Postal law reform: sending letters will take longer

Services - Postal law reform: sending letters will take longer

The German government wants to fundamentally reform the Postal Act for the first time in a quarter of a century. The cabinet adopted a proposal from the Federal Ministry of Economics on Wednesday. An overview of the most important questions and answers on the reform.

Why the reform?

When the Postal Act, which is still largely in force today, came into force in 1998, the Internet played only a minor role and orders from online retailers were an exotic thing. Writing letters for communication, on the other hand, was still the norm. Today, emails and chats dominate written communication. Letters have gone out of fashion and parcels have become a matter of course. This is why legislators want to adapt the regulations for the postal sector to the changed reality.

Why does the Postal Act exist at all?

The Federal Post Office was privatized in the 1990s. The Postal Act was intended to ensure competition while guaranteeing the basic provision of postal services to the population. As a "universal service provider", Deutsche Post has to comply with very strict regulations. In return, it receives tax relief. Competition has worked rather poorly: The Yellow Giant has an 85 percent market share in the letter segment and more than 40 percent in the parcel segment. Its letter competitors include Arriva and Citipost, while its parcel competitors include DPD, Hermes, GLS, UPS and Amazon's delivery service, the latter of which is number 2 in Germany behind Post/DHL.

What is to be changed in the law?

In future, Swiss Post will have less time pressure when delivering letters. This will enable it to reduce costs, for example by not using night flights to deliver letters. Until now, Swiss Post has had to deliver 80 percent of letters posted today on the next working day; on the working day after next, the rate must be 95 percent. According to the proposal of the Federal Ministry of Economics, in future there will only be a minimum value of 95% for the third working day after posting. On the fourth working day, 99 percent of letters should even reach the addressee. This means that letters will be transported more slowly, but will arrive reliably.

How else might consumers notice the consequences of the reform?

The Group has almost 13,000 post offices nationwide, most of which are post office counters at retailers. In some suburban locations and larger villages, however, there are no post offices, although the post office should have branches there - according to a government regulation. The gaps in the branch network are sometimes due to the fact that the last supermarket or kiosk has closed down and the post office cannot find another partner. Vending machines could provide a remedy, but have not yet been recognized in the branch network obligation. This is set to change in future, even if only in individual cases with the approval of the Federal Network Agency.

Will postage become more expensive again?

Yes, postage will most likely become more expensive. However, this will not be regulated in the legal reform, but in a separate official procedure next year. The current postage rate - 85 cents for a standard letter and 70 cents for a postcard - expires at the end of 2024. The Federal Network Agency will grant Swiss Post a price increase corridor, which the company will use. However, the amended law should then prevent the price from rising too much: a standard letter should not be more expensive than one euro.

What is controversial about the reform?

The use of subcontractors in the parcel sector has repeatedly caused displeasure. Customs have reported cases of undeclared work and illegal employment, while the trade union Verdi is calling for a ban on subcontractors. Although the proposal from the Federal Ministry of Economics does not go that far, the rules are to be tightened. In future, clients are to be obliged to check their subcontractors according to defined criteria.

This is not enough for the Greens and Social Democrats, who are calling for a ban on subcontracting or sub-sub-subcontracting. However, the FDP does not think much of this - in their view, there are black sheep among the subcontractors who should be punished, but overall it is a functioning and proven system. The situation at the parcel companies is different: market leader DHL hardly uses subcontractors, while its competitors do.

What else is causing criticism?

As a universal service provider, Swiss Post is to be granted VAT exemption for its corporate customer mail. This would put small, regionally active letter competitors under pressure, as they would then be at a price disadvantage. They now fear for their existence. The already weak competition on the letter market could come to a standstill.

How can working conditions be improved?

Carrying parcels is hard on the back, and sometimes delivery staff have to carry heavy garden and sports equipment and even dumbbells to the upper floors of apartment buildings. In future, heavy parcels weighing 10 kilos or more will be labeled so that the parcel carrier knows what they are and doesn't get injured. From 20 kilos, two-person transport or technical aids will be mandatory.

What other problems are being tackled?

Since last year, the Network Agency has been receiving an unusually high number of complaints about quality deficiencies in the postal sector. The complaints concern delayed, incorrectly delivered or lost items, and in most cases the anger is directed at Deutsche Post/DHL. The head of the Network Agency, Klaus Müller, occasionally raises his warning finger - but he can't do much more. This is set to change in future: his agency is to be able to impose hefty fines on the universal service provider Deutsche Post for the first time. Compared to the ministry's proposal, however, the legislative text adopted by the cabinet on the framework for fines has been somewhat watered down.

What are the next steps in the postal law reform?

The Federal Government's position on the postal reform has now been finalized. The Bundestag and Bundesrat will then have their turn, and the reform could be completed in spring 2024.