Playing ‘pass the parcel’ with China is proving expensive for Postnord – The Post

Playing ‘pass the parcel’ with China is proving expensive for Postnord

Once again the Danish postal service is smarting financially, but this time due to outdated international pricing agreements

Another load of cheap knick-knacks on its cut-price way to Danish customers from China (photo: Lav Ulv/Flickr)
January 4th, 2019 5:40 pm| by Stephen Gadd

It may be that Danes have stopped sending letters and Christmas cards since the price of one of the latter to the UK has now reached 30 kroner (anything up to 50 grams), but parcel traffic has been increasing dramatically due to internet shopping.

However, a century-old international postal agreement is hitting the bottom line of the Danish-Swedish postal company Postnord hard.

Chinese boxes
It is especially the Danish habit of buying from Chinese websites that is causing problems. The postal agreement treats China as a developing country, so it enables packages to be sent cheaply to Denmark, reports DR Nyheder. The Chinese only have to pay 6.50 kroner to Denmark for a package, and this comes nowhere close to covering Postnord’s costs.

The postal charges also put Danish webshops at a severe disadvantage compared to their Chinese counterparts, and the transport minister, Ole Birk Olesen, who is also responsible for the postal service, is worried.

Not-so-free trade
“I’m very much an advocate of international free trade but I don’t like the idea of the Danish state and postal service subsidising Chinese parcels,” the minister said.

He went on to add that unless the system was changed, Denmark ought to decide whether to opt out of the international agreement.

Denmark is not alone in its criticism. The same concerns have been voiced in the US regarding Chinese parcels. For example, it costs almost five times more to send a letter from Washington to Beijing than it does the other way.

A possible US alternative
Olesen is glad of the support. “The way things are at the moment is completely untenable. It has to be stopped and pressure is being exerted at present by the US, Denmark and other countries. If that ends up with the US leaving and creating an alternative system, then perhaps that is something we could also join,” he said.

When a country leaves the union it takes a year before the process is completed, and this provides a window during which it is possible to negotiate a new deal.

The number of parcels from China was expected to break all records in 2018, with Postnord predicting an increase of 25 percent in comparison with 2017. Postnord has had to expand by building a new hall at Copenhagen Airport solely to handle parcels from China.