Fast Confession – Czech Post CEO Roman Knap: Zásilkovna timed the end of the cooperation
Since 2018, Roman Knap has been the CEO of Czech Post. The beginning o last year put him through a real test, when he had to fight the first wave of the pandemic, which he considers to have been the most difficult. Czech Post incurred a loss of CZK 1.3 billion last year. "It was planned," Knap says. In his interview with LP-Life, he opens up about Czech Post‘s most difficult period, the end of its collaboration with the logistics company Zásilkovna and what he personally missed most during the pandemic.
A lot has changed during the pandemic. Especially our shopping mindset, where we basically had to move to the online world completely. It must have been a huge strain on the Czech Post...
The Czech Post was hit especially in the spring of last year, when the first wave came. Nobody knew what was ahead of us and how to prepare for it. So basically, after a short break in January, we resumed normal operations right away.
What were your first major steps against going crazy from all that?
The first major steps... There's always the advantage of certain naivety of not knowing what's coming. However, during that spring wave we had to prepare a plan for the case it happens again. Then came the autumn wave and we were ready for it. So it was really just that initial shock, a realignment of some internal processes, and then it was business as usual.
Jokes are circulating on social media, about how Czech Post mailmen don’t even try to deliver packages, leaving them at the branch with an excuse that the recipient was not at home. Did you unveil such cases? Is it possible to keep track of it?
It is. We deliver an average of 250,000 parcels a day. Out of those, I know that something like 7,000 are really problematic ones that we can't deliver as problem-free as we would like to. We already have all of our cars equipped with GPS, every driver has a terminal for card payments. It's easy to backtrack. Of course, the biggest problems were during the Christmas rush, when the number of packages was truly enormous. At that time the quality of service went down and our competition didn't increase their capacity. The Czech Post, however, didn't restrict anything, we kept going.
Have you ever tried working at a branch yourself? Sending parcels or sorting letters?
I actually do work in a branch. I've tried delivering parcels; I like to try everything. And I’m not doing it to relax, I want to experience what the operation is like and where the standard problems come from. Doing that, one immediately sees a lot of nonsense there that makes the postmen’s job unnecessarily harder. Our task is to gradually weed it out, and I want to be there for it.
According to an idnes.cz article, you laid off 1,200 employees during the pandemic. The demand for your services is rising, so why the mass layoffs?
There were actually 2,500 positions eliminated. You have to keep in mind... everybody looks at the Czech Post as a parcel carrier. But it provides a lot of other services that were far from growing. For example, fewer letters are being sent, 30% fewer people came to the branches than the year before, and we obviously have to adjust our operations to that. So yes, while we were laying people off from certain positions, at the same time we were hiring for other positions. Since you asked about the parcels – we were looking for more parcel carriers and had to fill these positions.
You already mentioned the most difficult period at the beginning of the pandemic. A lot of people complained about the long queues and the long waits at post offices. How did you fight the wave of negativity?
Such a wave is very hard to fight. We fought it by keeping the post office open, unlike other institutions. For example, in the autumn, when the pandemic wave was more massive, there were no more than 24 branches closed in one day. 24 branches out of 3,200. So, yes, some restrictions were necessary, but we continued to operate. The fact that there were queues somewhere, that they had to keep the distancing, these are the negatives that the protective measures entailed.
In 2020, Zásilkovna relayed over 600,000 parcels to the Czech Post. Then in January, Zásilkovna ended its collaboration with you, justifying that it was not satisfied with the quality of the Czech Post's services. How did you cope with this move?
Well, of course, you have to wait until Christmas is over, until we take all the parcels away and help them sort everything out and then you have the perfect opportunity to make a media splash, which they took advantage of.
But how is the Czech Post handling this situation now?
We have a network capacity of 70 million parcels. So calculate for yourself, what the percentage drop is, and that is also how we are approaching it. They're a customer like any other, and if I don't want to send a parcel through the Czech Post, I won't take the parcel there, simple as that. I don't need to give any media statements about that anywhere.
Last year, Czech Post increased its losses due to the coronavirus. By how much?
The Post did not incur a loss because of the coronavirus. We were expecting that loss, since we are going through a certain restructuring, which entails some costs. Of course, having 27,000 employees who need protective equipment, respirators, disinfectants means a cost in the hundreds of millions of crowns. Also, offices were closed, people were not sending registered letters, planes weren't flying. There was a slump in the market everywhere. On the other hand, more parcels were sent, and that helped us a little bit. We were going through a transformation. 2,500 positions were eliminated, we had to pay severance to everybody. We have trade unions, so there had to be some agreement and setting of conditions to maintain social harmony, and that costs a lot of money. That means it was really planned that Czech Post would incur a loss of CZK 1.7 billion last year, and we ended up with a loss of CZK 1.3 billion, which is actually better than expected.
Is one of the steps to regain profit raising the prices of your services? For example, sending a registered letter was marked up by five crowns, same with insured letters...
Wages are growing, the minimum wage is going up, so is the price of fuel, all of that has, among other things, an impact on the price of our services that has to go up as well.
"The Czech Post will be stripped of its branch network, including its network of employees, and will become an independent state enterprise," announced Deputy Prime Minister Jan Hamáček at a press conference back in May. How do we understand that?
It is quite simple, actually. First, if we separate the state services from the commercial ones, this is already a roughly 2-year-old issue that we are working on internally. We have set up the internal structure, the whole economics of the Post to make it work, but it has to be really transparent and clear which of those services are competitive, which are commercial and operating in the open market, as well as which are guaranteed to the citizens by the state and what does the available infrastructure consist of. Possibly even what the costs are. We’re talking about the branch network here. That is, it's the structure that the state guarantees to the citizens and, of course, sets what services can you get there. Then you have the parts of the business that operate in the open market, where you have to compete with those that are not burdened in that way. I always give this example: the Czech Railways cannot compete with private carriers, if they’re burdened with keeping stops in every village. So they have separated the infrastructure, and the stations are part of the infrastructure guaranteed by the state. So, regarding Czech Post the outcome for citizens is that the commercial services will be improved and at the same time the state will guarantee the infrastructure in the form of availability of branches.
You mentioned the citizens. If you had to single out one thing that will change the most for us, what would it be?
We are continuing to switch Czech Post from a traditional letter carrier to a parcel carrier, and the next year will be a turning point. From 2023 onward, by all predictions, parcel volumes will exceed that of letter mail for the first time in terms of revenue. People are simply sending fewer and fewer paper letters; digitization is everywhere. There will probably be an obligation to expand the use of data mailboxes, so the Czech Post really needs to be prepared for this trend.
Now, to move away from the work sphere, what has the pandemic changed in your life specifically?
I've had the COVID twice, so I know how we seem healthy all the time until we find out we're not. So, of course, now I have a lot of respect for it. I certainly wouldn't underestimate anything around it. I don't need to talk about readjusting life values or anything like that. It's enough that one suddenly starts to appreciate the everyday things that one thought were normal before. Suddenly, when you're sitting in a restaurant and someone puts a pint of beer in front of you, you realize what a small thing it is, but how much you missed it. I'm a people person; I need to be in touch all the time. Even in a company you can see that when people stop meeting in person, suddenly something's missing and the overall mood in the company sinks. So the pandemic has shown me how little it takes for the spirits and smiles in a society to fade.
