Country sheet: Italy - CIRCABC

Country sheet: Italy 505

Country sheet: Italy

1.1 Summary

Mail market characteristics

The postal market is characterised by:

(i) A high population density and a high degree of urbanisation;

(ii) Relatively low mail volumes per capita;

(iii) Direct mail (addressed advertising mail) is not included in the reserved area;

(iv) Both inbound and outbound cross-border mail are included in the reserved area;

(v) A VAT-exemption for all universal services provided by the USP;

(vi) There are many (small) companies with a universal service licence, but only one company

(Poste Italiane) with a universal service obligation (with the right to operate within the

reserved area);

(vii) A certain percentage of mail collected by Poste Italiane (including registered items) must

continue to be delivered through (city mail) competitors.

Regulatory developments

• The reserved area was reduced from 100g to 50g at 1 January 2006 – in conformity

with Directive 2002/39/EC. In accordance with the recent adoption of Directive

2008/6/EC, full liberalisation of the postal market is now scheduled to occur in 2011.

• Until 16 May 2008, the Ministry of communications was responsible for defining and

managing the regulatory framework for the postal sector and was the official

regulatory authority. By order of Legislative Decree May 16, 2008, n. 85,1 the

functions of the Ministry of Communications and its inherent financial, material and

human resources, are transferred to the Ministry of Economic Development.

Market developments

• Poste Italiane holds a dominant position in addressed mail deliveries. The main

competitor (TNT Post) is mainly active in the unaddressed mail market and registered

mail. In addition, there are many (small) companies active in local mail delivery.

• Since December 2007, competition has gained a possible boost as a percentage of

mail items that is collected by the universal service provider (including registered

mail) has to be delivered by competitors of the USP. The Ministry of

Communications and the National Competition Authority considered that this was an

important step towards the full opening of the market. The delivery offer to

competitors was established by an open and non discriminatory tender.

1 Published in the Official Gazette – General Series – no. 114 16 May 2008.

Annex II: Main Developments in the Postal Sector (2006-2008) 506

• Further development of competition is hampered by the existence (and extent) of the

reserved area and the VAT-exemption for Poste Italiane on universal services. In

addition, the scattered population in Italy strengthens the importance of Poste

Italiane’s network (to which no competitor has demanded access so far).

• There has been some debate about direct compensation from the Government to

cover the losses of the universal services (these subsidies were in addition to the

finances from the Universal Service Fund). The European Commission, recognised

that the public funds granted to Poste Italiane for years 2000-2005 and for 2006-2008

respected the European law on State aid, since they under-compensated the costs of

the universal services. However, the commission “regrets that Italy put the aid in

question into effect” as the measure “is liable to affect […] trade and distort

competition”.2

• Competitors such as TNT and Uniposta/Omnio Network have been investing in

(future) expansion that mainly focuses on business to consumer services. The

investments are in network expansion, printing capacity, integrated communication

services, and mail order.

Other issues

• Both the NPO and its competitors are investing heavily in increasing productivity,

network extension and diversification.

• Over the last five years, Poste Italiane has managed to transform its post offices from

a loss making into a profit making network. Because of installed IT-systems, rural

post offices can connect to the main office and start selling mortgages, bank accounts,

and insurance. Overall, however, the mail service remains loss making because of the

universal service obligation. According to an article in Fortune (June 12, 2006), the

losses are said to result from the universal service requirement to deliver mail across

the country five days a week, even in unprofitable (rural) areas.3

• TNT is using its network to diversify into mail order, as it recently signed an

agreement with Mr. Price (one of the most important online sales websites of

electronic products in Italy). Thereby it anticipates a large growth potential of the

market for B2C parcel deliveries.

Discussion points

• The scope of the reserved area and the VAT exemption for the USP imply that the

market for addressed mail in Italy has not been very contestable. Although the Italian

market does not differ from most other European countries in this respect, in Italy the

provision of the USO requires additional funding, beyond the returns of the reserved

area. In many other countries with a scattered population such financial support is not

needed (for example in France and Spain). These funds may have a hampering effect

2 http://ec.europa.eu/comm/competition/state_aid/register/ii/doc/NN-24-2008-WLWL-en-30.04.2008.pdf.

3 See http://money.cnn.com/2006/06/09/news/international/poste_fortune/index.htm.

ECORYS confirms that the costs of the universal services exceeded the revenues considerably. This statement is based on

classified data from the “Accounting Separations 2004-2006, National Regulatory Authority, Service Agreements Poste

Italiane – Communication Ministry 2003-2005 and 2006-2008”, which was provided to ECORYS by Poste Italiane.


on the development of competition. However in light of the regulatory barriers in

place (reserved area, VAT exemption), the additional effect on the development of

competition is likely negligible.

• The impact of the 2007 memorandum, forcing the USP to make use of competing

networks for delivering a certain percentage of mail, can be seen as a positive effect

on the development of competition. It helps competing operators to further develop

towards a competitive delivery network for the period after 2011.

Summary information on market developments:

Postal market segment / aspect Competition (market shares) Main competitors / remarks

Express NPO has 11.4% market share in

the domestic market

DHL (DPWN), TNT express,

FEDEX

Parcel (main players) See above The market share in parcel

deliveries within the universal

service area is unclear

Unaddressed n.a. Exact number of unaddressed

mail items is unknown

Cross-border mail Inbound and outbound:

NPO ≈100%

Addressed mail (market share CPOs)* 5% - 15% Market data are very unreliable.

Other competitors are TNT Post

and (possibly) Uniposta

Population density (inhabitants/km2) 195

Total addressed mail market (items) 6.8 billion items Market data are very unreliable

Addressed mail volume per capita ≈ 115

Status of NPO Limited liability company 65% state owned; 35% owned by

the public savings bank (Cassa

Depositi e Prestiti)

Main divisions of NPO Mail,

Banking,

Express

Note: * The market share of CPOs refers to the combined market share of CPOs in domestic addressed mail

delivery, excluding newspaper delivery. All figures refer to 2006. N.a. is not available.

Summary information on the implementation of the Postal Directive is given below.

Aspect Implementation and remarks

Universal service and its

financing

The USO complies with the Directives and is carried out by the incumbent Poste

Italiane. Other providers have a licence to provide universal services (outside the

reserved area) but only Poste Italiane is obliged to deliver in all of Italy.

The USO is VAT exempted and financed from the reserved area. Any costs not

covered by the returns from the reserved area should be financed by a Universal

Service Fund. In practice, however, the finances from the Universal Service Fund

and additional subsidies were not sufficient to cover the net costs of the universal

service.


Aspect Implementation and remarks

Reserved area Reduced to 50g at 1 January 2006. Full liberalisation is not expected until 2011.

Both in- and outbound cross-border mail are part of the reserved area. Direct mail

is liberalised.

Licensing and network

access

(i) A universal concession is needed to provide universal services and to have the

right to operate within the reserved area; (ii) A universal licence is needed for

universal postal services; (iii) Poste Italiane is not obliged to provide access to third

parties.

Tariff principles and

transparency of accounts

(i) The tariffs for the universal service are capped, with the level depending on the

inflation rate, productivity gains and the difference between quality objectives and

results.

