We have identified two main risk events impacting PostNL in 2021.
Having operated in an environment dominated by the pandemic since 2020, during the course of 2021 we began returning to more normal conditions. Our focus on expanding our network throughout 2021 helped us avoid issues with customer volumes during the year-end peak. Volume at our Parcels business continued to grow. As expected, this growth was partly offset due to the reopening of non-essential stores and more people going on holiday during the summer. In addition, disruptions in global supply chains also impacted international e-commerce volumes in the second half of the year, for example due to higher transportation costs and delays in production and supply of goods from the Far East.
In the second half of the year, international volumes were more heavily impacted than expected by VAT e-commerce rules introduced in the European Union (EU) on 1 July, and e-commerce law updates in China, aimed at preventing companies from selling fake products online. This put pressure on the performance of both Parcels and Mail in the Netherlands.
On 20 November a number of locations in Belgium were inspected by the Belgian authorities which led to the temporary closure of our location in Wommelgem. The inspections were done as part of an investigation that started earlier in 2021, with charges filed against PostNL, GLS and a number of delivery partners. The court hearing in these cases is expected in the third quarter of 2022.
Our executive management has considered the following main risks which may emerge in 2022 and beyond and related mitigating measures:
Market disruptors: We may not be able to keep up with the pace of technological development in the logistics and transportation industry and may find it difficult to compete in our core markets if one of the ‘tech giants’ decides to enter the Benelux market with a new product/service offering based on disruptive new technology, and engages in direct competition with PostNL/decides to integrate PostNL’s network into its operations. Our financial performance and position may be materially impacted should this risk occur.
We serve our customers with three core activities: collection, sorting, and delivery. Digitalisation helps us sharpen and improve these activities. In this way, our customers can count on smart logistics solutions and stronger customer experiences. Investing in further digitalisation, data analysis, and innovation of our products and processes helps increase our overall economic productivity. This enables us to remain a relevant and competitive player in the postal market in the future. For more information see the 'Customer value' chapter.
Climate change adaptation: Climate change is an increasingly important topic on the agenda of society and of PostNL's stakeholders. While the main focus of many has been on mitigating climate change, the effects of climate change on society are becoming more apparent. Acute and chronic extreme weather events are increasingly affecting society, for example the destruction caused by floods in the Benelux area and extreme heat leading to forest fires in the south of Europe in 2021.
Such events may lead to business disruption, devaluation of assets or cost increases for insurance and protection against climate-change events. While there is continuing uncertainty about how climate change will evolve, we have performed an initial climate risk assessment to evaluate the impact on PostNL in different scenario's. While we currently have no indication that adapting to climate change will materially impact PostNL in the coming 3 to 5 years, we plan to take additional steps in our risk assessment for the longer term, looking at both our operations and those of our partners along the value chain.