Roberto Cirillo: “Switzerland wants a robust, modern and digital postal service that is available to everyone at any time”
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Roberto Cirillo: “Switzerland wants a robust, modern and digital postal service that is available to everyone at any time”
Swiss Post has analysed the independent expert committee’s report. For Roberto Cirillo, CEO of Swiss Post, the committee’s findings reflect some of Swiss Post’s own analyses. The public postal service will continue to play a crucial role in Switzerland after 2030, albeit in an increasingly digital form. For this reason, Swiss Post is endeavouring to invest in both physical and digital public services and to ensure that it can still operate without taxpayer funding in the future. “Our goal isn’t a dwindling postal service, but a robust postal service that grows in sync with the requirements of the Swiss economy and public.”
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Overarching findings all agree: the postal public service remains a success factor for Switzerland
Swiss Post has read the report produced by the expert committee, led by former Council of States member Christine Egerszegi, with great interest. It examines the future of the universal postal service for Switzerland from 2030 onwards and offers recommendations on the direction the public service could take in the years to come. “We have noticed that the committee’s proposals have provoked a lot of discussion,” says Roberto Cirillo, CEO of Swiss Post. “And that’s a good thing. After all, it is important that we now have a broad discussion about how Swiss Post should respond to the needs of the Swiss public as we move forward. That’s why it’s high time for politicians to lead the discussion about the public service of the future. You can’t create new legal frameworks for the public service overnight. If we want to be ready by 2030, then we need to make a start today.”
Overarching findings all agree: the postal public service remains a success factor for Switzerland
In many respects, the analyses by the expert committee support the analysis Swiss Post carried out in 2019. This analysis provided the basis for the “Swiss Post of tomorrow” strategy. “We have identified the same current and future challenges for Swiss Post. These include the decline in letter volumes, the parcel boom and the growing demand for digital services,” Roberto Cirillo continues. In their report, the experts come to the following conclusion: individuals and companies in Switzerland will still need a robust public service even after 2030.
Switzerland needs not only modern postal services, but modern payment transaction services as well. The public service is an important feature of and success factor for Switzerland. A spirit of solidarity and economic considerations are the two elements that foster national unity and have enabled Switzerland to enjoy success in the economy and as a community in recent years. This ensures cohesion and creates a competitive, attractive environment for companies, which in turn provides people with a good quality of life.
The key question: how will Swiss Post’s universal service be financed in future?
The expert committee concludes that the financing of this universal service hangs in the balance. Swiss Post’s own analyses draw similar conclusions. Calculations in 2019 revealed that, unless Swiss Post reorganized its services, it would no longer be able to finance itself from 2028 onwards. The reasons for this are well known: a drop in PostFinance’s income due to its restricted model; a decrease in letter volumes, because people and companies are increasingly communicating in digital form; and the urgent requirement for investment in the logistics infrastructure, due to the sharp increase in parcel volumes. “Our response to this is our ‘Swiss Post of tomorrow’ strategy, which enables us to keep Swiss Post fit and healthy as we transform it to meet the needs of 2030 and onwards,” explains Roberto Cirillo.
“Unlike the expert group, however, we do not want to focus on cancelling services or potentially even using taxpayers’ money,” Roberto Cirillo adds. “We do not want to save money at the expense of our company’s health. We can see a legitimate alternative to this, and I firmly believe there is a way that doesn’t involves cuts or subsidies.” Swiss Post has already started moving in this direction. The “Swiss Post of tomorrow” strategy has now been in place for a year. In order to be able to pursue this strategy without cuts or subsidies, Swiss Post must be given the necessary freedom to act and evolve, as it has managed successfully time and again for 170 years. Swiss Post needs more entrepreneurial freedom to be able to adapt its services to ever-changing needs. “This strategy gives politicians more time. Specifically, time to decide what the legal framework for a modern public service from 2030 should look like. Waiting, however, is no longer an option.” The exact nature of the financing cannot be established until the scope of the new public service has been announced.