(ii) The prices are subject to ex ante price regulation by the NRA. The competition

authority may intervene “ex post” in the light of the competition law.

(iii) The NPO is required to submit annual accounts to the NRA that must show

separate information on the reserved area, universal services and activities outside

the universal service (accounting separation). They are verified by an independent

auditor and are submitted to the NRA for approval.

Quality of services Quality standards are set mainly concerning delivery time. Poste Italiane meets

these requirements. The NRA controls the achievement of them. Other important

elements about service quality are the presence of appropriate points of access for

the users, the postal offices opening times and the existence of simple complaint

procedures.

The national regulatory

authority

Since 16 May 2008 The Ministry of Economic Development took over the

responsibility as regulatory authority from the Ministry of Communication. It is

responsible for issuing licences (and determining requirements); setting maximum

tariffs, cancelling tariffs and setting new tariffs (and penalties if ceilings are not

adhered to); requiring data and studies from both the USP and non-USPs; and in

cases of serious violations of universal service obligations, the Ministry may launch

investigations to ascertain any failures and may apply sanctions.

1.2 General information

Italy is a large country and has the fifth-highest population density in Europe. The degree

of urbanisation is high.

Table 0.1 General country information (2007)

Italy

Population (in million) 58.8*

Size of the country (1,000 km2) 301.3*

Population density (inhabitants/km2) 195.1*

Degree of urbanisation 67.6**

Number (and percentage) of inhabitants 5 largest cities 6.3 million (11%)

Sources: * UPU (2006), ** UN (2005), *** World Gazetteer (2008 estimation).


1.3 Regulatory developments

1.3.1 Postal law and regulation

Decree 261/99 (the Postal law) adapted the postal regulatory framework to Directive

97/67/EC. The postal law was amended in 2003 by Legislative Decree 384/2003,

implementing Directive 2002/39/CE. An overview of all relevant legislation is provided

below.

Table 0.2 Postal law and regulation

Postal law and

regulation

Date of introduction Date of latest

amendment

Remarks

Postal Code 29 – 03- 1973 - Presidential Decree

156/73

Approval of the sole text

of legislative disposition in

postal, bank postal and

telecommunications

Postal law 20-07-1999 2003 Legislative Decree

261/99, implementing Dir.

97/67/CE.

Amended by Legislative

Decree 384/2003,

implementing Directive

2002/39/CE

Regulations concerning

dispositions on general

authorisations in the

postal sector

04-02-2000 15-02-2006 Decree 42—200 No.75,

amended by

Decree 15-2-2006 No.134


dispositions for issuing

individual licences in the

postal sector

04-02-2000 15-02-2006 Decree 04-02-200 No.73

Emended by Decree

No.129

Regulation on reserved

area and USO

18-12-2002 13-01-2004 Scope of the reserved

area for maintenance of

the universal service

Quality regulation 19-06-2003 - Decree of the

Communication Ministry

Quality standards for the

time transit of ordinary

mail, priority mail,

registered mail

Tariff regulation 23-12-2003 - New tariffs of reserved

postal services and new

prices of universal postal

services


Postal law and

regulation

Date of introduction Date of latest

amendment

Remarks


provisions of the universal

services and USO

obligations

01-06-2004 - Public Service Agreement

between Poste Italiane

and the Communication

Ministry (“Contratto di

Programma”) for 2003-

2005

Quality regulation 13-03-2006 - Decree of the

Communication Ministry,

Universal service quality

indexes for 2006-2008

Tariff decree and Quality

regulation

12-05-2006 Ministerial Decree on

tariffs and new quality

standards for the

universal service.

Source: Post Itanliane, Ministry of Economic Development.

1.3.2 Universal Service Obligation

The postal legislation (decree No. 261/99) defines the scope of the universal services. In

particular, the following domestic and international services should be provided at

affordable prices:

• Collection, sorting, conveyance and delivery of mail weighing up to 2 kilograms;

• Collection, sorting, conveyance and delivery of parcels weighing up to 20 kilograms;

• Registered items and insured items.

These services also include priority mail, addressed direct mail, newspapers and

magazines. The universal service is provided in all parts of the Italian territory,

throughout the year.

Collections and home deliveries are performed every working day and at least five days a

week.

The express market is fully opened to competition and is outside of the universal service.

In Italy the USP with a ‘Universal Service Concession’ has to deliver in all of Italy. The

losses from providing universal services (e.g. originating from delivering in rural areas)

should be covered by the returns from the reserved area, state subsidies and a Universal

Service Fund to which all mail providers with a ‘Universal Service Licence’ contribute.

Poste Italiane stresses that:

• the net costs of the universal services (accounting for the returns from the reserved

area) are only partially financed by State subsidies (around half of the total amount

that is annually certified by an independent auditor);

• the contributions to the compensation fund from licensee operators are very low

(around 100.000 euro per year);


• any costs not covered by the above-mentioned solutions are at the USP’s expense.

1.3.3 Reserved area

Italian legislation assigns Poste Italiane S.p.A. as the universal service provider of postal

services in the country. Until 1 January 2006 its exclusive rights in the reserved area are

identified by the following price and weight limits: 1.80 EUR and 100 grams. Since 1

January 2006, these thresholds have changed to 1.50 EUR and 50 grams. The reserved

area will end in line with the timescale defined by the new Postal Directive (2011).

The reserved area includes collection, sorting, conveyance and delivery of both domestic

and (in- and outbound) international letter-post items, within the above mentioned limits.

The reserved area also covers registered items relevant to administrative proceedings and

public procurements and registered items relevant to judicial documents with no price or

weight restrictions. Direct mail is open to competition (Legislative Decree 261/99 and

Ministry of Economic Development Order 22/11/01).

Table 0.3 Liberalisation of postal services and the reserved area (2008)

Postal product Within reserved area

(Yes, no, partially or unclear)

Remarks

Bulk mail and consolidation Partially Delivery <50 grams and <1.50 EUR

Consolidation is open to all

B2B non-bulk mail Yes <50 grams and <1.50 EUR

Individual item mail Yes ,,

Cross-border mail Yes ,,

Unaddressed mail No

Parcel mail No

Express mail No

Source: Poste Italiane.

1.3.4 NRA

Until 16 May 2008, the Ministry of communications was responsible for defining and

managing the regulatory framework for the postal sector and was the official regulatory

authority. By order of Legislative Decree May 16, 2008, n. 85,4 the functions of the

Ministry of Communications and its inherent financial, material and human resources, are

transferred to the Ministry of Economic Development. It grants the concession to the USP

to provide the universal service as well as licences for the provision of universal services

and authorisations in areas open to competition. It monitors compliance with the rules of

the universal service provided by Poste Italiane S.p.A. and ensures that licensed and

authorised operators respect the reserved area. It sets tariffs, prices and quality standards

4 Published in the Official Gazette – General Series – no. 114 16 May 2008.


for services provided by the USP and monitors performance in the light of the standards

laid down (UPU, 2006).

Complaints and redress procedure

The Postal Law describes complaints and redress procedures that apply to the USP (not to

non-USP operators). A request for intervention may only be submitted if a complaint has

previously been submitted and Poste Italiane has not replied or its reply is considered

unsatisfactory.

