Digitisation of society also affects the postal market
The digitisation of services as well as changes in the behaviour of consumers have affected the volumes of letter post and parcels already from the beginning of the 2000s, and the pace of the changes has increasingly accelerated in the 2010s.
Last year, approximately 900 million addressed letters were sent in Finland, and their number decreased by 10 per cent compared to the previous year. The stronger fall in the number of letters started in 2009, when the annual volume decreased by approximately 2 per cent. Since then, the fall has accelerated every year. Posti estimates that the development will continue in the same direction, and the volume of letters will be halved in five years.
In international comparison, the volumes of letters have turned to a fall in Finland later than in other Nordic countries. This is explained by the slower transition to electronic invoicing, as the invoices sent by companies have traditionally been the largest single group of letters when reviewed by letter type. According to a study commissioned by Posti, Finns have, however, willingly adopted the electronic invoice, and they are more ready to let go of paper invoices. During the past few years, the pace of change has accelerated, among other things due to the fact that an increasing number of companies have started to charge for paper invoices separately.
The breakthrough of electronic invoicing took place in Finland in 2013, when one in two invoices was received electronically. According to the study published by Posti in February 2014, 34 per cent of consumer invoices were received in an online bank or Netposti. Approximately 15 per cent of consumer invoices were received by email. Electronic invoicing is even more common between companies. The popularity of online invoicing is increased by its affordability, speed and reliability. According to Posti's forecast, the share of electronic consumer invoices is estimated to be 75 per cent of all invoices in 2020.
The share of the total volume of letters sent by consumers to each other is quite slight, and letters sent by consumers represent approximately one-tenth of all letters. Perhaps quite surprisingly, the annual drop in volume in this letter category has been slighter compared to the development of the total volume of all letters. For example, remembering various events by post, such as by sending Christmas cards, still holds up relatively well. Even though consumers have simultaneously adopted an increasing number of various electronic communications applications, these have not fully replaced the traditional letter.
Approximately half of all letters are addressed direct marketing or other communications sent by companies and public bodies. Electronic services also influence this letter group, offering in many cases a faster, more cost-efficient communications channel that precisely reaches the desired target group. Addressed advertisement letters have, however, retained their position fairly well until last year, and they thus deviate from other letter post sent by companies. In 2014, a drop also affected this segment. This may have been influenced by the prolonged economic recession together with the even more diversified electronic marketing channels that are available to an increasing number of companies. The current year, for its part, will show whether this is a temporary deviation or a falling development trend. In the other Nordic countries, the volume of unaddressed distribution turned to a fall a few years ago. Save the graph data as a CSV file
Figure: Development of the volume of letters sent 2009–2014
The development of the total parcel volume is clearly influenced by two factors: the increased popularity of online shopping and the general economic situation. There was a considerable decrease in the volume of parcels because of the financial crisis in 2008, but the volume has been growing again since 2009. In 2014, the growth in parcels that has continued swift in the past few years flattened out slightly, and the number of parcels grew by more than 2 per cent. Almost 60 million parcels were sent in Finland last year.
With regard to corporate customers, in particular, the slowing down of growth may be due to the economic recession, during which the general activity has decreased. The situation has been restored by the continuously growing and diversifying internet shopping by consumers. The different electronic shopping platforms between consumers enormously increase the number of potential customers, and therefore also the number of parcels sent by consumers to each other. The growing importance of consumer customers to companies in the parcel transportation business is visible in the continuous development of services, for instance in the form of new parcel terminals.
The assessment of the volume of the parcel market is difficult, because there are a high number of operators in the industry and therefore also different practices in the recording of volumes; a parcel may be recorded individually or as a part of a larger transportation unit. The assessment of the total number of parcels is based on a questionnaire sent by FICORA to the largest operators, to which a total of six parcel distribution companies responded. The group of respondents represent a significant sample of the largest operators, so on the basis of it is possible to estimate the size of the total market and proportion the figures thus obtained to information collected from other sources. Save the graph data as a CSV file
Figure: Development of the volume of postal parcels sent 2009–2014
This article is a part of FICORA's Communications Sector Review 2/2015.