Deutsche Post: After a record year, the challenges are now coming

economy Parcel and letter shipping

“Significant price increases” – inflation and war are troubling Swiss Post

DHL cargo plane at Frankfurt Fraport Airport DHL cargo plane at Frankfurt Fraport Airport

Long detours, higher fuel costs: air freight is becoming more expensive

Quelle: picture alliance / Daniel Kubirs

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Because of the Ukraine war and more expensive energy, the costs of air freight, sea freight and land transport are rising sharply. This should also make parcel shipping more expensive. Automatically in the business area – but private customers should also be prepared for it.

DDeutsche Post wants to help find jobs for refugees from Ukraine. “We will work together with the cities and municipalities and offer work,” said CEO Frank Appel.

The postal group already did this during the time of the wave of refugees from Syria. Now it must be about helping people and trying everything to avert a global economic crisis.

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In Ukraine itself, the postal group has ceased operations. However, postal items are still handed over to the country’s postal company at the borders. In Russia, however, with around 3,500 employees at the subsidiary DHL, operations will be maintained on a small scale.

Shipments not affected by the sanctions, such as medicines or documents, will continue to be delivered locally by DHL. According to the information, the two countries’ share of sales in the postal group’s business is around one percentage point.

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The consequences of Russia’s war of aggression in Ukraine are the dominant topic in the postal group – also in day-to-day business. In the most important area, DHL’s worldwide express delivery, the cargo planes use flight routes beyond Russia and the affected areas.

Cost increases a matter of time

“The routes have become significantly longer as a result,” said Post CFO Melanie Kreis. The higher consumption of kerosene due to the detours and a shortage of flight capacities have now caused prices to rise. “Everything will be much more expensive again,” said the manager.

Swiss Post has agreed contracts with business customers in such a way that rising energy costs are automatically passed on – albeit with a delay of several weeks in some cases. Price changes are also likely to occur for major customers in online retail, for whom DHL is the largest parcel service in Germany.

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The management speaks of “significant price increases” across all areas. According to the statement, there has not yet been a decision as to whether privately sent packages will also be increased in postage. However, with the current high inflation rate and cost increases, it should only be a matter of time.

The postal group, as the world’s largest air freight forwarder and second largest sea freight provider, is facing major challenges. The company is still benefiting from record earnings, for example from the bottlenecks in cargo flights and ship transport. But demand for transport could collapse in the event of an economic crisis.

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In parcel shipping, too, Swiss Post has been one of the biggest beneficiaries of recent years. The corona pandemic has caused online trade to rise sharply and thus brought parcel delivery into new dimensions. In Germany alone, DHL delivered 1.8 billion parcels last year, 200 million more than in 2020.

40,000 more employees

For the coming weeks, however, the management expects falling numbers in parcel shipping. The reason given was that customers would be reluctant to buy because of the current crisis situation.

CEO Appel speaks of “a new flight level” that the group reached last year and which should now be maintained. The company has generated a pre-tax profit of eight billion euros from sales of almost 82 billion euros. This corresponds to an increase in sales by a third and a doubling of profits. According to the information in the year, the tax rate was 26 percent.

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From the surplus of around five billion euros, the group wants to pay a dividend of 1.80 euros, in the previous year it was 1.35 euros. Unlike the VW Group, for example, where employees receive a special payment of 3,000 euros for the past financial year, there is currently no comparable decision at the Post Office.

When asked about the subject, Post boss Appel referred to the so-called corona premium of 300 euros paid last year. The workforce of the group has increased by around 40,000 to 590,000 employees in the past two years.

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