In cases of serious violations of universal service obligations, the user can directly report

to the Ministry. The Ministry may start appropriate investigations to ascertain any failures

and may impose sanctions. The possibility of reimbursement is provided for by the Poste

Italiane’s Charter of Quality, but only for items subject to tracing (registered items,

insured mail and parcels). Conciliation may be requested for settlements of up to 500

Euros (Poste Italiane, 2007b).

Table 0.4 Regulatory powers NRA

Powers Yes/No/Unclear Remarks

Require data from USP Yes

Require accounting system Yes

Require new data studies Yes

Cancel unlawful rates Yes

Levy Fines Yes

Seek judicial order No

Set new rates for USP Yes

Require downstream access No

Require data from non-USPs Yes

Source: WIK, 2006, Poste Italiane.

1.3.5 Licenses

The postal market is open to competition above 1.50 EUR and 50 grams. Operators must

obtain a licence or authorization. Licensed operators provide services included in the

universal service, while authorized operators provide services outside the universal

service. Both licences and authorizations are granted by the Ministry of Economic

Development (UPU, 2006).


Table 0.5 Entry regulations

Instrument Services allowed under

the license

Conditions for

obtaining the licence

Number of licences

approved

Universal Service Concession - Reserved area and

Universal Service

USO

A, B, C, D, E, F, G, X

1

Universal Service License - Universal services A, B, C, D, F, G, H, I 292

General Authorization - Express services

- Parcel services

A, B, C, D, H, G

1154

Source: WIK,2(006), Poste Italiane.

A = Confidentiality of correspondence.

B = Restrictions on dangerous goods.

C = Data protection requirements.

D = Environmental protection requirements.

E = Obligation to provide all or part of universal

service.

F = Quality, availability, performance, or price

standards.

G = proper response to complaints.

H = Non-infringement of reserved area of USP.

I = Contribution to universal service fund.

X = Deliver throughout the entire country.

1.3.6 Access

The Italian government has implemented no legal provisions to regulate access to the

facilities of the universal service providers. So far, postal operators have not requested the

regulatory authorities to investigate the desirability of such interventions.

Table 0.6 Network access

Upstream/downstream Form of access Regulated?

(Yes, No, Unclear)

Upstream Access to street letter boxes No

Access to outward sorting centres No

Downstream Access to inward sorting centres No

Access to delivery offices No

Access to PO boxes No

Source: ECORYS (2005), Poste Italiane.

1.3.7 Price regulation

In the Italian postal sector, price regulation is conducted by ex ante regulation which

requires that the USP receives a specific approval of the National Regulating Authority

before price changes of universal services can be implemented. The price is capped at a

level that depends on the inflation rate and productivity gains. The NRA may also

intervene ex post if necessary. Furthermore, the Competition Authority may intervene ex

post in the light of competition law.


Transparency of USP accounts

The USP is required to submit annual accounts to the NRA. According to Decree 261/99,

such accounts must show separate information on reserved area, universal service and

activities outside the universal service (accounting separation). They are verified by an

independent auditor and are submitted to the NRA for approval.

1.3.8 Quality of service

The Ministry of Economic Development sets certain quality standards and is also

responsible for monitoring performance, but outsources this to an independent body.

Italy applies the CEN standard EN 13850 and EN 14508.

Table 0.7 Quality of service USP in 2006

Standard Threshold Performance USP Remarks

International mail:

Inbound: D+3 85% 91.3%

Outbound: D+3 85% 92%

Priority mail: D+1 88% 88.1%

Registered mail: D+3 92.5% 92.9%

Insured mail: D+3 92.5% 98.8%

Ordinary parcels: D+5 93% 96.1%


1.4 The mail market

1.4.1 Mail market overall

Total turnover from the domestic postal sector as a percentage of GDP is about 0.28%.

The number of letter posted items per capita is around 115.

Table 0.8 Size of the mail market in turnover (billion Euro) – rough estimates

Postal product 2005 2006

Bulk mail and consolidation

B2B non-bulk mail

Individual item mail

Cross-border mail

≈ 3.9 ≈ 3.9

Unaddressed mail n.a. n.a.

Parcel mail n.a. n.a.

Express mail n.a. 2.4 – 2.9

Source: TNT Express (2007), own estimates.

Note: Post Italiane does not confirm these data.


Note: Assuming that Poste Italiane has a market share of between 85% to 95% in addressed mail. Poste

Italiane’s turnover on (traditional) mail services is about 3.5 billion Euro’s in 2006 (see Poste Italiane, 2006a, p.

37).

Note: n.a. is not available.

Table 0.9 Size of the mail market in physical terms (million items) (rough estimates)



B2B non-bulk mail


Cross-border mail (outgoing)

≈ 6,800 ≈ 6,800

Unaddressed mail n.a. >2,600

Domestic parcels n.a. n.a.

Express mail n.a. 350 – 400

Source: own estimates based on: UPU, Poste Italiane (2006a), TNT Express italy (2006), www.tnt.it,

Note: Post Italiane does not confirm these data.

Note: The volumes of addressed mail items are based on the assumption that Poste Italiane has a market share

of between 85% to 95%. Poste Italiane’s volumes of traditional mail services plus addressed advertisement was

about 6 billion in 2006 (see Poste Italiane, 2006a, p. 37).

Note: Poste Italiane delivers about 715 million unaddressed mail items, TNT Post delivers about 1.9 billion

unaddressed items, in addition there are many other companies delivering unaddressed mail items.

Note: volumes of express mail are based on information on market shares of Poste Italiane, as provided by TNT

Express italy (2006): 11,8% market share in the domestic express market and a volume of domestic express

items of 43 million (see Poste Italiane, 2006a. p. 38).


1.4.2 B vs C

The figures on mail sent by businesses are based on numbers provided by Poste Italiane.

These figures do not account for possible business mail sent via competing companies,

but their market shares are small.

Table 0.10 Postal streams in the market for addressed mail in turnover (Euro)

Postal stream 2006

B2B

B2C 75% (about 3 billion)

C2B

C2C 25% (about 1 billion)


Note: most of the items within “C to B/C” categories are sent by small business customers (for example Small

Office Home Office - SOHO).


Table 0.11 Postal streams in the market for addressed mail in physical terms (items)

Postal stream 2006

B2B

B2C 85% (about 5 billion)

C2B

C2C 15% (about 750 million)


Note: most of the items within “C to B/C” categories are sent by small business customers (for example Small

Office Home Office - SOHO).

1.4.3 Market opening

The difficulty of obtaining data on postal volumes prevents a detailed assessment of the

percentage of mail volumes that is open to competition. Various sources (Eurofound,

2007; TNT Post Italy; Postinsight.com) mention that Poste Italiane has a dominant

position with market shares possibly over 90% in addressed mail.

The markets for unaddressed mail, courier services and Direct Mail are fully open.

Further, after the Memorandum of 11 December 2007 signed by the Ministry of

Communications, Poste Italiane and its competitors, a relevant percentage of mail

collected by Poste Italiane (including registered items) must continue to be delivered

through competitors. This represents an interim measure towards the full liberalisation of

the market.5

There is no indication of unlicensed / unauthorised competition in areas where license /

authorisation is required.

