. By considering the purchasing power, the different macroeconomic conditions in the countries under review are taken into account. Purchasing power parity therefore 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 calculation 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. On average, the price of a standard domestic letter adjusted for purchasing power parity in the 31 european countries under review is 0.70, which is 0.04 higher than in 2013. This indicates that at 0.60 the price of a standard letter in Germany is way below the european average even when the difference in purchas ing power parity is taken into account, meaning that Germany is in the lower third of this ranking. By contrast, the price of a standard domestic letter is meanwhile higher in 16 countries. Although Bulgaria continues to remain at the top of this ranking, it now shares first position with Poland. The price of a standard letter adjusted for purchasing power parity is exactly 1.00 in both countries.
Letter prices in Europe 17 Letter prices adjusted for purchasing power parity in Poland Bulgaria Slovakia Croatia Denmark Latvia Hungary Finland Norway Greece Romania Lithuania Iceland Czech Republic Italy Belgium UK Estonia Portugal France Netherlands Germany Austria Ireland Switzerland Sweden Luxembourg Spain Cyprus Malta Slovenia 0.42 0.40 0.36 0.36 1.00 1.00 0.99 0.96 0.91 0.88 0.88 0.86 0.85 0.83 0.77 0.77 0.74 0.74 0.72 0.72 0.67 0.65 0.64 0.61 0.60 0.60 0.58 0.57 0.55 0.54 0.52 Average 0.70 Postal customers in Finland and the Czech Republic now have to dig much deeper than last year to pay for a standard letter. There have been significant price increases in both countries where the price of a standard letter adjusted for purchasing power parity has risen by 0.17 to 0.86 and 0.74 respectively. Finland has moved seven places up the ranking list and now occupies 8th position. The Czech Republic has actually moved up nine places to 14th position. Postal customers in Denmark have to pay 0.09 more for a standard letter adjusted for purchasing power parity, with Denmark now ranking 5th, two places higher up the ranking list than in 2013. Postage rates adjusted for purchasing power parity have dropped in eight countries. When prices are adjusted for purchasing power parity, postage rates have fallen by 0.09 since last year in Great Britain. The United Kingdom has therefore improved its position in the ranking, moving from 9th position down to 17th position. Although Malta continues to have the most affordable letter price in Europe, it now shares this position with Slovenia. Both countries have the most affordable letter prices in Europe adjusted for purchasing power parity at just 0.36.
18 Letter prices in Europe 8 Consolidated results In this final step, the letter prices are adjusted for the macroeconomic factors of both labor costs and purchasing power and are then consolidated into an overall result. The value determined using this method is therefore particularly reliable and informative. From this perspective, the european average of consolidated letter prices is now 0.86, 0.04 more than last year. In thirteen countries, the letter price is higher than this average, in 16 countries it is lower, in two countries, namely in Greece and Portugal, it is exactly this amount. After many years, Bulgaria continues to charge the highest letter prices, with a letter price of 1.64. Latvia, Lithuania, Slovakia and Poland continue to follow close behind followed by Croatia which ranks sixth. The consolidated letter price in the relevant countries is above 1.00 right down to Hungary which ranks 11th. Greece has worsened its position by three places in this ranking and now occupies 14th position. It charges a consolidated letter price of 0.86, 0.15 more than in 2013. It is a similar story with the Czech Republic: having increased its consolidated letter price by 0.18 to 0.83 since last year, it now ranks 16th, having moved up two places since 2013. From this perspective, the letter price has become more affordable above all in Great Britain where the price of a letter has dropped by around 0.04. This means the United Kingdom managed to improve its position by five places and now occupies 17th place in the ranking.
Letter prices in Europe 19 Weighted consolidated postage rates in Bulgaria Latvia Lithuania Slovakia Poland Croatia Romania Estonia Denmark Iceland Hungary Norway Finland 1.14 1.12 1.11 1.05 1.03 1.01 1.01 0.99 0.96 Greece Portugal Czech Republic UK 0.86 0.86 0.83 0.80 Belgium Italy 0.72 0.71 Netherlands France Switzerland Sweden Ireland Germany Austria Luxembourg 0.63 0.62 0.61 0.60 0.60 0.60 0.58 0.57 Cyprus Spain Malta Slovenia 0.48 0.47 0.47 0.40 Average 0.86 1.41 1.34 1.51 1.64 With its postage rate, Germany is placed at 25th in this ranking, clearly positioning itself in the lower mid-range. The consolidated price of a letter is only cheaper in the in general significantly smaller countries of Austria, Luxembourg, Cyprus, Spain, Malta and Slovenia. By contrast, in 23 countries, it is more expensive than the postage rate charged in Germany. It becomes particularly apparent by european standards when prices take the factors of labor costs and purchasing power into account that although Deutsche Post increased its postage rate by 0.02 in nominal terms on January 01, 2014, it is actually charging a very affordable price and is offering excellent value for money with the mail service it provides.
Deutsche Post AG Headquarters Corporate Public Policy and Regulation Management 53250 Bonn Germany www.dp-dhl.com March 2014