CEO to leave with 14 million kronor
CEO Håkan Ericsson will immediately leave his role with a golden parachute of over 14 million kronor ($1.5 million), the Postnord board announced on Monday.
“As a consequence of acceleration market changes, the pace of Postnord's adaptation efforts needs to increase further,” chairperson Christian Jansson said. Ericsson and the board both agreed that new leadership was necessary, Jansson said, and recruitment of a new CEO would begin immediately.
Head of finance to quit
The CEO isn't the only one losing his role as a result of the problems at Postnord: head of finance Gunilla Berg will also leave her post.
Jansson said that the changes weren't due to any failures by either Ericsson or Berg, adding “they have done fantastic adaptation work”.
Postnord's head office in Solna, north of Stockholm. File photo: Anders Wiklund/TT
When the board refer to market changes and a need to adapt, the big problem they're facing is a falling volume of mail in Sweden linked to an increasingly digital society.
In the second half of 2018, the amount of letters posted fell by a record amount.
This prompted Ericsson to write to the Swedish government asking for the law on letter postage prices to be changed. He requested a one-krona increase “in order [for Postnord to] conduct its societal function with financial viability”.
Last year, Postnord had an operating loss of 855 million kronor, a huge seven-fold increase on the previous year. This was mostly due to linked to staff turnover in the Danish business.
Speaking after the announcement of Ericsson's departure, Jansson said he saw two main challenges ahead for Postnord. The first was adapting to changes in how letters are sent, and understanding customer needs, while the second is coping with parcel delivery, which in contrast to letters has increased sharply in recent years along with the rise in e-commerce.
As well as calling for increasing letter postage in general, Postnord has already had to introduce extra fees during busy periods.
The postal service introduced a “capacity supplement” over the busy Christmas period, to compensate for its increased costs such as paying for extra transport, hiring more drivers, and extending opening hours in some locations.
The fee of four kronor per parcel only applied to business customers, not private customers, meaning that it was up to individual companies to decide whether to pass the cost increase on to their own customers. This fee was in place between November 15th and December 31st, covering Black Friday as well as the Christmas break.
No post on Sundays and longer delivery times
From the start of July, postboxes will no longer be emptied on Sundays. Of the almost 22,000 postboxes in Sweden, around 2,400 have previously been emptied on Sundays.
This follows an earlier announcement from Postnord that they will test mail collection every other day instead of every day in some areas, with the intention of expanding this to the entire country next year.
Postnord has tumbled in public confidence surveys, with rising complaints of late deliveries and some which never reach the recipient at all. Jansson said the service has “never had such high quality as today”, but public confidence in Postnord went from 50 percent to 11 percent between 2015 and 2018, according to a recent trust survey.
Although unconnected to the service's financial woes, Postnord received some bad PR when an undelivered bag of votes for the 2018 election meant 145 ballots went uncounted in a Dalarna town, forcing a rare re-election.
Falun Municipality and Postnord have disagreed on who was to blame for the mix-up, with councillors saying the mail service was responsible for delivering all early votes and Postnord saying the municipality never ordered this service.
What is Postnord anyway?
Postnord is a Nordic postal service. It was formerly known as Posten in Sweden (and before that, Kungliga Postverket or The Royal Postal Agency from 1683) but merged with its Danish counterpart, PostDenmark, in 2009 to become Postnord, which today is jointly owned by the Swedish and Danish governments. It's Sweden which has a majority 60 percent share.
In 2018, it was responsible for the distribution of over 3 billion letters and 1.7 million parcels.