La Poste - Company Profile, Information, Business Description, History, Background Information on La Poste

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92777 Boulogne-Billancourt Cedex

History of La Poste

France's La Poste has expanded beyond its position as that country's postal service to become one of the top three logistics, corporate services, and financial providers in Europe, behind Germany's Deutsche Post and ahead of the United Kingdom's Concordia. The government-owned, yet independently operated company holds the number three position for electronic mail services in Europe, the number three spot in the European parcels and logistics sector, and one of the top positions in the French financial services market. These activities combined to produce more than EUR 17 billion in 2001. Among the company's assets is its network of more than 17,000 post offices, which provide mail services, financial services, and Internet access and e-mail services throughout France. The company's Geopost subsidiary, formed in 2000 and located in the United Kingdom, handles the company's parcels and logistics wing, while express mail services are provided through Chronopost International and Tat Express. Since 2001, La Poste has gained controlled of Deutsche Paket Dienst, giving it entry into Germany, as well as adding to its operations in France and England; the DPD acquisition gave La Poste the number two spot in Europe's business-to-business parcel delivery market. Other subsidiaries and participations include Brokers Worldwide, which offers collection, preparation, and other services to U.S.-based international mail dispatchers; Dynapost, which is the French market leader in corporate mail processing; Europe Airpost, formerly the AĂ©ropostale partnership with Air France; INSA, which specializes in print distribution; and Mediapost, the leading French direct mail advertising service.

Roman-Era Postal Roots

The history of the postal service in France goes back to the time of Julius Caesar, who mentions in his De Bello Gallico a mail service running along the Rhone valley in Gaul. The province then benefited from Emperor Augustus's creation of the cursus publicus, which was at first restricted to carrying administrative mail. Private messages were carried by tabellarii, personal slaves or freedmen in the service of patrician families. During the Middle Ages, the state postal service disappeared, giving way to various private mail services. Messages were carried between abbeys by monks; the messengers of the University of Paris carried letters between the University's numerous foreign students and their families in Europe, and aristocrats and rich merchants such as Jacques Coeur employed messengers for their private correspondence. Messengers were appointed by municipalities, initially restricted to carrying mail between municipal officials, but by the 14th and 15th centuries they were also entrusted with private letters. The royal postal service remained one of many postal services for a long time. King Louis XI, who reigned from 1461 to 1483, reintroduced the Roman post house system, a relay system whereby horses could be changed along the route. King Louis XII, who reigned from 1498 to 1515, established such relays every seven leagues along royal roads. In 1533 permanent postal routes were created between France, England, and Switzerland.

On May 8, 1597, a royal edict created relais de louage, a stagecoach service intended for private use. This system was merged with the poste aux cheveux in 1602. The controleur général of the posts, Guillaume Fouquet de la Varane, appointed in 1595, played a major part in establishing a royal monopoly on the collection, carriage, and delivery of mail, with varying rates according to weight and destination. However, Louis XIII, who reigned from 1610 to 1643, gradually contracted the service to individuals in an attempt to raise funds for the royal treasury. During the reign of Louis XVI--from 1643 to 1715--various post-related positions were sold as special offices. Later, however, under the influence of minister Jean-Baptiste Colbert, the superintendent of the posts, Jérome de Nouveau, sought to abolish postmasters' offices. This took place in 1662. In 1668 the secrétaire de la guerre (minister of war), François-Michel Letellier, Marquis of Louvois, took the role of superintendent of the posts, left vacant after the death of de Nouveau in 1665.

Louvois entirely reorganized the postal service, placing it under two authorities. The superintendent, a government minister, was to set postage rates, while the fermier général was contracted by the royal treasury to administer the postal service. The first contract for the latter function was drawn up between the state and the Pajot and Rouillé families, who occupied this position for more than 50 years. The fermier générale included more than 800 post offices in France as well as offices in Rome, Genoa, Turin, and Geneva. There were six postal routes, covering the six major French highways, along which mail was carried by postcoaches. In 1738 the Grimod and Thiroux families took on the role of fermier général, which they retained until the 1789 revolution. During this period post was delivered between towns but not within them. The poste aux chevaux (horse post) was operated by postmasters who ran posthouses--these were often inns--and were responsible for carrying mail, while there were around 1,000 post offices in France, headed by salaried directors, which were responsible for collecting and dispatching correspondence. In 1759 C.H. Piarron de Chamousset obtained from the king the right to undertake local postal delivery in Paris. The service proved so profitable that the crown soon decided to recover the rights and to extend local delivery throughout France. The so-called Petite Poste (intra-town post) was extended by royal decree in 1786 throughout France, eventually covering all French municipalities. The 1789 revolution did not affect the mail service until 1793, when it became a state-owned agency. Financial difficulties prompted the government to revert to the contract system several years later. State control of the posts was established definitively in 1804 with the creation of a directorate general under the Ministry of Finance. Antoine-Marie Chamans, Count of La Valette, remained in charge of the posts from this date until the fall of the First Empire in 1815, when he gained a place in history by escaping from prison, disguised in his wife's clothes, the day before he was due to be executed.

