Postal services - 1st quarter 2022

This information is copyrighted to ANACOM

This information is copyrighted to ANACOM

Executive Summary

In the 1st quarter of 2022, postal traffic fell by 2.3%, revenues decreased by 2.2%, although revenues from letter mail (+3.2%) and editorial mail (+2.2%) increased

In the 1st quarter of 2022 (1Q2022) postal traffic decreased by 2.3% compared to the 1st quarter of 2021 (1Q2021). In 1Q2021, the decrease had been 9.2%. The recent dynamics have been influenced by the effects of the COVID-19 pandemic which generated a significant contraction in traffic. In 1Q2022, the pandemic is estimated to have caused a 10.8% decrease in traffic, a less severe impact than in 1Q2021 (estimated decrease in traffic due to the effect of COVID-19 of 13.0%).

Revenues generated by legally qualified providers of postal services amounted to around EUR 175.8 million, 2.2% less than in 1Q2021. This decrease was due to the evolution of parcel revenues, which fell by 8.4%, and to a lesser extent to the decrease in revenues from direct mail (-11.9%). Revenues from letter mail (+3.2%) and editorial mail (+2.2%) increased.

The average revenue per item increased by 0.1% year-on-year, as has been the case since 2018. This quarter, the increase resulted, among other factors, from the growth in the unit revenue of letter mail (+4.5%), influenced by the price increase promoted by CTT on 1 April 2021.

Postal traffic seems to be recovering after pandemic

Although the effects of the pandemic could still be felt in 1Q2022, with the gradual lifting of the movement restrictions throughout 2021 postal traffic seems to have started a process of recovery from the shock caused by the pandemic.

Parcels fell by 10.6%, in the context of the return to on-site work, and incoming international traffic fell 27.9%, influenced by the end of the VAT exemption on low value extra-Community purchases

In terms of type of item, letter mail, editorial mail and parcel traffic fell by 1.2%, 2.4% and 10.6% respectively, while direct mail increased by 0.5%.

In the case of CTT, the decrease in parcel traffic was due to the fact that “the activity associated to e-commerce [in 1Q2021 was] positively impacted by the effects of the COVID-19 pandemic restrictions, and [in 1Q2022] part of gains then obtained [were] temporarily reversed by the return to physical retail”. This evolution was also due to “a more challenging economic environment1.

Incoming international traffic, which represented about 5% of total postal traffic, decreased 27.9% quarter-on-quarter. This decrease was “strongly influenced by the end of the Value Added Tax (VAT) exemption on low value (de minimis) extra-EU purchases as of 1 July 20212.

At the end of 1Q2022, letter mail represented 74.7% of postal traffic, while editorial mail and direct mail represented 7.1% and 7.0% respectively. The weight of parcels in total traffic stood at 11.2%, 1.0 percentage point (p.p.) less than in 1Q2021. In terms of revenues, the relative weight of parcels was 41.2%, 2.8 p.p. less than in the previous quarter.

Universal service accounted for 81.5% of traffic and 52.5% of revenues

Postal services included in the universal service (US) accounted for about 81.5% of traffic and 52.5% of revenues.

US traffic fell by 1.0%, however its weight in total traffic increased by 1.0 p.p. compared to 1Q2021. US revenues increased by 3.4% and its weight in total traffic increased by 2.8 p.p.

Provider shares

The CTT group had a share of approximately 84.9% of postal traffic, down 0.6 p.p. from 1Q2021. Regarding the traffic covered by the scope of the US, the CTT group had a share of around 90.8%, up 0.6 p.p. from the previous quarter. On the other hand, the CTT group’s share of parcels reached 47.2% (-4.4 p.p. than in the corresponding quarter of the previous year).

The number of employees increased by 0.2%.

In 1Q2022, there were around 14.8 thousand employees assigned to the operation of postal services, 0.2% more than in 1Q2021. This growth was driven by the activity of alternative providers (+13.2%). The number of employees of the CTT Group decreased by 4.2%, reaching 71.3% of the total workforce at the end of the period (-3.3 p.p. than in the previous quarter).

Increase in access points and decrease in distribution centres and vehicles

The number of access points (+2.8%) increased while the number of distribution centres (-3.6%) and vehicles (-5.5%) decreased.
The number of CTT post stations increased by 1.4%, compared to the same quarter, maintaining the growth trend that began in 2019, while the negative evolution of post offices was reversed and their number increased by 0.2%3.

1 Vd - Press Release - Consolidated Results - 1st Quarter 2022
2 Vd - Press Release - Consolidated Results - January to September 2021
3 The number of CTT post stations and post offices for the end of the 1st quarter of 2022 is provisional.