Interview: Post offices are returning after being closed down

Omniva Board Chairman Mart Mägi with his amstaff Torm. Photo: Sander Ilvest

• Post offices were turned into sub-post offices; these in turn will be replaced by couriers.
• Postal firms could have a common network of parcel machines.
• Some closed post officers will apparently have to be reopened.

Mart Mägi, CEO of the state-owned postal company Omniva and a passionate stamp collector, says that newspapers are no longer read to learn the news; therefore the canceling of one home delivery day is hardly a tragedy.

What will happen to the home delivery of periodicals if the publication of newspapers is reduced because Omniva raises its prices?

One thing is the speed of periodicals. Äripäev stopped publishing its paper issue altogether, Postimees and Õhtuleht are giving up their Monday’s issues. The decision of Eesti Päevaleht is not yet known.

Periodicals are delivered home in rural areas mostly during the day, because the newspaper is not read for its news value, but for entertainment or as additional information in the afternoon, when you come home from work or have finished farm work.

We are not interested in this price increase. The more post we carry, the lower the price. Our price agreements are based on the volume. If the volume is maintained or increases, then this price should be more favorable. The published figure, i.e. a price rise slightly above 20 percent, is the current situation as the volumes have fallen steeply over time.

County newspapers lost subscribers when people could not get a fresh newspaper with their morning coffee because they were not delivered early enough.

It is different in the cities, and there some people would like their papers in the morning. There will definitely be a morning delivery in the cities for a few more years. In the low population density regions it is really not possible to deliver mail to everyone's homes by 7-8 in the morning.

Isn’t this a small extortion attempt because the Competition Authority did not allow the merger of two companies providing similar services?

Who are we extorting? We do not extort anyone, and neither do the publishers. We saw that we could save a million euros from this merger. Our proposal was simple: we will pass this savings on to our customers; the price increase will be smaller. Our annual turnover is 150 million euros, of which periodicals are about seven percent. Both we and Express Post are making loss.

It is a pity; there would have been a smaller price increase. The owner, or the state, has said that we have to break even or make a small profit.

But cannot this loss be met from the revenues of parcel machines?

We can say that we meet the owner's expectation through the parcel business. The problem is that if we are always more expensive than our competitors in the package business, we will lose the market in the long term. The winners are the French, the Finnish, the German and the United Kingdom postal services, which have parcel machines in the market in Estonia under the names of DPD, Itella, DHL and UPS, respectively. We are losing the market because we pay extra for the periodical and letter service.

Why is the number of mailboxes being reduced?

All over Estonia there are mailboxes with less than five letters a month or none at all. We only remove unused or rarely used mailboxes. In the old days, mailboxes were located at bus stops, and it made sense. Today, people move more in shopping malls. Therefore, we had to change the locations of the mailboxes to get closer to the people. In addition, we put mailboxes on the ferries for Christmas to make it more convenient for people to use our service.

They are closing down the sub-post office in Vormsi Island after it had been downgraded from a post office. The people are angry. When will the closure of post offices finally end?

It is quite simple with the small islands and rural areas. Personal postal service or a post office at your home has arrived. During the pre-war republic, there was a postman who delivered the letter home, accepted the letters and took them away. He had stamps, envelopes with him and he also brought the pension money. Today, there is a similar free service if you live more than five kilometers away from a post office or sub-post office.

We shall hold large campaigns in the beginning of the year so that people will know that such opportunity exists. While in the past the people had to take into account the opening hours of the post office, nowadays the trend is for the postman to come home at a time convenient for the person.

It is a more convenient and flexible service for the individual and, of course, more profitable for Omniva than keeping a post office visited by very few people, but whose maintenance cost is high. The number of letters has declined steeply and we can service the customers in the usual mail round. A courier whom the person knows comes and services the customer at home.

We do not need post offices on small islands. Sitting at an office and waiting for the whole island to come together is pointless. The courier takes the letters, packages and periodicals home and collects the shipments to be sent.

Maybe someday we shall start delivering mail to small islands with drones carrying letters and packages. However, the problem with them is that you cannot fly there with a drone with rotors; it is possible only with an aircraft-type drone, which needs mini-airfields on both sides and people who know how to operate them. There is no way it would pay right now, but since technology is advancing so fast, things may change.

There is also a reverse trend going on in the world, i.e. post offices are coming back. We do not rule out this in Estonia either.

Why are post offices coming back?