Forming the Modern Postal Service in the 19th Century

The Restoration period brought several major changes in the postal service. A royal decree of February 24, 1817, made possible the introduction of the money order, which allowed funds to be delivered at one post office upon receipt of an order transmitted from another. From April 1, 1830, postal collections and deliveries were made every second day from and to homes in every municipality in France. This was the first appearance in France of the modern postman, and brought the end of rural isolation. During the reign of Louis-Philippe, mail transport was accelerated by the introduction of the railway. In 1842 mail was carried on the Strasbourg-Basel line. In 1845 mail began to be sorted in designated wagons during the train journey from city to city. Soon this method of transport replaced the horse post, which officially ended in 1873. A major improvement was due to Etienne Arago, a famous scientist and director of the posts under the Second Republic, who was responsible for the introduction of the fixed postage rate and the postage stamp, based on the English innovation of the penny post. On August 24, 1848, the National Assembly decreed that a single postage rate should be charged regardless of distance, though varying with the weight of the letter. In December 1848 another decree marked the introduction of the first three French postage stamps. In the first year after the reform, postal traffic jumped from 122 million to 158 million letters per year. During the Second Empire, rapid improvements were made in postal services abroad, especially by boat, when regular postal links were established with Indochina in 1861; the United States, Mexico, and the West Indies in 1864; and South America and West Africa in 1866.

After a short period during the siege of Paris by the German army in 1870 when a pigeon post operated, the postal service extended its role during the Third Republic. The postal service, controlled by the Ministry of Finance, and the telegraph service, controlled by the Ministry of the Interior, were combined under a single administration, the Ministry of Posts and Telegraph, headed by Adolphe Cochery. Later, however, the postal and telegraph services were attached to several other ministries until 1906, when an undersecretariat of posts and telegraph services (P&T) was reestablished as a single ministry within the government. On April 9, 1881, a new state institution was created, the Caisse Nationale d'Epargne (National Savings and Loans), with a separate budget, which was supervised by the posts and telegraphs undersecretariat. Savers could use any post office in the country as a savings bank. At the same time, this gave the state vast sums of money to finance large social and housing programs. In 1900 deposit accounts at the Caisse Nationale d'Epargne totaled FFr 3.5 billion. Following the example of Austria (1883), Switzerland (1906), Germany (1909), and Belgium (1913), under the law of January 7, 1918, the French posts and telegraphs undersecretariat was allowed to operate a current account service. In the face of violent opposition from the French banks, the undersecretariat was not allowed to offer interest-bearing accounts. The funds accumulated by postal current accounts were placed in the custody of the Public Treasury.

Developing in the 20th Century

In the 20th century, an airmail service was introduced. The first attempt to transport mail by air took place in July 1912, near Nancy in Lorraine. The airplane, carrying 40 kilograms of mail, flew for 17 minutes. On October 15, 1913, the same pilot, Lieutenant Ronin, flew from Paris to Bordeaux carrying an urgent letter to the steamship Peru, bound for the West Indies. During World War I the development of airmail services was suspended. In 1918 the Paris-Le Mans-St. Nazaire route began to be exploited for the use of the U.S. Army. Several state-subsidized private firms carrying airmail, such as the Compagnie Aéropostale and the Compagnie Farman, appeared in 1919. At the end of the year, the pilot and airplane-builder Pierre Latécoère made the first international airmail delivery, to Barcelona, Spain. The service was soon extended to Rabat, Morocco, by way of Alicante and Malaga. In 1922 the pilot Maurice Nogues established the first commercial Paris-Bucharest-Constantinople-Ankara airlink, and in February 1930 the first postal airlink between France and Indochina. Jean Mermoz made the first direct mail-carrying flight between France and South America on May 12, 1930. On September 2, 1930, Dieudonné Costes and Maurice Bellonte flew from New York to Paris without stopping. In 1939 the airmail service consisted of four routes covering 11 French municipalities with daily flights.

The French P&T was affected severely by World War II: by the end of the war, 25 percent of post offices, 50 percent of mailwagons, and 75 percent of Paris's post vans had been lost, destroyed, or stolen. Old German warplanes were used to start up airmail services again. During the 1950s and 1960s the P&T concentrated on improving existing services, introducing motorized postal delivery and mechanical sorting. Postal codes, included in addresses to facilitate sorting, were introduced in 1964. In 1973 the first automatic sorting center opened in Orléans. In 1961 a helicopter service was introduced to deliver mail to the islands off Brittany. At the same time, postal services began to be rationalized; first Sunday and then Saturday afternoon deliveries were withdrawn.

It was only since the 1970s that national P&Ts began to experience competition from new communication techniques. Between 1976 and 1985, international mail traffic decreased by 10 percent because of growing recourse to telecommunications. Meanwhile, European Economic Community (EEC) regulations were introduced to control competition between data and written material transmission services. This led to the French government's decision to separate telecommunication and postal services. The reform law of 1971 separated the Direction Générale des Télécommunications (DGT) from the Direction Générale de la Poste (DGP). In 1990 the two entities adopted new names--La Poste and France Télécom, respectively--in recognition of their new legal status.