1.4.4 Cross-border mail

Table 0.12 Cross-border mail volumes

X 1000 2005 2006

Outgoing 96,700 95,000

Incoming 188,800 199,500

Source: 2005 – UPU ; 2006 – Poste Italiane (questionnaire) and Poste Italiane (2006a).

The main actor is Poste Italiane. Remuneration is according to international UPU

standards.

5 The Memorandum was approved by the National Competition Authority through its Decision of 27 February 2008.


1.4.5 Impact of Innovation

As in other European countries, physical mail volumes are substituted by means of

electronic communication. The extent and speed of this process are less, though, than in

other countries because electronic services are not as widespread and the publishing

industry relies on ‘paper based’ solutions. As a consequence, the development of the

direct mail market has a high potential.

Table 0.13 Impact electronic substitution

Postal product % change in total market volume (avg./year)

Bulk mail and consolidation n.a.

B2B non-bulk mail n.a.

Individual item mail n.a.

Cross-border mail n.a.

Unaddressed mail n.a.

Parcel mail n.a.

Express mail n.a.

Source: n.a.


1.5 Market structure and competition

1.5.1 National postal operator/Universal Service Provider

Currently, the Poste Italiane Group is the principal operator in the sector. The Italian state

owns 65% of the postal operator while the remaining 35% stake is held by the public

savings bank (Cassa Depositi e Prestiti). Since 2005, the Italian government has indicated

that it aims at further privatisation of Post Italiane.

The principal postal services provided by the group include the following:

Postal services:

• Correspondence (single items, registered and insured mail, legal communications and

other registered post);

• Commercial mail (catalogues, non-addressed mail, etc.);

• Direct mail;

• Periodicals (prints, gadgets, books, etc.);

• Electronic communication (telegrams, faxes, telexes);

• Express carriers;

• Packages.

There is no data available regarding the precise market share of Post Italiane, but multiple

sources indicate that Post Italiane has a dominant position in the markets for postal

services. This does not include the express market. Here the most important players are

global companies such as TNT, Bartolini and DHL that have the majority of the market


share (Databank 2007). of the market share Poste Italiane Group holds 11.4% (Databank

2007).

Table 0.14 Postal network of the national postal operator

2004 2005 2006

Number of post offices 13,855 13,881 13,893

Number of postal agencies 0 0 0

Number of street letter boxes 63,710 62,000 62,000

Per 10000 inhabitants 11 11 11

Source: Poste Italiane (Number of Post Offices at 12/31).

Table 0.15 Division of turnover of the national postal operator per market segment (in million euros) - rounded

Postal product 2007 % of total

Bulk mail and consolidation 2,989 67.6

B2B non-bulk mail n.a. n.a.

Individual item mail 905 20.5

Cross-border mail (inbound/outbound) 217 4.9

Unaddressed mail 36 0.8

Domestic parcels 146 3.3

Express mail 30 0.7

other postal services 98 2.2

Total 4,421



Table 0.16 Division of postal items (in million) of the national postal operator per market segment - rounded

Postal product 2007 % of total

Bulk mail and consolidation 5,000 75.89

B2B non-bulk mail n.a. n.a.

Individual item mail 638 9.69

Cross-border mail (in- and outgoing) 294 4.47

Unaddressed mail 611 9.27

Parcels 18 0.28

Express mail 3 0.05

other postal services 23 0.35

Total 6,589



Vertical and horizontal integration

Poste Italiane is vertically integrated in all levels of the supply chain. The Poste Italiane

group is also active in the market for express and courier services, and unaddressed mail.

Since 2006, UPS and Poste Italiane agreed for UPS to carry the Italian postal service's

international express shipments.


Table 0.17 Overview alliances and partnerships of the national postal operator (2007)

Mail Express Logistics

UPS - International -

Diversification

The company has diversified mainly into retail banking, financial services and insurance.

Due to installed IT systems, rural post offices can connect to the main office and start

selling mortgages, bank accounts and insurance. Further, offering of mobile services

(PosteMobile) represents a first case in Europe of integration between mobile and

financial services (i.e. financial payments by mobile).

1.5.2 Competitor postal operators

In Italy, notably the express courier market is characterised with a high degree of

competition; competitors such as TNT and DHL have a significant market share.

However, within the Universal Service competition remains limited. Although there are

212 operators, their catchment areas are mainly restricted to small, mostly urban areas.

This is not the case for the main competitor - TNT Post.

The TNT Group currently manages its business through two divisions: Express and Mail

(TNT Express and TNT Post). The group’s strategy primarily focuses on investing in its

network.

TNT Post

TNT Post currently has a network which is based on 122 direct and indirect branch

offices throughout the country. The company is organised into three business units:

• Addressed mail –ranging from business advertising to direct mailing and the delivery

of registered mail;

• Unaddressed mail – various kinds of unaddressed distribution;

• B2C – delivery of ordinary parcels from businesses to consumers.

TNT Post also offers a series of printing and enveloping services, thus positioning itself

in the market as an integrated supplier. Printing facilities throughout Italy specialise in

different types of printing: transactional (hybrid) mail or direct mail.

TNT Italy is diversified into mail order, as it recently signed an agreement with Mr. Price

(one of the most important online sales website of electronic products in Italy). The

agreement includes the delivery of the products, installation, in-house test and pick up

service of the full range of products offered on the Mr. Price website: refrigerators,

laundry machines, TV, etc. The agreement covers all regions in Italy, including rural

areas. The strategy seems to respond to the large growth potential of the European market

for B2C parcel deliveries, where there is an increasing “grey” zone between Express and

Parcel services as traditional Parcel services become more express in nature (see

European Express Market Map 2008).


TNT Express

TNT Express Italy is committed to continuously investing in fleet renewal distribution

and structures, providing them with the most advanced technologies for rapid sorting.

TNT Express owns Italy’s largest Sorting Center in Piacenza, which is fully automated.

Furthermore, it plans the construction of 60 new branches over the next 4 years, in

compliance with the most modern energy-saving technologies. As such, TNT Express is a

fully vertically integrated organisation.

Deutsche Post World Network

Deutsche Post World Network (DPWN) is operating in mail, express and logistics. This

is a mixed group which operates on the international and Italian market in

correspondence, express courier services, logistics and packages. With the acquisition of

DHL Italia in 2003, DPWN is particularly well represented in the express market.

Table 0.18 Overview of main competitors on the postal market (2007)

Postal

operator

Market Volume mail

/ Turnover

mail

# of

employees

Service level

(number of

deliveries per

week)

Coverage

GRUPPO

TNT

(Dutch)

A, B, C

(domestic and

international)

2 billion

GRUPPO

DPWN

(German)

A, B, C

(domestic and

international)

FEDEX

(U.S

American)

A

MPE-

Mailboxes Etc

(British)

Unipost

(Italian)

D

Source: Eurofound, 2007.

Note:

A: Correspondence and express courier services.

B: Parcels.

C: Logistics.

