Deutsche Post is drawing up plans for large-scale cost savings in its German mail business,including longer working hours, to counter the long-term decline in letter volumes. Heavy cuts at
insolvent major customer Quelle also threaten the parcel business.The German postal operator saved €180 million in mail operating costs in the first half of2009 and aims for full-year savings of €300 million through a range of savings, including sortingcentre closures, the termination of the night airmail flight network and optimising the mail andparcel linehaul network.
DP has already scaled down weekend and Monday sorting and deliveries in recent weeks due tothe seasonal fall in volumes during July and August. In many of the 82 mail sorting centres inGermany only regional post is being sorted on Sundays and nationwide letters are being held backfor sorting on Mondays. Some delivery staff are not working Mondays, and their rounds have beenincorporated into enlarged districts for that day. In addition, 15 sorting centres are closed onMonday evenings, with volumes being sorted in other nearby centres for delivery on Tuesdays, Germanmedia reported.
At the same time, Juergen Gerdes, head of Deutsche Post-DHL’s Mail division, is planningdeeper and longer-term cost-cutting measures to cope with the “irreversible” decline in lettervolumes. In the first half of 2009, traditional letter volumes fell 6.4%, and the company hasalready referred to a “worst case” potential 20% decline in the longer term.
The mail business needs a “long-term transformation”, including a reconfigured network andimproved productivity through longer working times and wage measures, Gerdes said at the company’srecent half-year results press conference. But new products and services, including a secure ‘digital letter’, are also needed, he stressed.
Deutsche Post plans to propose extending the working hours of the 190,000 mail staff from38.5 hours to 40 hours once the present collective agreement expires at the end of this year,according to widespread media reports. Moreover, the company wants to postpone the agreed payincrease scheduled for December 1 this year. The number of employees will be reduced by naturalfluctuation through non-replacement of departing staff, but there will be no large-scale job lossesin the near future since compulsory redundancies are contractually ruled out until mid-2011.
Meanwhile, Deutsche Post’s German parcel business is likely to be hit by the restructuring ofkey customer Quelle, the mail-order subsidiary of insolvent retail group Arcandor. Some 3,700 ofthe 10,500 Quelle employees will lose their jobs and the business is up for sale. The mail-orderfirm’s long-term future remains unclear.
In the past, DHL Parcel Germany has generated annual revenues of about €500 million from itscontract to handle up to 100,000 daily parcels for Quelle. About 1,000 Mail division employees areinvolved in handling the mail-order company’s parcels and brochures.