At that time, La Poste and France Télécom became exploitants autonomes de droit public, state-owned and largely autonomous. The powers of the ministry in charge of these were clearly defined: general regulation of the sector, planning contracts between La Poste and the state, and protection of employees' status as civil servants. Postal and telephone rates were no longer set by the ministries of finance and posts and telecommunications. The financial status of La Poste was markedly different from that of the DGP. In 1923 a law had been passed that separated the budget of the postal services from that of the state. This, however, allowed the state to levy large sums of money from the mail service's profits in order to subsidize government electronic and space programs. The 1990 reform law granted La Poste a totally independent budget. The question of reduced postal rates for the press, which represented half the public subsidies given in total to that sector, was also solved by the reform, which obliged the state to contribute to press rates subsidies.

Other subsidies needed to be found to finance loss-making post offices in rural areas; in 1990 there were 17,000 post offices, 12,000 of which were based in areas with fewer than 10,000 inhabitants. The 1990 reform aimed to support the structurally loss-making postal services by developing La Poste's expertise in financial services. La Poste's share of current account funds had been diminishing steadily for 40 years; it fell from 30 percent of total current account funds in 1950 to 12 percent in 1988. Traditional savings products were also facing serious competition from new stock-exchange-oriented savings products. The 1990 reform authorized La Poste to act as an insurance company in offering all types of personal insurance. A major difference remained between La Poste and the French banks, however; the first was barred from making real estate loans unless the borrower had previous savings, as well as from making consumer loans, the two types of loans for which there was growing demand.

Diversified Services Provider for the New Century

Meanwhile, the P&T began to develop a marketing policy, since it was allowed to establish individualized contracts for mail services with major private clients, generally corporate. The 1980s were characterized by the development of new services: telecopy (facsimile, or fax) services were launched in 1981. Chronopost, a rapid delivery service of correspondence and goods with guaranteed time limits, began in 1986. The P&T started to explore services such as gift or advertisement delivery or company mail, whereby special prices could be negotiated for large mailings. In 1990 computerized scanners were installed for post-code sorting.

La Poste became an independent, public sector company in 1991. The group began to step up its financial services offerings, to the extent that by the middle of the decade financial services represented nearly one-fourth of its revenues. Yet, in 1997, La Poste was forced to detach its financial services products from its mail services in a move designed to reduce its competitive advantage. This policy placed La Poste in line with most of its European counterparts. Meanwhile, La Poste was facing increasing competition in its mail and parcel delivery services as more and more of the segment was opened to competition.

As a response, La Poste began diversifying its operations in the late 1990s. Logistics and corporate mail services, not only in France, but across Europe, became a core company direction; in 2000, La Poste created a new subsidiary, GeoPost, based in the United Kingdom, to oversee its growing logistics holdings. In that year, also, La Poste acquired full control of its AĂ©ropostale air freight partnership with Air France, which was renamed Airpost and then focused on providing postal traffic services. La Poste also took steps to gain a major share in the Internet communication and e-commerce delivery markets; in 2000 La Poste rolled out a free e-mail and Internet access service located in its network of offices. Meanwhile, La Poste had been building up its position in the European parcel deliveries market. After buying up Denkhaus, with operations in Germany and the Benelux countries, in 1998, La Poste began acquiring a stake in Deutsche Paket Dienst (DPD), a major rival to Deutsche Post in Germany, which also held leading positions in the United Kingdom and France. By 2001, La Poste had gained full control of DPD, giving it one of the leading positions in the European market.

That acquisition, however, was not without its glitches--by the end of the year, it had become apparent that La Poste had overpaid some EUR 100 million for DPD. The resulting write-off--combined with preparations for the passage to the Eurodollar in 2002 and disruptions resulting from the September 11th attacks in New York City and Washington, D.C.--forced La Poste to report its first annual loss since 1996, of EUR 95 million.

A parliamentary report released at the end of 2001 recommended that La Poste spin off its financial services wing into a separate subsidiary, in order to ensure its survival against the new banking services giant created with the merger of Caisse des Depots et Consignations and Caisse d'Epargne. The spinoff would allow La Poste to offer a complete range of financial services, including providing home and other loans, and would enable many of the group's loss-making rural offices to become profitable. In the meantime, La Poste began lobbying for the right to shut down a large proportion of those offices--many of which served towns with populations of fewer than 2,000, in favor of reorienting the network toward more densely populated towns of more than 10,000.

Principal Subsidiaries: Brokers Worldwide; Dynapost; Europe Airpost; Geopost; INSA; Media Post; SF2 (50.1%); Sofipost Holding Company; Sopassure (50.01%); STP.

Principal Competitors: Deutsche Post World Net (DPAG); Consignia plc; TPG NV (TP); Die Schweizerische Post; Canada Post Corp.; Australian Postal Corp.; Post Office Ltd.; La Poste (Belgium); Maroc Telecom; Communications Authority of Thailand; Entreprise des Postes et Telecommunications Luxembourg; Magyar Posta Rt; Hellenic Post-ELTA SA; Malawi Posts and Telecommunications Corp.


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