An Post delivered more than six million parcels to homes in the State in December as ecommerce in the run up to Christmas “exploded”, its chief executive David McRedmond has said.
But its letters business continues to decline, with Mr McRedmond suggesting that it might be time to look at An Post’s obligation to deliver letters to every house in the Republic, every weekday.
In an interview with Inside Business, a podcast by The Irish Times, just days before December 25th, Mr McRedmond said: “Ecommerce has once again exploded and this December we’ve already delivered over six million parcels, that’s three to every household in Ireland.
“It’s up about 30 per cent [versus December 2022] but where it’s really dramatic is if you go back to 2017 we delivered one million parcels. It is inexorable, that growth in ecommerce. People like shopping online, it’s just the way they shop now.”
What’s in store for 2024?
An Post CEO David McRedmond joins Ciarán Hancock to discuss a stellar year for the company with a move to a new HQ, a €30 million government loan repaid and some six million packages delivered this December.
However, Mr McRedmond acknowledged that the State-owned company’s traditional letters business will be down about 5.5 per cent this year.
“That’s a tiny bit more than we expected. We budgeted for about 5 per cent per annum decline. That means that each year we’ve got to find an extra €30 million in revenues and those revenues are straight to the bottom line because it doesn’t cost anything to deliver the last 5 per cent of letters. It’s 100 per cent profit and it’s tough to make that up.
“Parcels are much more difficult to deliver and they don’t have the margins that letters do but that’s the business we’re in.”
He also noted how other European countries were moving away from the obligation to deliver letters each day. “I’ve just seen today that Denmark has switched off its universal service obligation, that’s the obligation to deliver to every house, every day. We still think there’s value in it but we probably need to move towards greater flexibility around it. What do people want? Do they want letters every day? We certainly know with parcels that they want them immediately. But letters are still very important to us.”
When asked what kind of flexibility An Post might like, Mr McRedmond said: “It might be that we don’t have to deliver five days a week, maybe it’s three days a week. We will want to deliver every day but it’s a difference between what you’re regulated to do and what you want to do. Instead of a focus on penalties in An Post if we don’t do this or we don’t do that, I just think it’s much better to trust us and see what we can do.”
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