The postal service market in Ukraine: What can we expect for pricing?

The war in Ukraine has had a significant impact on the postal services market. Issues related to logistics, security, and access to remote areas have complicated the delivery process and led to increased costs. This month, three major market players – "Nova Poshta," "Ukrposhta," and "Meest Poshta" – commented on tariff matters. More details about the market situation, pricing policies, and factors influencing future prices can be found in the article by RBC-Ukraine.

Major Market Players

The largest player in the Ukrainian postal services market by volume of shipments is "Nova Poshta." In 2023, the company delivered 412 million parcels, which represents a 30% increase compared to the previous year. The company has also significantly expanded its network, boasting nearly 30,000 service points, including offices and self-service kiosks.

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"Ukrposhta" also holds a significant market share, particularly in the delivery of written correspondence, international shipments, and services in rural areas. Recently, the company has expanded its electronic services, introducing shipment tracking and online payment options.

Another notable player in the postal services market is "Meest Poshta," although its market share is considerably smaller compared to "Nova Poshta" and "Ukrposhta." The company primarily specializes in providing services to business clients and has carved out its niche in the freight transportation market.

Tariff Policy

Today, postal logistics service tariffs in Ukraine can vary even within a single carrier, depending on specific factors.

These factors include the weight and size of the shipment, type of service (addressed or branch), transport distance, special transportation conditions, and delivery timelines.

According to economist Oleg Pendzin, the cost of operations is determined by specific expenses: logistics, staff salaries, and utility payments for branches. These factors directly influence how companies set their tariffs.

Therefore, as of 2024:

• Ukrposhta's basic tariffs for shipments within the region: up to 2 kg – 40 UAH, up to 5 kg – 55 UAH, up to 10 kg – 70 UAH, up to 15 kg – 90 UAH, 20 kg – 105 UAH, 30 kg – 125 UAH, over 30 kg – 125 UAH + (3.00 UAH × actual weight over 30 kg). Across Ukraine: up to 2 kg – 45 UAH, up to 5 kg – 60 UAH, up to 10 kg – 75 UAH, up to 15 kg – 100 UAH, 20 kg – 115 UAH, 30 kg – 130 UAH, over 30 kg – 130 UAH + (5.00 UAH × actual weight over 30 kg).
  Ukrposhta's express shipping tariffs within the region: up to 2 kg – 45 UAH, up to 5 kg – 75 UAH, up to 10 kg – 80 UAH, up to 15 kg – 110 UAH, up to 20 kg – 115 UAH, up to 30 kg – 130 UAH. If across Ukraine: up to 2 kg – 60 UAH, up to 5 kg – 85 UAH, up to 10 kg – 100 UAH, up to 15 kg – 130 UAH, up to 20 kg – 135 UAH, up to 30 kg – 150 UAH. The cost of sending documents is 20 UAH within the city and 50 UAH across Ukraine (delivery time up to 2 days within the region and up to 4 days across Ukraine).
  Packaging, insurance, and return of the shipment are not included in the delivery tariff. The envelope for documents is included in the delivery cost.
• Tariffs from "Nova Poshta" for shipments within the city: up to 2 kg – 60 UAH, up to 10 kg – 90 UAH, up to 30 kg – 140 UAH. Across Ukraine: up to 2 kg – 80 UAH, up to 10 kg – 110 UAH, up to 30 kg – 160 UAH. The cost of sending documents is 65 UAH.
  The delivery tariff already includes: an envelope for document delivery, bags for parcels from 0.5 kg to 4 kg, a commission from the declared value up to 500 UAH, return of unclaimed parcels and documents, and redirection upon arrival.
• Tariffs from "Meest Poshta" for shipments across Ukraine, arranged online: up to 1 kg – 45 UAH, up to 2 kg – 55 UAH, up to 10 kg – 80 UAH, up to 30 kg – 135 UAH. Across Ukraine arranged at the branch: up to 1 kg – 60 UAH, up to 2 kg – 70 UAH, up to 10 kg – 95 UAH, up to 30 kg – 140 UAH. The cost of sending documents is 45 UAH (if arranged online) and 60 UAH (if arranged at the branch).
  The delivery tariff includes a commission from the declared value up to 500 UAH and free return of shipments up to 30 kg if the recipient refuses.

Thus, the following conclusions can be drawn: the tariffs of the state "Ukrposhta" are almost on par with those of private players in the express delivery segment. For example, the tariff for shipments across Ukraine up to 2 kg at "Meest Poshta" (55 UAH) is even cheaper than "Ukrposhta" (60 UAH).

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Private companies, such as "Nova Poshta" and "Meest Poshta," have significant advantages in speed and service, offering delivery in shorter timeframes (1 day compared to 4-6 days with Ukrposhta). This makes them more appealing to customers, despite slightly higher tariffs.

Additionally, the additional options in the tariffs of private companies are predominantly already included, such as packaging, return of shipments, or redirection. In the case of "Ukrposhta," these services incur additional costs, making the final cost of sending through private operators clearer and more understandable for users.

Therefore, while the basic tariffs of "Ukrposhta" are currently among the lowest on the market, private operators compensate for the price difference through better service, additional options, and faster delivery.

Reasons for Tariff Changes

In recent years, the state "Ukrposhta" has tried to maintain the affordability of its services for the public; however, starting from July 1 of this year, it raised tariffs for shipments across Ukraine. The necessity for increasing tariffs was explained by the company as a result of rising delivery costs due to increased electricity expenses and infrastructure damage.

At the same time, the CEO of "Ukrposhta," Igor Smilyansky, recently announced a decision to freeze delivery tariffs for postal shipments for at least until the end of 2024.

"We understand the decisions of companies that, under the pressure of rising costs, have opted to increase tariffs. However, considering the potentially difficult winter and increased taxes to finance the army, we decided to support Ukrainian businesses, consumers, and the military by maintaining affordable tariffs," emphasized the company's CEO.

It is worth noting that as a state company, "Ukrposhta" receives significant compensations from the government, which helps it maintain the lowest prices for services. According to open data, in 2022 alone, "Ukrposhta" received over 3 billion UAH from the government in various forms of compensation and subsidies.

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Private players – "Nova Poshta" and "Meest Poshta" – have a somewhat higher pricing policy (when compared to the basic tariffs of "Ukrposhta," not express). At the same time, Nova Poshta has demonstrated a strategy of maintaining tariffs for almost two years (referring to the price increase on January 1, 2023 – ed.). Only in October did the company announce an increase in its service tariffs.

"Increasing tariffs will allow us to continue operating and provide Ukrainians with the same speed of receiving their parcels," the company explained in early October.

"Meest Poshta" also announced on October 10 that it would be increasing its basic delivery tariffs. The key changes primarily affected business clients using freight services with heavier weights.

"Changes in tax legislation, inflation, and