D: Financial, communication and support services to enterprises (correspondence, fax, express courier

services, packaging services, photocopies, translation services, sale of office products, worldwide

money transfer, etc.).


1.5.3 Competition

There is a high degree of competition in the express courier market, which is dominated

by international corporations, such as TNT and DHL. This is not the case for the postal

services within the universal service; where, in practice, only two parties are relevant

Poste Italiane and TNT. Poste Italiane still holds a dominant position in the market for

postal services (Eurofound, 2007).

Eurofound (2007) reported that a company called Uniposta was recently launched in Italy

in preparation for the liberalisation of the service. Little is known about this company,

other than that it seems to be mainly active in unaddressed mail and direct mail. In the

beginning of 2008, Uniposta was taken over by the Omnia Network Group,6 thereby

joining Uniposta’s delivery network and Omnia’s communication services.7

There is no information on the number of consumers that have switched suppliers.

Table 0.19 Number of competitors and degree of competition (2005)

Postal product Market share USP Number of

competitors

Concentration ratio

C3


B2B non-bulk mail


Cross-border mail

n.a. n.a. n.a.

Unaddressed mail n.a. n.a. n.a.

Parcel mail n.a. n.a. n.a.

Express mail n.a. n.a. n.a.

Total

Source: n.a.


6 The Group's principal activities are to provide logistics, transport and Leasing. The group also provides IT platforms

required for the management of all corporate processes. It operates through 4 business units: the multi media contact

centre services, the logistic and transport services, operating lease services and system integration services. 7 Omnia Network’s Multimedia Contact Centre (“MMCC”) groups together design, implementation and management activities

pertinent to solutions and services of a Contact Centre, CRM and e-commerce; it governs the processing of information and

contains a data-base for marketing, sales and customer care operations.


Table 0.20 Number of competitors and degree of competition (2006) – rough estimates

Postal product Market share USP Number of

competitors

Concentration ratio

C3


B2B non-bulk mail


Cross-border mail

85% - 95% 1 (plus 290) 100

Unaddressed mail n.a. 1 (plus 290) n.a.

Parcel mail n.a. n.a.

Express mail 10 - 12 % 5 (plus 1150) ≈ 65

Total

Source: TNT Express Italy (2006), budget sustainability report 2006.

Note: Poste Italiane does not agree with these figures.


Current and future profitability prospects.

After restructuring and diversification of the post office network (into banking and

insurance services), Poste Italiane has managed to become profitable to pay its first

dividend in 2006. The direct marketing’s contribution to revenues is less significant today

than in the past.8 Instead, innovative and integrated services compensated the general fall

in correspondence in the traditional sector performances. Both express courier and

postage stamps remained good in term of revenues, while parcels contracted in volumes.

The net cost of the universal service in Italy is only partially financed by State subsidies

(around half of the total amount that is annually certified by an independent auditor).

Today, any costs not covered by the above-mentioned solutions are at the expense of the

USP. According to an article in Fortune (June 12, 2006), the losses are said to result from

the universal service requirement to deliver mail across the country five days a week,

even in unprofitable (rural) areas.9

Meanwhile, the competition (TNT’s Postal division – mainly active in unaddressed mail)

seems to have grown considerably (13.5% turnover growth from 2006 to 2007).10

1.5.4 Competition issues

The National Competition Authority (NCA) verifies possible predatory pricing practices

or an abuse of the dominant position by Poste Italiane in the postal market. Furthermore,

special tariffs (discounts) by Poste Italiane within the universal service must be

preventively submitted to the NRA for evaluating their correspondence with the

legislative principles (such as cost orientation).

8 In France and Germany, advertisers send nearly 50 percent of the mail; in Italy, it's just 28 percent – see

http://money.cnn.com/2006/06/09/news/international/poste_fortune/index.htm. 9 See http://money.cnn.com/2006/06/09/news/international/poste_fortune/index.htm.

10 see http://www.tnt.it/it/it_chi_tnt_italia.html.


In 2005 the Italian Antitrust Authority issued two related measures, opening an

investigation of a possible “abuse of dominant position” by Poste Italiane SpA and Postel

SpA, in relation to the tariffs charged for franking Hybrid Electronic Mail, and an

“unlawful strategy” designed to hinder the development of competition in the supply of

printing and enveloping services. In April 2006, at the end of the investigation, the

Authority imposed a fine of 1.6 million euros on Poste Italiane. VBB on Competition

Law, Volume 2006, No. 4, states that: “Pursuant to the decision, Poste Italiane has 45

days to define new general conditions of access to the postal network, in conformity with

competitive principles, modify the previously stipulated conditions and ensure that actual

and future competitors have equal access with Postel and other subsidiaries. Among these

conditions, the ICA clarified that Poste Italiane must allow such operators to deliver

hybrid mail to the postal network's receiving centres, thus eliminating the obligation to

have the Post Office take delivery at their printing works.” Confident that it operated in

full compliance with market regulations, Poste Italiane has appealed the Antitrust

Authority’s ruling before the Lazio Regional Administrative Court. Based on

documentation that Poste Italiane provided (to obey the Authority’s order set out at the

end of the preliminary investigation (n.15310/2006), on March 2007) the Competition

Authority agreed with the position of Poste Italiane.

In February 2008 - Italy's antitrust authority said it has decided to accept commitments

made by Poste Italiane SpA to settle an investigation into the post office's market position

in liberalised services. The antitrust authority had been investigating complaints from a

series of private postal operators (including TNT Post). The investigation looked at

supply deals made by the post operator (between Dec 2000-Jan 2007), together with

proposals in a tender procedure, that were seen as strengthening Poste Italiane’s market

position. Poste Italiane promised to tender concessions to collect and deliver post in 70

different urban areas with an overall value of 168 mln eur over three years.11

Level playing field issues

In Italy all universal services offered by the USP are exempted from VAT, other mail

service providers are not exempted.

Directive 97/67/EC allows access to the public postal network, besides the above

mentioned case law on hybrid mail services, no competitor has asked for access.

There has been some debate about direct compensations from the Government to cover

the losses of the universal services (these subsidies were in addition to the finances from

the Universal Service Fund). One could argue that such subsidies prevent entry from

foreign operators and discourage innovation. The European Commission recognised that

the public funds granted to Poste Italiane for years 2000-2005 and for 2006-2008

respected the European law on State aids, since they under-compensated the costs of the

universal services. However, the commission “regrets that Italy put the aid in question

into effect” as the measure “is liable to affect […] trade and distort competition”.12

11

see www.Hellmail.co.uk - 28 February 2008. 12

http://ec.europa.eu/comm/competition/state_aid/register/ii/doc/NN-24-2008-WLWL-en-30.04.2008.pdf.


1.5.5 Results of competition

The effects of market opening seem to be limited so far. Competitors are mainly active in

the segment for (un)addressed advertisement. An important reason for the persistent

dominance of Poste Italiane (notably in universal services) may be the fact that the 50

grams threshold of the reserved area covers a major share of the market for addressed

mail deliveries and that universal services provided by other companies are not exempted

from VAT.

