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Post is delivering fewer and fewer letters, but more parcels
May 7, 2024, 4:57 p.m
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Although billions of letters are still being transported by Deutsche Post, the trend is falling sharply. The money for the group comes from the parcel division – and foreign business.
While the letter business of the postal group DHL continues to lose importance, the parcel volume driven by online trading is increasing. In the first quarter of 2024, the volume of letters transported fell by 6.6 percent to around 3.3 billion, the logistics group in Bonn announced. The parcel volume, however, increased by 4.4 percent to 424 million. In the Post & Parcel Germany division, in which DHL has bundled its letter and parcel services and delivers the shipments together in so-called combined delivery in some places, sales increased by 1.6 percent to 4.3 billion euros. That’s only about a fifth of the group’s total revenue.
The reason for the progressive loss of importance of letters is the digital age, in which communication via the Internet is gradually replacing the previously common correspondence on paper. Before Corona, the decline in letter volumes was two to three percent per year, but now it is down around six percent. You have to be prepared for the fact that there will continue to be declines in the mid-single-digit percentage range in the future, said CFO Melanie Kreis.
In the globally active company, which said goodbye to its company name Deutsche Post DHL last year and has since been called just DHL, the national core business is more of a problem child. The other businesses abroad – whether express deliveries, freight services or other logistics services – are more lucrative. DHL has 594,000 employees worldwide, including 187,000 in the national post and parcel sector.
A ray of hope for the core business
The first quarter of the year can be seen as a ray of hope for the core business: while group sales fell by 3.2 percent to 20.3 billion euros due to the weak global economy and the operating result (EBIT) even fell by a fifth to 1.3 billion euros , things are looking up for Post & Parcel. EBIT jumped by almost half to 194 million euros. The strong growth is also due to a weak comparable quarter: at the beginning of 2023, a labor dispute by German postmen, parcel carriers and sorters led to high extra costs.
Business is now running more profitably again, but CFO Kreis expressed reservations. We are on a very good path. However, one problem is the high investments that are necessary to master the structural change – i.e. the change from letters to parcels – and to make progress in climate protection. The targeted annual EBIT of 800 million at Post & Parcel Germany would not be enough for this. “We clearly have to get over the billion here.” That in turn would give scope to invest in Germany. The DHL board is hoping for the planned reform of the postal law, which will relieve the yellow giant of the burden in key areas, for example by reducing the time pressure when sending letters.