Although domestic letter markets in the European Union have been gradually liberalized since the 1990s, and are fully open to competition in all Member States since 2013, the universal service providers (USP) kept de facto monopolies in all Member States. The parcel and express delivery market is more competitive and characterized by oligopolies consisting of three to six players. The most successful USPs are creating pan-European parcel networks. Parcel delivery markets are generally competitive and cost-effective, and service levels have increased for many years. Price levels are controlled by the buying power of large e-commerce platforms.
In contrast, letter delivery markets are facing significant challenges. The USPs are struggling to operate profitably due to eroding volumes and revenues. Consequently, service levels are reduced while prices increase, despite the USPs’ strong efforts to modernize. Many Member States subsidize the USPs to compensate for the net costs of the Universal Service Obligation (USO).
In future European postal legislation, the USO should address the structural problems of the letter market as USPs face increasing challenges to operate profitably. Either compensation for USO costs will become more relevant or service levels will need to be reduced, as it is already happening in some Member States. However, it is important to maintain the successful competitive framework for parcel delivery, and parallel regulation by postal and transport legislation should be avoided.
Videos of all presentations held at the workshop are available on the TRAN committees website.
