German Post Sees Growing Competition at Home

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In the wake of last month's successful initial public offering, the German post office, Deutsche Post Worldnet, faces unprecedented competition at home, which explains the drive to win a foothold in foreign markets.


It still enjoys a monopoly on delivery of letters up to 200 grams, which accounted for first-half sales of 11.3 billion deutsche marks ($5.5 billion), a third of total turnover and the key to the company's profitability. But the monopoly ends Dec. 31, 2002, and private competition is already well-established on the German market, where private carriers deliver mail heavier than 200 grams and have taken a significant market share in the parcel business.


Deutsche Post faces competition from five nationwide distributors, including United Parcel Service, Atlanta, and companies owned by France's La Poste, Royal Mail and the Dutch post office. About 5,500 private "parcel shops" compete in regional and local deliveries, while 700 firms have nationwide licenses. Most of them would be in a position to deliver letter mail beginning in 2003, and the larger carriers are already building nationwide alternative delivery systems able to deliver mail at lower cost than the high-priced DP monopoly.


Private companies already offer far lower prices for parcel delivery. The newspaper Die Welt reported last month that the German Post's Express Service charges DM 45.25 (about $22) to deliver a 22-pound package.


Hermes -- a private delivery service that Otto Versand, the world's largest mail-order house, began building in the 1970s -- offers pickup and two-day delivery service for DM 18 (about $8). It has a network of 3,300 parcel shops, everything from newsstands to convenience stores, that customers can use as a second address. And it is training separate letter carriers to move in once the monopoly falls.


UPS, which has been locked in legal battles with Deutsche Post before the European Commission in Brussels, Belgium, since 1994, has offices in more than 70 German towns and cities. It also plans to partner with Texaco.


In the Benelux countries, which are Belgium, the Netherlands and Luxembourg, UPS customers can cut parcel delivery costs by picking up packages at all Texaco service stations.


German Parcel has a network of 1,200 package shops and will introduce new pricing mechanisms this month. Packages will be judged not by weight but by size, ranging from small to extra large, thus reducing price categories from 12 to four. Most of these services have not been well-publicized within Germany, let alone in other European countries or in the United States. Deutsche Post's growing network of acquisitions and start-ups has blanketed the competition abroad.


German Web sites listing different prices and services include www.dpd.de, www.Germanparcel.de, www.ups.com and www.hermes-vs.de. Many, but not all, have English-language sites.
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