Since December 2007, competition has gained a possible boost. Following the

Memorandum of 11 December 2007 signed by the Ministry of Communications, Poste

Italiane and its competitors, a relevant percentage of mail collected by Poste Italiane

(including registered items) must continue to be delivered through competitors. This

represents an interim measure towards the full liberalisation of the market.13

The Ministry

of Communications and the National Competition Authority considered that this was an

important step towards the full opening of the market, because it allows competitors to

deliver a portion of items that is within the reserved area. The delivery offer to

competitors was established by an open and non discriminatory tender.

Competing companies such as TNT and Uniposta/Omnio Network have been investing in

(future) expansion that mainly focuses on business to consumer services. The investments

are in network expansion, printing capacity and integrated communication services.

1.6 Customer needs

Poste Italiane is a founding member of Consumers' Forum: an independent association

with members including the leading consumer associations, a large number of industrial

and service companies and trade associations, institutions, universities and research

centres. The aim of the above-mentioned association is to overcome difficulties regarding

the dialogue between consumer associations and companies, in order to promote the

pursuit of quality products and services and improve conciliation procedures for dealing

with consumer disputes (Poste Italiane, 2007b).

Examples of initiatives realized in co-operation with the consumers associations are:

1. Review of layout of post offices:

Consumer associations were involved during the design stage and were invited to

express their opinions and offer suggestions, many of which were incorporated

into the project to renovate post offices;

2. Quality Charter for postal products:

The complete range of postal products was reviewed by consumer associations

along with product characteristics, procedures and deadlines for submitting

complaints and refund amounts;

13

The Memorandum was approved by the National Competition Authority through its Decision of 27 February 2008.


3. Quality week:

On the occasion of the launch of the Quality Charter for postal products, a

customer information project was carried out directly inside post offices.

Representatives of consumer associations chaired the information tables, handed

out copies of the Quality Charter and answered customers' questions;

4. Consumers' week:

Poste Italiane and Consumers' Forum took part in the first week of open dialogue

between businesses and consumers. A series of events and conferences aimed at

establishing constructive dialogue between representatives of the production

sector and consumers was organised throughout Italy in order to come up with

mutual solutions, settle litigation and resolve outstanding problems with the goal

of improving citizens' quality of life.

Users' economic rights

Poste Italiane has been active in the field of consumer protection since 1999 and has

established working relations with a large number of consumer associations belonging to

the CNCU (national council of consumers and users). Initiatives aimed at protecting

consumers have been generated by this cooperative effort.

Consumer surveys

Poste Italiane periodically monitors customer satisfaction. The most recent studies14

indicated an average score of 7 (on a scale from 1 to 10).

An independent study was realised by Cittadinanzattiva, a consumers’ association,

(“Relazione Pit Servizi, March 2007). This annual report focuses on services in general,

including postal services. The analyses are based on complaints submitted by consumers.

In 2007, as in 2006, postal services scored relatively well in terms of the number of

complaints. For the fourth year in row citizens reported less disruptions. This was partly a

result of a consolidated strategy in collaboration with the Association of Consumers. The

problems that did occur related mostly to delays / loss of parcels, followed by delays /

non-delivery of mail.15

1.7 Price performance

1.7.1 Tariffs

Tariffs for postal services included in the reserved area and prices for postal services

included within the scope of the universal service are set by the Ministry of Economic

Development as the regulatory authority. Prices for services outside the scope of the

universal service come under the responsibility of postal operators (UPU, 2006).

Currently, the NRA has established uniform tariffs for single items (priority mail) and

prices for bulk mail which depend on destination area (Ministerial Decree 12 May 2006).

14

Indagine CS Prodotti/servizi PI – IPSOS (2007); Customer satisfaction – TNS infratest (2007); Customer satisfaction

aziende clienti prodotti di corriere espresso PI – Eurisko (2006). 15

See: http://www.cittadinanzattiva.it/content/view/94/119/.


Table 0.21 Public tariffs (in euro)

Postal product 2005 2006 2007

Letter post 1st class 0.60 0.60 0.60

Letter post 2nd

class 0.45 0.45 n.a.

Letter post cross-border 0.62 0.62 0.65

Parcels (< 5 kg) 7.00 7.00 7.00

Parcels cross-border (< 5 kg) n.a. n.a. n.a.

Registered item 2.80 2.80 2.80

Insured item16

5.30 5.30 5.30

Bulk mail, 20 g 0.45 0.45 0.28

Bulk mail, 100 g 0.90 0.90 1.15

Bulk mail, 300 g 1.80 1.80 2.35

Total

Source: Poste Italiane, 2007a.

Note: Since the second half of 2006, second class mail is not available any more.

Note: in cases where differentiated rates apply, the table presents the lowest possible rates.


Table 0.22 Public tariffs (in PPP)

Postal product 2005 2006 2007

Letter post 1st class 0.58 0.58 0.58

Letter post 2nd

class 0.44 0.44 n.a.

Letter post cross-border 0.60 0.60 0.63

Parcels 6.77 6.78 6.81

Parcels cross-border n.a. n.a. 30.56

Registered item 2.71 2.71 2.72

Insured item 5.12 5.13 5.16

Bulk mail, 20g 0.44 0.44 0.27

Bulk mail, 100g 0.87 0.87 1.12

Bulk mail, 300g 1.74 1.74 2.29

Total

Source: conversion rate based on Eurostat data.

Note: in cases where differentiated rates apply, the table presents the lowest possible rates.


Evolution of public and special prices for main services

Consumer prices for letter mail have remained rather constant during the last 3 years. In

particular business consumers sending bulk mail weighing less than 20 grams in high

urbanised areas have experienced a strong decrease in prices in 2007. This was largely as

a result of the introduction of differentiated prices for bulk mail, making a distinction

between high density urban areas; regular urban areas, and rural areas. This recent

revision of the bulk mail prices allows for a better representation of true costs.17

16

20g, up to 50 Euros of value. 17

Business consumers in regular urban areas and rural areas, however, have experienced constant to increasing price levels.


Affordability

Income inequality in Italy is above the EU average – see figure below. Its income level in

terms of PPP is around the EU25 average. The price for priority mail is about 20% above

the EU25 average (both in absolute terms18

as well as in terms of PPP).19

Following the

recent revision of bulk mail prices, the lowest price for bulk mail (20 grams – in densely

populated urban areas) is now 13% below the EU average.20

All in all, postal services are

relatively more expensive for private consumers than in other EU countries. For business

clients, Italy may be less expansive. It should also be noted that 85% of the mail items are

sent by business clients.

1.8 Employment aspects

1.8.1 Employment

According to the Eurostat database, the sector accounts for about 0.7% of total

employment.21

Poste Italiane states in its Social Report (2006, p. 45) that “70,000 employees [are]

assigned to counter and other services.” From the annual report (Poste Italiane, 2007a, p.

20) it shows that 65,856 people are working in mail related activities exclusively

18

EU average price for priority mail is about 50 Eurocents (based on prices weighed relative to GDP). In Italy this is 0.60

Eurocents – see table above. 19

EU average PPP price is 47 Eurocents (converted to PPP based on Eurostat statistics and weighed relative to GDP). In

Italy this is 0.58 Eurocents – see table above. 20

EU average PPP price for 20 grams bulk mail is 31 Eurocents (converted to PPP based on Eurostat statistics and weighed

relative to GDP). In Italy this is 0.27 Eurocents – see table above. 21

Poste Italiane rejects this figure.


