Caped crusader takes up postal challenge

Postmen are not seen in the same way as other functionaries.

Unlike telephone or electrical engineers, they often have a special place in people's hearts and minds pictured in a uniform or riding a bike, they bring families together and smiles to the faces of old ladies in remoter parts of the world as they deliver an unexpected missive.

In our minds, they certainly do not look like Bror Anders Månsson, the founder and joint owner of Sweden's largest private-sector postal company Citymail. Sporting a long black cape, horn-rimmed glasses and a trendy goatee beard, Månsson could not be less like Postman Pat if he tried. And the differences do not stop there.

'Post offices are organised in a very archaic way with a director, an under-director, a postmaster and so on. We are not,” he says. 'Sweden Post has 12,000 staff and we have 800, most of whom come from other areas of work and all of whom are computer literate.'

Since EU communications ministers agreed in December to a very gradual opening of the mail-delivery market from 2003, Sweden looks set to be the only example of an open market in Europe for some time.

The country is a test-tube experiment for the rest of the Union, since it launched a competitive market for mail in December 1992.

When he founded Citymail back in 1990, Månsson conducted a detailed study into postal services in the UK, Germany, Belgium and the Netherlands. He discovered that traditional mail was shrinking as a proportion of the postal market, with computer-generated mail, such as bank statements and invoices as well as the euphemistically named 'direct mail' (otherwise known as 'junk') now accounting for the lion's share.

'Also, as I looked at the quality standards, I asked myself how these post offices could survive as companies in the long-term when they were offering 98% quality,' says Månsson.

'Telecoms operators do not tell you that you can call somewhere, but you will only reach the person you want 98% of the time. Nobody would tolerate that.'

This is why courier companies started to appear in the early Nineties to deliver documents such as papers and contracts for law firms which could accept nothing less than guaranteed delivery.

Families and friends writing letters and posting them in postboxes now account for just 5% of the market.

Half of the entire market comprises pre-sorted computer mail, says Månsson. This comes from banks, insurance companies and mail-order catalogue firms writing their letters by computer and sorting them in distribution centres, for delivery within three days.

The other near-half of the market is office-generated, often delivered overnight but increasingly sent via electronic mail and fax.

'So much is pre-sorted these days and yet post offices have been investing heavily in sorting machines 200 million ecu just by Sweden Post in 1995-96,' he says. 'This is the reason why these monopolies are so frightened of competition because they have completely misread the market.'

They are desperate to hold on to every sector of business they can. Since the Swedish market opened, Sweden Post has used every means possible to beat off Citymail, claims Månsson.

'The first thing they tried to do was stop us getting any volume so they used exclusivity clauses with their business clients, offering 20% discounts on the condition that they gave no letters to Citymail. After that, they tried to set 'dumping' prices in the Stockholm area and only in our Zip-code zones. They have been condemned 15 times by the competition authority since 1992,' he says.

Nevertheless, Citymail has been able to burrow into niche areas of the market and now delivers mail to people living in Stockholm, Göteborg and Malmö as well as rural areas of the Swedish archipelago.

“When competing with Sweden Post, I do not try it over 8,000 products,' he says. 'Instead, I choose one where their quality is low and their price high. Only if that works do I expand.'

The behaviour of Sweden Post is not new. It is typical of all the established operators in telecoms, energy and aviation throughout the EU as they face what they fear is a competitive abyss. The irony is that the post offices have much to gain from the new world, says Månsson.

'It seems to me that the opposition is still living in the old world and does not understand that new services will not kill the old ones,” he says. 'A lot of these new technologies actually create business. For example, mobile phone companies have to send bills to their customers, and just look how many magazines there are about personal computers and the Internet they all have to be delivered to subscribers.'