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Price adjustment

2022-07-29 15:06

PostNord is implementing a new price adjustment valid from September 1, 2022.

There are several factors that necessitate this adjustment. The most important of these are increasing fuel prices, significant salary increases among both drivers and terminal workers, a general increase in costs for products and services and a double interest rate increase by The Central Bank of Norway (Norges Bank) that will reduce investment opportunities among vehicle owners. These factors are affecting all logistics companies and most of them are affecting all carriers as well. We are also experiencing that there is a lower availability among carriers. This has resulted in higher prices for all transport that has not already been agreed in contracts.

No government support

The Norwegian Logistics and Freight Association (NHO LT) and Norges Lastebileier-Forbund (the Norwegian Truck Owners’ Association), which represent large parts of the industry, have been in dialogue with the Norwegian Ministry of Transport since February about possible solutions to mitigate the negative consequences for the industry of high fuel prices. This has not yet led to any concrete measures, and the transport industry has not received any assistance in terms of being able to keep costs at a lower level. The result is that many market participants are struggling. PostNord has paid energy supplements to subcontractors since March 1 and increased their advance payments to ensure reliable deliveries to us and to our customers. We will continue to do so as long as it is necessary.

Substantial price and salary growth

Unfortunately, the reduction in capacity regarding both material and drivers resulting from the war in Ukraine remains unchanged. Logistics companies throughout the EU are experiencing a shortage of transport capacity – and thus increased prices.

The general cost growth resulting from inflation and interest rate rises are also affecting our industry. The costs of salaries, vehicles, spare parts, packaging and containers have all increased in the last six months. Salary growth for terminal workers and drivers are expected to be high. The demand for material has not been affected by inflation, and our forecasts indicate that the imbalance between supply and demand will continue to drive up prices for transport services.

The double interest rate increase by Norges Bank in mid-June is also resulting in large increases in costs for vehicle owners, something that again will put greater pressure on prices in the market.

Shortages of vehicles and drivers

The driver shortage is worsening. Foreign drivers continue to be available, while the situation in the Norwegian labor market is tough. Low unemployment and a record number of vacancies are providing few opportunities to recruit new drivers in Norway. This market situation is resulting in inflexible capacity, something that again is making salary negotiations more difficult.

In our experience, the lack of drivers is a source of major concern among our suppliers, and our departments all over the country are seeing price increases among their subcontractors for the second time this year due to increased costs. These increases combined with accelerated interest rate increases by Norges Bank are affecting suppliers’ desire and opportunities to invest in new vehicles. This is exerting additional pressure on capacity on the supply side.

Cost cutting is not enough

At PostNord we have been implementing a cost-cutting program since the beginning of the year. Unfortunately, these measures and the price adjustment made on June 1 have not been sufficient to compensate for the price and salary growth we are experiencing. It is therefore necessary to implement a further price increase from September 1, 2022.

The price adjustment of our products is divided into three parts, and is at the following percentage:

Group  Price adjustment
MyPack Collect 3,5 % 
Partload / Linehaul  7,9 %
Other services  7,65 % 

 

Certain fees are adjusted:

  • The pallet exchange fee is increased to NOK 69.
  • The package surcharge on Multi Parcel B2B and MyPack Home Unattended is increased by NOK 2.