(transport, sorting, and delivery), of which 42,979 people work as mail carrier or mail

carrier supervisor.

Table 0.23 Employment in the sector, in employees and FTE

Poste Italiane SpA 2005 2006

USP

Total 145,628 145,963

Full time employees 142,177 141,708

TNT

post n.a. ≈ 2,000

Express n.a. ≈ 3,000

Indirect (affiliated companies) n.a. ≈ 3,000

Other

various n.a. ≈ 10,000

Total ≈160,000 ≈160,000

Source: Poste Italiane; Eurostat, www.tnt.it,

http://www.investinemiliaromagna.it/wcm/investiner_en/notizie/news_2006/ott/caso_succ_tnt.htm.

Note: data for TNT Post is for 2007.

Note: total employment is based on Eurostat; ‘other’ is derived from this figure.


Table 0.24 Employment by universal service provider per segment, total and [% flexible]


Mail n.a. n.a.

Express n.a. n.a.

Logistics n.a. n.a.

Total

Source: n.a.


1.8.2 Employment conditions

A Memorandum of Understanding on Corporate Social Responsibility was signed in

2007 between Poste Italiane S.p.A. and the Trade Unions. This memorandum defines

areas of intervention on training and workers’ involvement, behavioural principles and

values, employees well being, quality of work, employment and welfare policies.

TNT Express in Italy has been ranked number 10 out of 800 companies that participated

in a survey by the Great Place to Work Institute (GPTW). The survey is conducted by

analysing the level of satisfaction of a company’s employees.

Training

The USP carried out several training activities in 2006. The number of training days

amounted to 119,021, including 72,523 spent in “the classroom” and 46,498 provided

through e-learning. Training content primarily focused on commercial and regulatory

matters. Commercial training initiatives involved around 132,000 Post Office staff while


regulatory training involved over 92,000 staff (Poste Italiane, 2006a). Training initiatives

also focused on operating process innovation and development strategies.

TNT considers human resources as a strategic asset. To this end, TNT invests in training

and development. In 2006, the following courses were organised:

• ‘Train the Trainers’ with the aim of facilitating the provision of the new Health and

Safety directives for manager and supervisors;

• ‘Cargo handling loads’ dealing with issues related to the current legislation, the

manual for handling cargo, (working with equipment (pallet, truck), loading and

unloading, and methods of reporting), a practical driving test, and a manual for facing

the media. In 2006 52 warehousemen were trained.

Equal Opportunity Committee

In its guidelines for 2005-2007, the National Equal Opportunity Committee (C.P.O)

established to remove obstacles to equal treatment of men and women at work and to

safeguard female employment.

Efforts were done to implement the “Project for the hearing-impaired – Hygiene and

safety in workplaces in conformance with Legislative Decree 626/94” for disabled

resources. Moreover, the ‘Italian Sign Language Training Project’ was created in order to

establish a post office that is also accessible to and can be used by customers with various

kinds of disabilities. (Poste Italiane, 2006b).

Poste Italiane has started an experimental phase with the purpose of supporting new,

innovative solutions related to work organisation more able to cope with family troubles

and capable of producing positive effects on the quality of work. Initiatives relate, for

example, to teleworking and ad-hoc training programmes for staff that returns from more

than 60 days of leave. The main goal of this training is to support employees conciling

their professional and private lives after a period of leave and adapting themselves to

changes within the company.


Wages

Table 0.25 Wages as proportion of total costs (in %)

Operator 2005 2006

Poste Italiane SpA:

Total labour costs 65 64

wages and salaries 45 47

Social security contributions 11 12

Net provisions for disputes 4 2

Redundancy payments 1 1

Other 4 2

TNT

Post

Total labour costs n.a. n.a.

Express

Total labour costs 75 65

Source: Annual Report Poste Italiane 2006; TNT Express italy (2006), budget sustainability report 2006.


Average wages paid by Poste Italiane in 2006 were about 34,000 euros including social

security contributions.

Role of trade unions

There are large differences in the level of unionisation. At Poste Italiane this is very high,

covering 70%-80% of the workforce, whereas it is much lower in other companies.

Eurofound (2007) mentions that a fragmented representation (via the four main unions:

CGIL, CISL, UIL and UGL) negatively affects the position of workers. Poste Italiane,

however, stresses that these unions usually tend to keep a unique policy.

Employers are also organised. Employers may belong to FISE (the Federation of Service

Enterprises) or CNA (the National Craft Workers Confederation). FISE represents seven

affiliates, including ARE (the Express Deliveries Agency).

Sector based collective agreements

There is no single collective contract in the sector. There are instead a number of different

contracts: one regulating all the companies in the Poste Italiane group; one regulating the

express delivery agencies; and one (the craft workers’ contract), regulating all the

companies and agencies belonging to the CNA.

Different contractual terms apply to Poste Italiane and the private companies. The unions

are working towards having one single contract, to come into force as soon as

liberalisation is complete, which will ensure that equal rules apply to everyone operating

in the sector (Poste Italiane, 2006b).


1.8.3 Productivity22

Turnover per FTE is hard to establish since no figures are provided by Poste Italiane on

the division of the labour force over financial and postal services. The reason is that a

large share of the workforce is active in both services. Overall the total turnover per

employee is about 62 thousand euros per employee in 2006 (which increased from 36

thousand euros per employee in 2000 – see annual report 2006a, 2004).

The number of items per employee exclusively working in the mail segment (transport,

sorting and delivery) is about one hundred thousand a year.

Table 0.26 Productivity (in items/FTE)

Operator 2005 2006

USP

Turnover / FTE n.a. n.a.

items (1000) / FTE n.a. n.a.

Source: n.a.


1.9 Technological developments and environment

1.9.1 External

Table 0.27 Percentage of letter mail in the communications’ market (turnover)

2005 2006

Percentage n.a. n.a.


See Section 1.4.5 for the impact of substitution by electronic communication. It indicates

that the extent of e-substitution is less than in other EU countries.

1.9.2 Internal

Currently there are 20 automated sorting centres and 48 manual sorting centres limited to

provincial catchment areas. The number of manual sorting centres is decreasing (from 64

in 2005) along with employment in these centres (from 6000 to 4300 over the period

2005 to 2007). The number of people working in the 20 automated sorting centres is

increasing (from 9000 to 10600 – again over the period 2005 to 2007) – see Poste Italiane

(2006a, p. 17; 2007, p. 20).

22

Figures are based on methodology from Poste Italiane (2004, p 55) and data from Poste Italiane (2004, 2006).


Table 0.28 Percentage of letter mail automatically processed

2005 2006

Percentage 35-40% 35-40%

Source: http://postalautomation.elsag.it.

Note: Poste Italiane states that these data do not exactly reflect it’s automation percentages.

