DHL 1998 Annual Report Download - page 16

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The economic environment
All in all, 1998 offered a more favorable economic environment for
Deutsche Post than past years. Germany’s gross domestic product grew by
2.8 per cent over 1997, the largest rate of growth reported since German
unification.
However, a closer look at general economic conditions reveals a more
nuanced picture of the implications these conditions have for Deutsche Post.
Private consumption generated little impetus during the year. Although
disposable income increased noticeably, private consumption grew by only
1.9 per cent. Falling short of average growth levels, this rate was not strong
enough to stimulate mail order trade which is a major source of Deutsche
Post business. At 4.7 per cent, growth in the service sector – which as a rule
makes intensive use of postal services – was much higher than average and
considerably more favorable for Deutsche Post. Despite a marked slow-
down in growth in 1998,the export sector – which is particularly important
for development of our international mail business – was still able to post
5.4 per cent growth.
Postal markets and general regulatory conditions
Postal markets throughout the world are in the midst of radical change.
Market liberalization, new competitors and rapid technological change are
impacting general conditions. Individual sectors of the market – such as
parcel mail and express mail service – are merging. Internationalization of
the postal industry also picked up noticeable speed in 1998. Customers are
becoming more demanding: Besides expecting high quality, they increas-
ingly look to providers for integrated solutions as well. However, these new
challenges also hold special opportunities for efficient, innovative service
companies.
Today’s postal markets will continue to record strong growth. Europe’s
aggregate courier, express and parcel mail market is currently estimated at
around 23 billion euro. Many observers expect market volume to double by
the year 2010. The dramatic increase in the use of the opportunities offered
by the Internet (e-commerce with mail-order companies, for example) will
be a major source of strong impetus for this growth. With the time factor
becoming increasingly important for corporate success, the express mail
service segment will also continue to register double-digit growth.
12
Group Management Report