Interview with Christian Levrat and Roberto Cirillo
“Swiss Post is and will remain there for the people”
Swiss Post has been there for the Swiss people for 175 years. However, it will only remain successful long-term by evolving. We interviewed CBD Christian Levrat and CEO Roberto Cirillo about the progress of developments.
Roberto, Swiss Post is continuing to implement its transformation. What position is Swiss Post in today in light of last year?
Roberto Cirillo: Swiss Post is doing lots well today and is moving in the right direction. However, we are seeing constant and rapid change in customer requirements. This is having a major impact on Swiss Post. Digitization is moving forward at tremendous speed. While parcel volumes are rising long-term, our traditional core business of letters and over-the-counter payments has been in sharp decline for years. That’s why we’re establishing the core business of the future today. We’re doing that by pursuing our “Swiss Post of tomorrow” strategy whose time horizon is 2030+. On the path to the Swiss Post of tomorrow, we’ve achieved a huge amount over the past three years, laying a solid foundation for the future on which we will now continue to build. In specific terms, we’ve merged our logistics organizations to provide a future-oriented full-service offering for our customers. We’ve expanded our capacity significantly and are harnessing the synergies available. A good example of this is the installation of a parcel sorting machine at the Härkingen letter center. This system went into operation last September.
Customer requirements are changing constantly and rapidly.
We’ve achieved growth, both domestically and internationally, in goods logistics and are now one of the major service providers in Switzerland. We’ve also significantly strengthened our competencies in eCommerce and online direct marketing. We can now also provide relevant cross-media solutions in the advertising market. Asendia – our joint venture with the La Poste group – has become one of the leading providers in international eCommerce logistics. We’ve also positioned ourselves strongly in the digital arena. ePost means our customers can now decide which mail they wish to receive in their private letter box at home and which digitally with access from anywhere in the world. Since last year, cantons including Bern, St. Gallen and Lucerne have been using our platform to send their information directly to digital mailboxes. We play a key role in the traditional, analogue-based healthcare system and have now laid the foundation for the introduction of a standard, trustworthy digital patient record. We enabled both elections and votes to be held digitally for the first time in 2023. Swiss Post is increasingly driving innovation in an ever more interconnected Switzerland. It acts as a bridge-builder between digital and analogue services for people, organizations and public authorities.
That sounds like everything is going well and Swiss Post is on track ...
Roberto Cirillo: We are generally on track with our strategy, but we’ve made less progress than anticipated in some areas in the challenging market environment. For example, the opening of the network is moving forward less quickly than expected. The set-up phase and investment in the Communication Services unit, in other words digital services, is taking longer than we envisaged in 2020.
There are two main reasons for that. Firstly, the challenging economic climate and regulatory conditions. They have prevented us from providing scalable and profitable solutions quickly. For example, in e-health where regulatory provisions are very stringent and market complexity is high. Secondly, there are not that many companies on the market in the field of communication services that are a good fit for Swiss Post and its strategy – we carefully weigh up every acquisition. I strongly believe the shift towards the digital world is an indispensable part of public service because people are making greater use of the benefits of digital solutions. Public service must shape day-to-day life and make it easier for most people in the country. Because one thing is clear: public service must be modern, otherwise it isn't public service. Everyday life has become digital for people in Switzerland. That’s why Swiss Post’s public service must become digital too.
Swiss Post is a reliable partner.
Christian, does Swiss Post need to work on the quality of its services?
Christian Levrat: Despite the challenges outlined by Roberto, in 2023 we still provided customers with the high-quality services they are used to in Switzerland. Our quality was recognized with the gold award from the Universal Postal Union last year. Out of postal organizations from 172 countries, we were declared the best in the world for the seventh consecutive time. This shows we provide top-quality services and can operate successfully in a challenging environment. Above all, this is thanks to the tremendous commitment of our employees. Swiss Post is a reliable partner – even in turbulent times where we are faced with climate change, geopolitical uncertainty, rapid technological changes and ever tighter household budgets. While also adopting a sustainable approach. We’re assuming responsibility now for the environment of tomorrow and are pursuing an ambitious climate target. In the cities of Bern and Zurich, our delivery operations have been completely electric since early 2023, the same applies in Geneva as of mid-January 2024 and other cities, such as Basel, Biel, Winterthur and Lucerne, will soon follow suit. Swiss Post is already operating Switzerland’s largest fleet of electric vehicles by far.
Looking to the future, I’m confident our result will improve over the coming years. That’s mainly thanks to PostFinance. With the turnaround to positive policy rates, relevant factors have already changed. Development in our core business nevertheless remains challenging. There is a decline in letters and over-the-counter transactions because demand for our traditional core business is falling. We are not yet able to sufficiently offset this decline through digital solutions, logistics and network opening. That requires an effort on our part. We’ve now made a start with the transformation process that’s already under way. We’re adapting, are there for our customers in both the physical and digital worlds and are developing new services for the Swiss public.
Swiss Post acts as a bridge-builder between digital and analogue services.
Roberto, how well is Swiss Post positioned for the challenges of the future?
Roberto Cirillo: Swiss Post has been there for the Swiss people for 175 years, and will continue to be. Swiss Post is and will remain there for the people. With the 2023 financial result and balance sheet, we’re working extremely hard on developing the strategy for the period 2025 to 2028. The current strategy is heading in the right direction. We’re adjusting it where necessary due to changing requirements. We’re addressing the question of how we can develop the network to better meet customer needs. We wish to invest in the network to deploy state-of-the-art technologies. At the same time, we also aim to increase relevance for our customers and improve efficiency. This will enable us to continue financing an extensive, Switzerland-wide branch network of Swiss Post access points in future. In our core activities, we are working intensively to put Swiss Post on a stronger footing in future with modern, forward-looking solutions. For our customers, our employees, our owner as well as for the Swiss people and economy.
Christian, as Chair of the Board of Directors, how confident are you about Swiss Post’s future?
Christian Levrat: To really be able to look to the future with confidence, we need changes to regulatory conditions and the necessary room for manoeuvre. To put it simply, without fundamental reform, Swiss Post will not be able to fund its system from its own resources and without public money in future. Three years ago, Roberto said: “We don’t want to become a museum.” That’s more valid today than ever. We want a strong Swiss Post for a strong Switzerland. And we want to remain relevant. For our customers. For our employees. For Switzerland.
We need a change to regulatory conditions.
What would be the key changes to the regulatory requirements?
Christian Levrat: There are three main elements in my view. Firstly, it’s vitally important that the new regulatory conditions reflect requirements in relation to digitization and digital life. That includes having both a physical letter box and digital mailbox and deciding which mail you wish to receive at home and which is delivered digitally with access from any location. Secondly, in my view we must ensure Swiss Post can continue developing its branch network and we can take full advantage of the opportunities presented by digitization and automation for the benefit of our customers. The third point is that the issue of payment transactions needs to be addressed. In particular, payment transactions with coins are loss-making. Here the legislator must find a solution to ensure financial viability.
Why Swiss Post is adjusting its prices
Swiss Post wants to continue providing high-quality public service for future generations and to finance this from its own resources. To do so, Swiss Post must make investments from its own resources to continue providing high-quality services in future and to be able to respond to changing customer needs. For example, this includes investment in parcel sorting and the digitization or electrification and modernization of the delivery fleet.
The decline in letter volumes and over-the-counter transactions as well as inflation are creating significant additional costs, most of which Swiss Post must bear itself. In this climate, efficiency measures and price increases are unavoidable.