Interview: PostNord CEO Annemarie Gardshol outlines strategic and commercial priorities

For Annemarie Gardshol, PostNord’s long-term strategic goals are clear – to master the basics of parcel and mail delivery, explore new avenues for growth and achieve fossil-free operations by 2030 through agile management and targeted investments. Achieving all this, however, is no easy feat amid changing market conditions, fluctuating parcel volumes and shifting consumer behaviour, the Nordic postal group’s CEO made clear in an exclusive interview with CEP-Research.

In this first part of a two-part interview, the PostNord chief discussed current market conditions, management changes and investments in parcel lockers and home delivery offerings, as well as opportunities for future growth. 

Gardshol revealed that although the pandemic has accelerated PostNord’s strategic plans by about two years due to the surge in B2C volumes, the group’s overall goals remain the same as in pre-pandemic times.

“For us there are a few main priorities – winning in parcels and ensuring a sustainable business going forward, all while tackling declining letter mail volumes,” she explained. “The latter point relates to our business in Denmark and Sweden where we have the Universal Service Obligation to take care of.”

Fluctuating parcel volumes

For Gardshol, one of the greatest challenges faced by the PostNord Group is handling the great fluctuations in B2C parcel volumes. In the first quarter of 2022, for example, the group’s overall parcel volumes declined by 10% to 59 million pieces. Volumes to B2C customers decreased by 14%, while volumes to B2B customers increased by 3%.

“Coming out of the pandemic, we are seeing growth rates go back to normal levels, and we might even see a little bit of a setback in 2022 because of what is going on in the world right now,” Gardshol explained. “But in the long term, the trend is that B2C e-commerce is still a growing market, and for us, as e-commerce becomes more and more global, we will be looking at how we can benefit from international growth.

“Right now, however, the greatest challenge is dealing with fluctuating volumes,” she continued. “One month we could see 20% growth in volumes, the next 5% growth and then a -10% reduction. It’s extremely difficult to handle and we don’t have all the answers, but it is something we are working on.”

Agile management

One way that PostNord is attempting to tackle this is through a more agile management approach. In 2019, prior to the pandemic, the group undertook a restructuring of its management team and as a result Gardshol was brought on board as Group CEO.

“The organisation was simplified quite a bit,” she explained. “We wanted to accelerate our plans by giving the different business units, the countries, more responsibility to speed up decision making. We kept responsibility for things like group IT and other technologies at PostNord Group level so all business units could benefit from synergies. We now have quite a small management team, which has enabled us to speed up decision making quite a lot, putting us in a good position to handle current changing market conditions.”

The group is now working on ensuring management at all levels becomes more agile in their decision making so they can operate more independently and react faster to the fluctuating conditions. “We don’t want middle managers, for example, to sit and wait for a decision from the PostNord Group management, we want them to be able to make decisions themselves,” Gardshol stressed. “This is a cultural and structural change, and we are currently examining the tools needed so management can make the right decisions based on their area of responsibility.”

Diverse consumer preferences

Along with B2C parcel volume fluctuations, PostNord is also seeing big shifts in consumer behaviour because of the pandemic. Gardshol noted that the market has shifted from moving towards PUDO for parcel delivery to one which relies more on home deliveries and parcel lockers. “We are shifting our planned investments with this in mind,” she revealed. “We want to be able to offer a much more attractive home delivery offering and a bigger parcel locker network.”

One challenge PostNord faces in this area is examining which delivery model works best in each of its geographical markets - Sweden, Denmark, Norway and Finland. “Denmark is very much a home delivery market, whereas Finland is more of a parcel locker market because the Finnish postal operator, Posti, has invested heavily in building up a locker network,” she pointed out. “Norway and Sweden, meanwhile, have traditionally been about PUDO points.”

Investing in PUDOs, lockers and home deliveries

In post-pandemic times, PostNord sees more and more consumers, across all its markets, preferring home, or parcel locker deliveries. With this in mind, the operator will be making several investments in this area, the group CEO continued.

“We are building a network that will cater for all three channels – PUDOs, home delivery and lockers, but where investments are being made right now is in strengthening our home offerings and our parcel locker network. By the end of 2022, for example, we should have around 12,000 parcel lockers throughout the Nordics. Today we have around 11.000 service points in the Nordics. We will probably double this number over the next five years.”

In terms of its home delivery offering, PostNord plans to make its services more flexible and convenient for customers. “It is all about giving the customer the ability to pick the time they want their parcel delivered, track their parcel or re-route it if needed,” Gardshol emphasised.

Although no specific details were given, she confirmed that the post will be working on customer facing offerings and apps to improve the home delivery experience along with “putting the right prerequisites in place to enable the driver to deliver a good service.”

New sources of growth

Meanwhile, PostNord is also looking at new sources of growth against this background of changing demand and challenging operating conditions. International business and contract logistics are just two topics on the agenda.  

“International volumes will be extremely important for us in the next few years,” Gardshol said. “We are a Nordic company, but we also have businesses in Germany, which is an important export market into the Nordics. We also have partnerships throughout Europe, such as with DPD, and we have the Direct Link business which operates more on a global level, so that will also be an important source of growth going forward.”

“We also have a 3PL business within PostNord,” she continued. “This business is quite successful, and I believe a lot of exciting things could happen within this area in the future. We will be looking at whether this business model could be replicated into other markets, or if there are new emerging businesses that could grow out of it.

“For the core B2C parcel business we will be exploring how we can get more out of that, such as how we can build an even stronger proposition to be the preferred option at the checkout. We will remain a logistics company, but we are moving more and more towards being a tech-enabled business, with a strong focus on the end consumer. If you start to look at in that way, there are so many new businesses that could come about. However, mastering what I like to call our “brilliant basics” – the prerequisites for efficient parcel and letter mail delivery – will always be key for us. It is extremely important that we don’t lose sight of that,” she stressed.

In the second part of the interview, Annemarie Gardshol discusses sustainability, fossil-free operations, adjusting to the mail and, not least, the various impacts of the Ukraine conflict.