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PostNord cutting up to 4,000 Danish jobs in response to digitisation

Logistics firm PostNord is set to cut jobs in Denmark due to falling mail volumes in the country, with a new production model set to be introduced

Swedish-Danish logistics company PostNord has announced up to 4,000 job cuts in Denmark over the next two to three years as a result of increasing digitisation.

According to the company, mail volumes in its Danish business have fallen by 80% since the start of the millennium.

“Three years ago, PostNord laid out a strategy adapting to digitisation, but with its rising pace in Denmark in 2016, this is not enough,” said Björn Ekstedt, CIO of the PostNord Group. “Against this backdrop, PostNord has announced a new production model to be introduced in Denmark.”

PostNord Denmark has axed around 3,000 full-time jobs since 2013, but this is has not been enough to offset poor financial performance caused by the fast introduction of digitisation. The planned 3,500 to 4,000 redundancies will be the result of a major business transformation at PostNord Denmark.

This revamp will cost SEK3bn (£274.2m), and its financing is currently being discussed with the group’s owners, the Swedish and Danish states.

At the heart of the transformation push is a new production model, which will see separate production processes and infrastructure for mail phased out.

Ekstedt believes IT has a crucial role to play in the transformation project by cutting costs from legacy systems, supporting the integration process and developing new services for logistics and e-commerce.

“Logistics has traditionally been a B2B business, but, with the growth of e-commerce, it becomes a B2C business with completely different requirements and expectations from the delivery receiver because the receiver is not our customer. The receiver is the customer of our customer,” said Ekstedt. “PostNord as a logistics company has treated those receivers as our customers and we have developed our IT to match that.”

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In conjunction with the Danish transformation, PostNord Group is looking to cut over SEK1bn (£91m) in administrative costs over the next three years. This push to improve competitiveness is expected to affect around 1,200 full-time employees across the group, including 500 already covered in the Danish figures. The pressure is also felt in IT.

“Costs will be reduced by ongoing sourcing, more effective cooperation with partners and a reduction of the number of employees,” said Ekstedt.

Ekstedt doesn’t expect transformation projects on the scale of PostNord’s Danish operations in other Nordic countries, where the rate of decline in mail volumes has been slower. In Sweden and Norway, the company has been continuously adapting to changes on the market and that work is ongoing.

PostNord Group operates postal services in Denmark and Sweden, as well as communication, e-commerce, distribution and logistics services across the Nordic region and Germany. In total, the group has some 33,000 employees.

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