Digital services are becoming increasingly important
Swiss Post shares the expert group’s view that digital services should be a more integral part of the universal service in future. According to the report, Swiss Post has two major advantages: the company and its staff enjoy a high level of trust. Moreover, Swiss Post has a dense network of physical access points that create a link with the digital world. The committee explicitly highlights Swiss Post’s ability to transport confidential information − including digital information. In addition to e-voting and E-Health, the committee mentions that storage and transfer of data are services that could potentially be integrated into the universal service of the future. “That is a mandate for us: we want to ensure that our services are even better adapted to our customers’ digital needs. In this regard, too, we are on the right track with our ‘Swiss Post of tomorrow’ strategy,” the Swiss Post CEO continues.
A Mail removed from the universal service?
The report proposes removing A Mail from the universal service from 2030, leaving only B Mail as part of the mandate. As far as Swiss Post is concerned, abolishing A Mail is not an option, be it in the universal service itself or outside of it. Individuals and companies sent almost half a billion A Mail letters in 2021 − this equates to a third of all letters. Even if the volume of letters as a whole continues to fall, the share of A Mail remains stable at around a third. One thing is clear: A Mail is a necessity. “What Swiss Post really needs is the operational freedom to use resources as effectively as possible − not to remove services.”
Newspaper delivery removed from the universal service?
According to the experts, the delivery of subscription newspapers and magazines should be removed from Swiss Post’s universal service obligation in future. Swiss Post is conscious of its central role in facilitating a press market that runs smoothly and knows that this service is still important to publishers and readers alike. Yet it is also aware that this service currently runs at a deficit. Unlike A Mail, which is currently a profitable delivery service, newspaper delivery – regardless of the indirect press subsidies – results in significant losses for us. If newspapers were to be removed from the universal service from 2030, our customers (newspaper publishers and all parties that have newspapers distributed) would have to bear this deficit themselves in future, and Swiss Post would have to charge competitive prices. It is up to Parliament to decide if this is preferable. Roberto Cirillo says: “To my mind, there is no question that Swiss Post is prepared to shoulder some of the deficit in newspaper delivery, provided that the universal service receives solid financing.”
Payment transactions opened up to public tender?
The expert group suggests that the universal service for payment transactions should be provided independently of postal services. They would like to see this particular service opened up to public tender and funded by the state if necessary. The government has issued PostFinance with the universal service obligation for payment transactions. This mandate is undertaken by PostFinance, together with Swiss Post, or, more precisely, PostalNetwork. Thanks to Swiss Post’s branch network, PostFinance ensures that it meets the accessibility criteria for payment transaction services. Meanwhile, PostFinance handles the processing with its infrastructure.
For PostFinance, it is clear that it would participate in any public tender of a revised universal service obligation in payment transactions. Payment transactions are part of PostFinance’s DNA, and the company does not shy away from competition.
The residual monopoly and financing abolished?
The expert group suggests abolishing the residual monopoly for letters weighing under 50 grams. It is clear that Swiss Post has not been a monopolist for quite some time. Swiss Post offers 85 percent of all its services in open competition, and sometimes even in competition with major international companies. The expert committee supports its proposal by pointing out that Swiss Post’s monopoly is becoming less and less important when it comes to financing the universal service. “Yes, it is true that income is decreasing, which is a logical consequence of declining letter volumes. However: despite the decrease in income, this monopoly still remains an important, and, above all, the only financing tool for the universal service,” explains Roberto Cirillo. Swiss Post is able to use funds generated within the residual monopoly exclusively for services that fall under the universal service. “In terms of the extent to which the financing of the universal service will be impacted if the residual monopoly is removed, this is something we will not know until we see exactly what the universal service of the future actually looks like – but this is an issue that the expert committee has not clearly laid out,” concludes Roberto Cirillo.
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