When I started working in the freight forwarding industry, 14 years ago, I got very interested and curious about the postal supply chain industry!
But who wouldn’t?
Postal services exist since mid-19th century and no one can deny that they have improved our everyday lives. The advent of internet and digitalization, in the last decades, have resulted, in a large extent, in postal services to appear redundant to all of us. However, that’s not the case.
Traffic is indeed expanding in some areas and regions due to high growth of e-commerce but, this does not mean the generation of revenues and profits to the postal sector. The competition is fierce and the low profitability must be a signal for changes. Postal industry should embrace innovation and try to improve its processes, so we can see its true value.
At Haulystic, we understand that digitization creates disparities in socio-economic conditions. Hence, we are here to present the trends of 2019 that will affect the postal sector, as well as the goals that the industry will try to accomplish in the next few years.
7 trends that affect postal sector
Postal industry needs to improve the quality of its services while modernizing its infrastructure. Digital technology has made a necessity for postal sector to innovate in order to keep up with the progression and the requirements of the customers.
- There has been a change in the way people interact with the government. More specifically, e-government is a new model that uses digital initiatives to improve the public services for the people.
- The increase of cross-border trade, the digitalized financial models and the internet economy amongst other factors, rapidly change the landscape of global business models. Since the postal industry contributes to this financial inclusion, it needs to embed new technologies that fully leverage on the potential of the new systems.
- Knowing that time is valuable to anyone and since the digital devices have made us to work faster and more accurately, then it is critical that this change is being made to the postal sector as well. This could be a challenge, since postal services have to change completely from a physical to a digital context.
- Another trend that we can observe is the increase in parcel volumes mainly due to e-commerce and m-commerce growth. This trend has made vital for the postal services to be repositioned in a more digitalised model. By doing so, this sector will be able to uncover all the hidden potential and return to its older glory rather than fade in time.
- The international standards and measures have changed drastically the last few years. The postal industry must innovate in order to be compliant with all the new regulations and policies. Changes in regulations and policies across the world have also increased the need for new optimized methods that overcome security threats.
- People have grown to become very environmentally conscious, meaning that they held other people and businesses accountable for their impact to the environment. They can critically assess the different situations and reward companies that show an environmental concern or even punish them if they use non-environmentally friendly methods.
- Exports and changes to Gross Domestic Product have a positive effect on demand for postal services. In addition, rising rates of internet penetration have resulted in potential substitution of physical mail, while opening up room for the growth of e-commerce and new segments such as parcel delivery, payments and remittances.
Further, we can identify 3 models that are emerging from these trends.
There is an accelerated diversification that goes beyond parcels and supply chain. In areas such as Africa, Arab nation and Asia-Pacific, model 1 is used as business moves away from letter post, which now represents less than 40% of total revenues.
Diversification into parcels and logistics while maintaining the letter post. This model is mostly used by industrialised countries and Latin America and the Caribbean. The letter post still accounts for 50% of total revenues, but the postal services have diversified into other segments.
The third model shows an increased reliance on letter post. The growth of e-commerce has not enabled regions such as Eastern Europe and CIS, to diversify their postal operators into other segments. As a matter of fact, revenues from letter post increased from 38% to 46% in just a decade.