Consumer-driven logistics and communication markets

The driving forces in PostNord’s markets may be summarized in brief as rapid growth in e-commerce, increased demand for cross-border logistics solutions and a continued digitization-driven shift from physical to wholly or partly digital communication.

Increased demand for Nordic end-to-end-solutions

The logistics market is driven above all by global growth and expanding international trade. The Nordic logistics market is closely correlated with GDP, but is also impacted by rising Web-based commerce. Commerce between the Nordic countries represents a significant portion of total commerce in the Nordic region. At the same time, Europe is the Nordic region's most important trading partner. The demand for Nordic end-to-end solutions and cross-border solutions to, from and within the Nordic region is rising. The market includes everything from home deliveries of parcels and road freight for heavy goods, to advanced logistics services such as third-party logistics (TPL).

The logistics market is characterized by higher demand for additional and increasingly advanced services, with recipients expecting more and more in terms of communication, conditions of delivery and flexibility. Recipients have high demands for fast delivery, preferably on the same day. The market is also characterized by tough competition and a close focus on costs, which has led to rising demand for outsourcing of logistics solutions, as more and more companies are opting to outsource all or parts of their supply chain.

In the past, the top competitors were global logistics operators such as Deutsche Post, via DHL, DB Schenker, Bring and a host of minor players with large or small positions in different service areas. As the market has developed, this has created an opportunity for new operators to gain a foothold in the logistics market. These new operators are not classic logistics enterprises. They are companies offering solutions based on the fact that information can be used and sold between sender and logistics operator, and between logistics operator and recipient.

Position: PostNord, with its own Nordic network and international partnerships, for example with DPD, has a leading position in the Nordic market in distribution and logistics, in which the e commerce related logistics segment is showing rapid growth. The Group's logistics offering is largely harmonized within the Nordic region.

Potential for growth in the e-commerce remains strong

E-commerce is expected to continue to grow by more than 10–15% annually over the next few years. The basic driving force of e-commerce is convenience. Both e-retailers and recipients demand simplicity and availability. The major share of e-commerce purchases are still made from domestic companies. However, it is increasingly common for consumers to look for products beyond their country's borders. Sites in the United Kingdom, Germany, the United States and China, above all, attract Nordic consumers.

One of e-commerce’s most important competitive factors is effective and seamless logistics. Delivery method, location, time and cost have become increasingly important to consumers at the time of purchase. Two powerful trends are the omni-channel concept, where the end consumer has the same purchasing experience irrespective of channel, and information logistics, which provides track-and-trace and control over deliveries in real time.

Position: Today, PostNord has a unique reach and a leading position as expert and partner to the majority of e-retailers in the Nordic countries. All-in-all, this represents further attractive opportunities for growth. About a third of the new agreements signed by PostNord are in the fast growing e-commerce segment.

Patterns of communication changing

With the shift to digital communication options, mail volumes are decreasing. In the Danish market, the pace of digitization has been very high. This results from several factors coming together at the same time, not least legislation on digital communication from and to public sector agencies. In Sweden, digitization is still advancing less rapidly.

With digitization, the decline in mail volumes will continue. This changing market is a reality and a challenge to all postal corporations. Against that background, the regulatory conditions to enable postal corporations to run competitive and financially sustainable operations while meeting the changing needs of consumers and businesses for postal services will have to be continuously adapted to prevailing and future needs. Denmark passed new postal legislation in 2016. Following a review of Sweden's system of postal regulation, a new postal ordinance entered into force on January 1, 2018. Under the new regime, the requirement of overnight delivery was altered to two day delivery. Digitization is also driving higher demand for combinations of physical and digital communication.

Position: PostNord provides the universal postal service in Denmark and Sweden and is the only player that reaches all households and businesses in the two countries. This capacity is a factor or strength with regard to the growth in e-commerce. While the overnight delivery requirement has been scrapped, PostNord offers an overnight service for businesses, organizations and public authorities needing to contact their recipients quickly. Via PostNord Strålfors, certain mail services are also offered in Norway and Finland. In addition, PostNord Strålfors' omnichannel solution gives the Group a strong position in combinations of digital and physical communication. Helping customers to achieve better market communication outcomes by combining analysis, segmentation and impact measurement with physical and digital advertising solutions in the Nordic region will be another growth and focus area going forward.

Last updated: 6/21/2018 3:55 PM