External developments and competition

The domestic and international parcels and mail markets in which we operate are dynamic, which was illustrated in 2022 as external developments created a turbulent environment, heavily impacting our business. Parcel volumes were badly disrupted by the deteriorating global macroeconomic situation, which ultimately led to reduced consumer spending and slowing e-commerce growth domestically and internationally. For Mail in the Netherlands, a very tight labour market led to an ongoing shortage of mail deliverers across the Netherlands, especially in the south of the country, impacting quality levels. In this section we explain in greater detail how these developments influenced PostNL.

Geopolitical and economic events

2022 was a year impacted by a variety of factors. The devastating war in Ukraine led to a crisis for the country's people, resulting in many seeking refuge across Europe. The war has had major consequences globally, impacting agricultural production and energy prices, leading to severe macroeconomic repercussions. High inflation, rising interest rates, rapidly rising energy costs, and more costly goods affected consumer confidence, leading to consumers cutting back on their spending.

The zero-Covid policy in China led to a general production slowdown that impacted international logistics. At the same time, there was the ongoing effect from the EU VAT rules introduced in 2021, which saw all commercial goods imported into the EU become subject to VAT, irrespective of their value. Brexit also continued to slow parcel volumes from the UK to the EU.

For PostNL, these developments negatively impacted parcel volumes for much of the year. Rising inflation led to increased costs, including salary expenses, which we were not fully able to absorb through regular price increases. These issues also affected our customers, partners and suppliers. Rising energy and other costs made the transportation of goods more expensive, while global supply chain issues led to delays in the availability of products. For example, we were unable to introduce as many e-vehicles as planned, impacting the progress we made towards our Zero 2030 programme goals.

Growth in e-commerce

While e-commerce in 2022 was hit by a range of complex market circumstances, including high inflation and severely reduced consumer spending, we fully expect e-commerce to continue to grow on the back of online penetration, shifting market share from offline, and improving macro-economic conditions. While it remains unclear exactly when this will happen, our expectations are that it will be more towards the medium term. In the Benelux, the expansion in traditional e-commerce markets is ongoing, while relatively new markets, such as health, are growing. This is being driven by both an ageing population and the shift towards home-based care, leading to a rise in the demand for medical logistics and platforms that support home care services. These events, plus increased international transportation costs, had a negative impact on our international Spring activities.

We believe our comprehensive networks, proximity to the consumer, and coverage across the Benelux enable many developing sectors to grow online. In response to the growing e-commerce ecosystem we continuously invest in our networks while increasing the flexibility of our operations.

Tight labour market

The labour market in the Netherlands further tightened in 2022, illustrated by low unemployment rates and a record number of open vacancies. This made it more difficult for PostNL to recruit in some regions, with Mail in the Netherlands particularly badly affected. The labour shortage added to the pressure on wages, which were also affected by rising inflation, and impacted delivery quality levels.

Effective collaboration with our logistics partners is crucial for our success. Based on changes in societal expectations, our drive to improve our service quality and customer experience, as well as sustainable development, we are further enhancing our labour model with our logistics partners to make it future proof. As well as ensuring we continue to adapt to any changes in labour laws and regulations, this also involves focusing on delivering the desired customer experience, our sustainability goals, and societal expectations. More information can be found in the chapter 'Social valuedownload'.

Acceleration of digital transformation

Rapid developments in technology impact the way businesses operate. Trends that will influence our sector include the use of data, which will help logistics companies manage demand peaks, provide insights into supply and demand forecasts, and help with route optimisation. This will lead to benefits for customers and consumers. Digitalisation will also lead to smoother ordering, automatic fulfilment services, and better payment and delivery processes, creating a more efficient value chain. Yet alongside opportunities, digitalisation is also driving digital alternatives for mail, such as electronic invoicing, social media, and other digital marketing services, which continue to contribute to declining mail volumes.

The digitalisation shift requires logistic service providers to operate faster and more efficiently to rapidly process all individual orders. With parts of logistic processes still being operated manually, there is greater potential for the use of automation and digitalisation. As the technology becomes faster, more accurate and more affordable, automation will play an even greater role in our industry in the years to come. More information on our digital vision can be found heredownload.

Consumer in control

The voice of the consumer has never been more important than today, and we help retailers and consumers connect. Consumers increasingly expect digital alternatives to traditional services, and want greater control over their shipments. Examples include the purchase of stamps, rerouting of parcels and preparation of returns. In addition, they want to be notified about the shipment of their parcels conveniently and reliably, and this increasingly takes place through the PostNL app, which saw a 10% increase in the number of downloads in 2022. The PostNL app provides users with notifications of parcels and digital previews of the mail items that will be delivered. For PostNL, this means we need to focus continually on enhancing the consumer experience and consumer journey, ensuring that we remove disruptions from the journey. More information on how we help the consumer to remain in control can be found in the chapter 'Customer Valuedownload'.

