Many have compared the parcel delivery sector to the telecoms sector. What are the similarities and what are the differences?

The only similarity between parcel delivery and telecommunications, is that infrastructure investments are high in both industries, but this is where the comparison ends.

Parcel delivery sector is starkly different from the telecoms sector:

  • In parcel delivery, our jobs cannot be delocalised. We want to continue creating jobs and sustain existing ones at a time when many sectors are cutting down – not expanding – their workforce.
  • Operational costs for handling and transporting parcels remain significant, even if larger volumes create the opportunities for synergy. Overall, margins are low and competition is fierce in our open market. There is definitely no “rent” effect in our business.
  • Compared to telecoms, our costs are also more volatile. The Regulatory authorities BEREC and ERGP note that “the differences in costs for postal services are significantly greater than for telecommunications services due to the higher impact of geography, population density, labour, delivery and transit costs on postal services as compared with international roaming.”
  • Unlike with budget airlines or mobile telephony, we do not dictate the final price end-consumers pay for delivery. E-retailers do.
  • Price regulation in the form of imposed lower prices will not create a better deal for consumers. It would be hard for a regulated price to comprise a fair assessment of our operating costs, some of which can be highly volatile. This is different in mobile telephony, for example, where costs are flatter.
  • Also, investments in new technologies need to be paid off and postal operators are committed to high employment standards. Capping prices at arbitrarily low levels runs the risk of encouraging parcel delivery operators to safeguard margins, and the volumes of parcels handled, simply by increasing their offer of “premium” services. Consumers would be offered additional services at higher prices, and standard deliveries may become comparatively less attractive.