The sorting centres ‘Rome Fiumicino’ and ‘Milan Peschiera Borromeo’ are an important

node in the Italian postal network, providing fully automated mail processing. ‘Milan

Peschiera Borromeo’ currently handles about 25% of Italian mail traffic.23

Plans to further develop the processing of postal items and to develop the value of mail:

Developments in automated sorting will take place in the next years. New Automated

Sorting Centres will be opened and the existing ones will be improved with the

installation of modern generation machines. The developments will follow the following

targets:

• Increase the level of automation of sorting processes and progressively reduce the

manual activities in order to increase the reliability and quality of service and to

reduce the costs;

• Develop ICT infrastructure to support production with the aim of promoting the

introduction of innovative services with high added value for Business Customers.

These ICT applications will mainly be used to extend the opportunity to offer product

tracking and other various Value Added Services for customers.

On the website of Elsag Datamat24

more information can be found on the further

developments by Poste Italiane in the processing of postal items – see text below.

The "Nuova Rete" Project:

An external company Elsag Datamat which is specialised in the fields of technology, IT and mechanical

engineering for postal services, has been selected by Poste Italiane as main supplier for the renewal of

the Italian Postal Network.

The overall project is divided into several steps:

• rationalization of postal network logistics;

• development of both postal network mechanisation and system integration in postal centres;

• integration between postal processes and processing steps;

• development of new added value services.

Elsag Datamat supplies:

• letter and flat sorting systems;

• integration systems (mail buffers);

• postal plant system integration (plant engineering, layout, flow and process optimisation, etc.);

• production management systems;

• ancillary services (training, maintenance, etc.).

23

See http://postalautomation.elsagdatamat.com/MilanSortingCenter.htm ; this information is not confirmed by Poste Italiane. 24

See http://postalautomation.elsagdatamat.com/NuovaRete.htm.


After the successful completion of a two-year test period, the new infrastructure entered the definitive

roll-out phase across the entire country. The project's goals, in addition to improving service

performance, are to reduce production costs and increase the reliability of the logistics chain, without

affecting service levels. The reorganisation reduces the number of sorting centres to 24, increasing the

level of production automation from 35-40% to 85% at the same time.

TNT

Part of TNT’s strategy to invest in its network entails an important operational

investment, opening a new, fully up-to-date modernised distribution centre in Piacenza.

This project has involved a significant commitment in terms of resources used, resulting

in a plant employing about 400 people and a total investment of around 16 million euros.

1.9.3 Environment

Poste Italiane

Concerning energy management, the company has set itself the target to reduce its energy

use by 20% by 2020 - in line with the objectives of the European Commission. Poste

Italiane established the Energy Management Department that constantly monitors energy

use and takes action regarding situations that are not in line with the prescribed data.

Parallel to this, Poste Italiane aims to use an increasing amount of energy produced from

renewable sources. In 2006 the company considered requiring potential suppliers of

electricity to possess RECS certification (Poste Italiane, 2006b)

Concerning fleet management, Poste Italiane has managed to comply with the most recent

regulations regarding pollution (standardization). In particular, more than 97% of the fleet

of motorcycles consists of Euro2 four stroke vehicles, so only a small number (less than

3%) of Euro1 two-stroke motorcycles remain and they are being discarded. Furthermore,

over 90% of the four-wheel vehicle fleet meets the Euro4 standard. Furthermore:

• Compared to 2005 there has been an increase of 53% in the number of vehicles using

methane gas25

and Poste Italiane S.p.A. now possesses a larger fleet of vehicles using

methane than any other European postal company;

• in 2006, tests for more alternative fuels began. The Company is also starting

relationships with two foreign producers of electric trucks with a range of more than

100 kilometres carrying a load of from 2.5 to 4 tons (Poste Italiane, 2006b);

• With regard to more traditional fuels the gradual adoption of latest-generation diesel

vehicles continues and there are plans to experiment with innovative prototypes for

transportation and delivery.

In 2006, Poste Italia started a uniform waste management program, which includes

sensitization and training initiatives, as well as a monitoring program. Additionally, a

series of actions were carried out, such as, the supply of suitable materials, connections

and transportation to ecological islands and entries in the related registers (Poste Italiane,

2006).

25

. The company considers this the most environment-friendly fuel that can currently be used on a large scale.


TNT

In compliance with the guidelines issued by the Group and aware of the impact generated

by its business environment, TNT Express Italy has further implemented its

environmental management standards in order to create a system that is more accurate in

assessing environmental impact and allows to establish procedures for the proper

management of monitoring systems for environmental performance. This implies efforts

in actively promoting initiatives aimed at containment of waste, saving natural resources

and, above all, the awareness of contracting operational stakeholders.

In terms of fleet management the company’s strategy includes the following objectives:

• gradual substitution of corporate fleet vehicles with low environmental impact;

• concluding agreements with manufacturers to facilitate the adoption of means or

methane gas and LPG to facilitate the replacement of obsolete ones;

• feasibility studies on the use of means for electric and gas distribution in historic

centres;

• development of a mobility plan aims to study systems to reduce the number of cars

circulating in areas where TNT is present with the largest number of employees.

Energy consumption is primarily tied to infrastructure and may be subject to variation

according to possible restructuring of sites across regions and the insertion of high-tech

machinery. Methodologies are planned for construction at new sites: future branches will

use bio-compatible materials and installations of co-generation and tri-generation, in

addition to more modern technologies. New partnership for the use of photovoltaic panels

and fixtures with low consumption are under investigation. In 2007 pilot test will be

conducted in new branches to confirm the information relating to energy saving.

Furthermore, the company has active strategies in waste management, noise reduction,

preventing environmental accidents, and awareness campaigns among employees.

1.10 Sources

• De Bas et al. (2005). Study on the development of competition in the European postal

sector. ECORYS.

• Fortune (12 June, 2006) “Is the Italian post office the next hot IPO?”

http://money.cnn.com/2006/06/09/news/international/poste_fortune/index.htm.

• MarketResearch (2007), “European Express Market Map 2008”,

http://www.marketresearch.com.

• Lumio, A., Fickinger, S. (2007). Eurostat data in focus. Postal services in Europe –

Data on Universal Service Providers. Eurostat.

• Niederbruem et al. (2006). Main developments in the postal sector 2004-2006. WIK

Consult GmbH.

• Poste Italiane (2004). Annual report 2004.

• Poste Italiane (2006a). Annual report 2006.

• Poste Italiane (2006b). Social report 2006.

• Poste Italiane (2007a). Annual report 2006.

• Poste Italiane (2007b). Postal products. Retrieved January 28, 2008, from

http://www.poste.it/en/postali/.


• Universal Postal Union. Postal Statistics Database – Data by administration.

Retrieved January 28, 2008, from

http://www.upu.int/pls/ap/ssp_report.main?p_language=AN&p_choice=BROWSE.

• Universal Postal Union. (2006). Status and structures of postal administrations. UPU.

• TNT Express italy (2006), budget sustainability report 2006.

• http://www.cittadinanzattiva.it/content/view/94/119/.

• http://www.investinemiliaromagna.it.

• http://postalautomation.elsag.it.

• http://www.tnt.it/.

• In addition Poste Italiane, TNT Post and the Ministry of Economic Development

have provided direct contributions.


Documents

Country sheet: Italy - CIRCABC