The capacity of parcel machines is limited; depending on the machine, they can only hold 40–50 parcels. It is especially difficult during the holidays when there are simply too many parcels, especially if the recipients are not in a hurry to take them out. We have developed a solution, for example packages in one person's name are in the same drawer, but this also does not reduce the load at the busiest time of the year.

We can add parcel machines, but most of the time they will be empty. I believe that the streets should not be littered with parcel machines. Every bank used to have its own ATM. Why?

I think that in the near future the network of parcel machines will become open for everyone. Post offices are coming back in some places because they can handle ten times larger volumes of packages than in a single parcel machine. We can already see it on Amazon and AliExpress. They make post offices in major cities. It is likely that some post offices will have self-service in the future. The package is on the shelf just like in IKEA; you take the package, register receipt and walk away with it.

Does it somehow concern Estonia as well?

We may have to bring back some post offices. If they return, they will replace the sub-post office, as these are too limited in their range of services. In some sub-post offices, the volume is so large that it makes more sense for us to have a post office. At the beginning of the year, we will see which sub-post offices will be converted back into post offices.

So it concerns only the big cities?

Not necessarily. In big cities, there are still post offices operating; it is more about small towns or villages. For example, the type of settlements like Saku. We will have to build a few more post offices already next year. Lasnamägi is also currently served by only two post offices, but there is such a large volume that we are considering opening a new post office. We really look at each region individually.

What conclusions have been drawn from the reform of slowing down the movement of mail, where separate envelopes are required to send the mail as quickly as in the past, the deadlines for delivery of others were extended and shipping became more expensive?

90 cents does not actually cover the delivery of the mail, the costs are higher. We are currently at a loss with the universal postal service. The current regulation also says that the price must be affordable, not cost-based. An affordable and cost-based price is somewhere between 1.30 and 1.40 euros for a common letter within Estonia.

Mail speed is a separate subject for discussion. Currently, according to the law, the frequency of mail delivery is six days a week. We shall have to see what the new postal law will say. For example, in Denmark, mail is delivered once a week; in Finland three times a week. In fact, letters are not expected like a package. People want to receive the package immediately. If someone says that I sent you a letter from abroad, of course you will expect it, but it is not time critical. A letter is emotional.

Is there any pre-arrangement or understanding of what the competitors think about the cross-use of parcel machines?

Not yet. We have proposed that our post offices would be open to all. If DPD or Itella wants to issue packages at our post offices due to excess volume, we are ready to provide this service.

Parcel machines will change in the future. For example, if you want to go skiing from Tallinn to Kuutsemäe, you can send the skis there to the parcel machine and return them later. No need to carry the skis yourself. The dimensions of the cabinets will change. For example, two-drawer micro-machines can come to apartment buildings, where you can send a package and receive it by SMS. This is an issue of the next couple of years.

You are a philatelist yourself. Does the current range of products in post offices meet the needs of the stamp collector?

We are renovating post offices so that stamps, envelopes and postcards will become more visible. The updated post offices will be different. There will be more emphasis on packaging, but also much better display of stamps.

There are also big plans for the Toompea post office. Right now it is very cramped, but it can be made a bit more spacious. The plan is to make micro-exhibitions of Estonian postage stamps on the digital screen there, as the National Museum has done.

Better availability of stamps is nice, but a postage stamp without a postmark is like half the story for a philatelist. Are there plans to bring back your own calendar marks to post offices and sub-post offices, as was done in Ruhnu?

There is currently no such plan, but we are expanding our stamp dealer network.

How Ruhnu regained its calendar postmark

An envelope with a Ruhnu calendar postmark (on stamps). Photo: Private collection

Ruhnu is using its own calendar postmark again. Philatelists can rejoice that there was a resourceful entrepreneur on Ruhnu Island, who can be thanked for the postmark. As nit happened, the entrepreneur had a dispute with the Statistical Office, which demanded the submission of reports on time. The company did send its reports on time, but it was not recorded with a local postmark. Shipments from Ruhnu were usually postmarked when they arrived at the Kuressaare sorting center. Unfortunately, the connection to Ruhnu by both ship and plane is uncertain, and so the shipment could not reach Saaremaa until several days after posting. Statistics Estonia was not satisfied and demanded a penalty from the company for repeatedly violating deadlines, after which the company threatened to sue, because in its opinion the Estonian state should be able to determine the time of posting rather than the time of processing the shipment somewhere.

As a solution to the problem, the Ruhnu post office got its own calendar postmark. The decreasing number of local postmarks, as the letters are stamped at county sorting centers, is reducing the interest of collectors.