Commission looks to address cross-border parcel delivery market failures

By May 22, 2015EU

By Owen Bennett

The Digital Single Market Strategy has caused quite a stir in the Brussels policy sphere, with interest groups and industry actors scrambling to form positions on the Commission’s far-reaching proposal. While this latest effort to complete Europe’s digitalisation will touch upon a motley crew of sectors, it is the Strategy’s focus on the postal sector that is worthy of particular consideration. Indeed, the publication has served to confirm long-held suspicions that EU policymakers have concrete regulatory plans for the growing cross-border parcel delivery market.

The Commission’s rationale for placing a focus on cross-border parcel delivery is based on the understanding that an affordable high-quality delivery system for consumer goods is the underpinning of a truly digital single market. Indeed, 62% of European companies wishing to engage in cross-border e-commerce consider the high costs of parcel delivery to be an entry barrier. This reality, allied with the fact that tariffs for cross-border parcel delivery charged by national postal operators are estimated to be two to five times higher than domestic prices, points to an operating environment that stifles cross-border selling in the Single Market.

This conclusion is hardly new, and the DSM Strategy is the latest in several commitments by policymakers in the Berlaymont to address the parcel-delivery sector. Indeed, following a Green Paper in 2013, the Commission produced its Roadmap for Completing the Single Market for Parcel Delivery. That policy paper highlights the major structural and frictional barriers to smooth parcel delivery across borders and the role (and indeed responsibility) of sector actors in addressing some of the concerns. Through focused industry self-regulatory actions the Roadmap seeks to improve price and delivery transparency, operability between market actors, and consumer protection. A Commission report on the success of these measures, which will inform future regulatory measures, is expected to be published in June 2015.

However, the Digital Single Market Strategy stands distinct from the existing policy avenues in that it targets the structural issues that compromise cross-border parcel delivery. As such, it focuses on the price dimensions at play and the existing mechanisms of regulatory oversight within Member States. Indeed, in the Strategy a commitment has been made to “launch complimentary measures to improve price transparency for European delivery…and to enhance regulatory oversight of the cross-border parcel markets to ensure well-functioning cross-border delivery.”

Measures to this end will be initiated in early 2016, with a further round of regulatory scrutiny promised for 2018. Concrete efforts to address the problems will undoubtedly be popular among consumer and SME stakeholders, as reflected by the Parliament’s July 2013 Resolution that called for a level-playing field for e-commerce sellers and for “consumers to be put at the heart of the delivery process”.

But how the Commission’s proposals are received by national postal regulators and industry actors will be fascinating to see, especially as the parcel delivery market has never been on the receiving end of any meaningful EU level regulatory action. And given its lucrative value to a sector that has been damaged from the decline of ‘snail mail’, market actors are likely to be watching very closely as the Commission gets to work implementing the DSM Strategy objectives.

 

22 May 2015