Operating environment

Digitalization and the change in people’s behavior have significantly reduced the number of paper mail items. The number of addressed letters delivered by Posti has decreased by 70 percent within the last ten years, and the households receive a stamped letter only every third week on average. Competition in mail delivery is increasing. In addition to Posti, there are currently 14 operators delivering mail in Finland. The COVID-19 pandemic has sped up the change in the postal business, and the postal service volume decline is expected to continue over the coming years. The decline is accelerated partly by the actions of the public sector and the state to reduce paper mail.

Posti operates on market terms and entirely without public funding. As stated in the Postal Act, Posti is responsible for the universal service delivery that covers letters and postcards paid with postage stamps. The share of mail items covered by the universal service obligation accounts for only around three percent of all mail items delivered by Posti. The majority, around 97 percent, of Posti’s services is fully commercial and offered in a competitive market.

Market situation and business environment, January–December 2023

The demand for logistics services lowered throughout the year, and the overall economic sentiment indicator is below the long-term average both in Finland and Sweden. On average, the overall economic sentiment indicator picked up mildly in the EU and in the euro area during Q4 but not yet in Finland and Sweden. The economic sentiment predicts weak economic development.

Finnish (-0.5%) and Swedish (-0.7%) economies decreased in 2023, and according to Statistics Finland, the number of bankruptcy applications in Finland increased by 25% in 2023 compared to 2022. Consumer confidence has recovered from all-time lows, but confidence is still clearly below the long-term average. High inflation and increased interest rates have affected households’ purchasing power and restrained companies' desire to invest in machinery, equipment, and construction projects. Inflation is already slowing down but there is no certainty that the European Central Bank will lower its interest rate in 2024.

The economic situation affected the circulation of goods in Posti’s warehouses and Posti's parcel volumes negatively. Logistics is a supporting industry for trade and industry sectors and the demand of logistics services therein has continued to be low, with a direct impact on Posti's business operations and performance.

The amended Postal Act came into effect in October 2023 and reduced Posti’s universal service delivery obligation to three days throughout mainland Finland. Five-day delivery of paper newspapers in sparsely populated areas will continue, as newspapers will be delivered on two weekdays with the help of the new, temporary State Aid. Traficom awarded the government grant to Posti in 17 of the eligible areas after a public application process, and in Lapland a separate public service obligation was imposed on Posti. The changes in the Postal Act are responsible decisions that help the sector adapt to the sharply decreasing mail volumes and at the same time support the delivery of paper newspapers in sparsely populated areas. Posti is satisfied that the reforms enable full-time work in mail delivery, significant emission reductions and meeting the changing needs of customers.  

According to the latest forecast from the Bank of Finland, GDP contracted by 0.5% in 2023 (+1.6% in 2022). Based on Riksbank forecast, Sweden's GDP decreased by 0.7% during 2023 (+2.8% in 2022). The Finnish and Swedish economies are not expected to return to growth path until 2025. Political strikes in Finland may have an impact on economic development in 2024 and have a greater impact of Posti’s financial performance compared to its competitors. Geopolitical tensions and several important elections, including the US presidential election, bring uncertainty to economic prospects.