Sustainable logistics

Companies are increasingly focusing on the longer-term societal impact of their businesses, while consumers are looking for delivery options that are low or zero emission. Across the sector, the drive to reduce dependency on fossil fuels by switching to e-vehicles has been hampered in recent years by supply chain delays. Temporary solutions include moving to renewable diesel, which produces significantly less CO2 emissions during its life cycle compared to fossil diesel.

At PostNL, we want to, and stakeholders expect us to, operate a company with sustainability at its core, making progress on a range of environmental, social and governance topics. This includes the growing concern about climate change, increased attention for human rights, greater focus on diversity and inclusion, being more transparent about how we conduct business responsibly, and employing people with a distance to the labour market. Sustainability is about responsible business. It is also a driver for business model innovation, for example by transitioning towards emission-free last-mile delivery, and enhancing our employment models.

Competitive landscape

While in the last few years the development of e-commerce has made the market interesting for both existing and new e-tailers, recently many involved in the sector have had to make major cost savings, for example through reorganisations. Large e-tailers have begun to spread their volumes through dual or multi-vendorship models.

While our competitors face the same market and cost pressures as we do, we believe our efficient network and our strategy, including our digital transformation programmes, enable us to create distinctive customer experiences that will further strengthen our market position. Going forward, we aim to maintain our market-leading position in the Netherlands in the B2C segment by enhancing the customer experience through digital innovations, our sustainability profile, competitive pricing, investing in and expanding our network, and focusing on further improving quality and customer satisfaction.

We provide a vital communication service through our postal services. Competition in the Dutch postal market is focused in a number of areas, with a few postal operators having built a position in niche segments by combining mail volumes into large consignments and handing these to PostNL.

Additionally, we see a large number of small, locally active postal operators connected to social enterprises offering postal services in their local areas, and we work together by outsourcing the delivery of our mail to them. Mail destined for outside these areas is primarily handed to PostNL.

The growth of digital communication remains the major reason for the decline in mail volumes. While this means that consumers receive less mail, it also means that the mail they do receive gets more attention and is more relevant. We believe the value we deliver through the letterbox is growing for a number of reasons. One is that physical mail creates a connection that digital communication is unable to. Another is that physical mail offers a permanence that emails and other digital communication do not. Physical mail also remains a trusted way for companies to reach the right person at their registered address.

The international e-commerce arena is becoming more competitive. Traditional players are seeking to strengthen their position, while different types of start-ups, for example those focussing on value-chain orchestration, end-to-end logistics or digital support, are entering the market. Large e-commerce and/or platform businesses are also expanding their geographical coverage and role in the logistics value chain, selecting the best logistic partnerships or, if needed, setting up their own logistics networks. For PostNL, our flexible and customer-focused approach enables us to respond quickly to, and profit from, market dynamics when expanding our logistical network in Europe.

Regulatory themes

An increasingly connected world means that commercial markets are developing rapidly, driven by innovation and digitalisation. While these developments create business opportunities, such as through the use of data, they also represent some risk.

Our business objectives could be impacted by delays in our digital transformation, the increase in, and complexity of, regulatory requirements across our markets, and the growing focus on sustainability.

To mitigate these risks, governments frequently introduce new laws and regulations that are becoming increasingly more complex. The main areas of high-impact regulations on PostNL's businesses include postal services, labour, international trading, data protection and privacy, and environmental management. We strongly believe that advocacy by stakeholders is crucial in the creation of qualitative and meaningful new rules and regulation that will benefit all stakeholders in society. PostNL is always available to share its sector-specific knowledge and market experiences with policymakers, and maintains regularly contacts with different stakeholders and policymakers by participating in activities like consultations and debates on topical issues. 

Our approach is to proactively engage with governments and other regulators on a regular basis to better understand the impact of upcoming regulatory changes. This helps us prepare effectively so that we can comply fully and in time. We are also in ongoing dialogue with regulators on existing rules and regulation in order to continuously improve on our compliance in an ever changing operational context.

We see compliance as an important mechanism to safeguard sound business conduct, protect the rights and well being of people and operate commercially within predefined boundaries. The chapter 'Regulatory compliance managementdownload' provides a detailed overview of our approach towards compliance, a description of the main events and the most relevant developments in different laws and regulations.