COURIERS - The Baltic courier market labyrinth

  • 2007-09-05
  • By Talis Saule Archdeacon

THE WHOLE PACKAGE: While trends in courier services vary between the Baltic states, large companies with worldwide networks – a major advantage in the industry – still dominate the market in all three countries.

RIGA - Courier services are one of the few industries in which trends in each of the Baltic states significantly differ. Not only does each country have very different kinds of companies providing the services, the rate of industry growth in each market also varies drastically.

It is important to note, however, that large international companies with strong worldwide networks still hold the top position in all three states.

In Estonia, most of the locally-run courier services are provided by companies that work primarily in other fields. There are a large number of companies that focus on freight shipments to Finland and the rest of Scandinavia. These companies often use courier services to supplement their income. Likewise, security companies such as Falck and K-Grupp use their facilities to provide secure courier services, and even flower delivery, in addition to standard security.

These companies are able to gain a foothold because growth and competition are relatively stagnant in that country. "Business is staying relatively constant," Marko Tamm, manager of Veega shipping and courier services, told The Baltic Times. "Nothing has changed recently… there has been maybe a 20 percent growth in the past two years, but that is really not very much," he said.

In Latvia, by contrast, the courier market is on the move and competition is extremely intense, according to Valdis Rapnieks, managing director of DKK, the largest locally owned courier service provider in Latvia. "We got a lot of jobs lately. We have increased our volume from last year by around 70 percent. It seems that we don't have any limits, it is really booming," he said.

Rapnieks explained that the company is experiencing some growing pains as it struggles to cope with the increased demand. "This [growth] sounds good, but we now have additional problems. Problems with [inadequate] workforce, IT problems and all the other problems that happen when an increase is so fast and so big," he said.

While the few biggest companies operating in Latvia are the same large, multinational giants that operate all over the world, the market is equally divided between them and the local companies, Rapnieks said.
This is not the case in Lithuania.  Mindaugas Pivoriunas, general manager of the DHL Lithuanian division, told The Baltic Times that not only are his biggest competitors other large international companies such as UPS and TNT, they are the only competitors. DHL single-handedly controls close to half of the Lithuanian market.

"Talking about traditional courier service there are no competitors from locally owned services," Pivoriunas said.
He explained that the most drastic change in the Lithuanian market is not a rapid growth or decline, but a fundamental change in the way the business is run. He said that clients are demanding more early morning, pre-9 a.m. service, while companies are trying to focus more on making their deliveries over land rather than by air.

"One trend is that companies, who previously used courier service economic deliveries, are currently trying to move to cheaper road based deliveries. Due to EU expansion, road transit is much easier," Pivoriunas said.

National Post
One of the few things that could be considered constant throughout the three Baltic states is the failure of the national post system to provide adequate services.

Estonia recently announced that the state-run postal service, Eesti Post, would be forced to close 44 post offices on Nov. 1 due to their lack of profitability. The Latvian postal service, Latvijas Pasts, likewise announced losses of 7 million euros year-on-year and the need to close dozens of post offices. Both Latvia and Estonia are planning drastic reform to attempt to revive the national services. Meanwhile, Lithuania's post services are facing losses 2.3 times greater than last year.

Companies in the Baltic states, however, are reacting quite differently to the shortcomings of the national posts. Rapnieks explained that competition is so intense in Latvia that private companies are actually helping to fuel the losses of Latvijas Pasts rather than simply picking up the slack that the state-run company leaves behind.

In Lithuania, however, the main courier services don't see the postal service as a serious competitor. "They are not our main competitors," Pivoriunas said, "they are focusing more on traditional mail business. Of course they have some EMS [Express Mail Service], but they do not have many clients because they don't have the image of a strong courier service."

Surprisingly, some Estonian companies are cooperating with rather than competing against the flagging Eesti Post. "Estonian post does many different things, and we actually use them for local deliveries outside of main cities. They can do it fast but they are not so cheap anymore," Tamm said.