CPC International Postal Update

June 26, 2019

Over the past months, several national postal services have grappled with falling revenues as they navigate the new world of e-commerce and best paths forward. This unfolds as the global postal community prepares for a Universal Postal Union (UPU) Extraordinary Congress in September.

Universal Postal Union Update

The UPU’s Extraordinary Congress is September 24-25 in Geneva, Switzerland. If an agreement cannot be reached, the United States is prepared to withdraw from the UPU and establish self-declared rates to end low, subsidized rates given to foreign mailers.

According to Cheryl Bolen of Bloomberg, the UPU’s terminal dues system slams the U.S. Postal Service with costs that they cannot cover. The Trump administration has made fixing the international postal imbalance a component of the president’s efforts to address trade deficits. The current price regime benefits China and a handful of countries.

Politico reported that Scandinavian countries expressed support for President Trump’s decision to challenge the UPU’s preferential treatment of China. Denmark, Sweden, Finland, Iceland, and Norway, looking to protect their e-commerce businesses, all said that they stood with the effort to reform the UPU’s terminal dues system.

Royal Mail App And Financial Woes

Royal Mail unveiled a new app for consumers that, it anticipates, will improve the experience of sending and tracking mail. According to Post and Parcel,  Royal Mail will now let customers obtain a QR code that they can redeem for the appropriate postage label. The app will also provide real-time updates on the status of the customer’s delivery.

Despite the innovative app’s release, Royal Mail still suffered through financial struggles this past quarter. The parcel service notified shareholders in May that dividends would fall, The Times reported.  With Royal Mail seeing declining profits, the service is planning a £1.8 billion investment to reverse its financial fortunes.

Possible Amazon, Alibaba Takeover In Brazil

A report from The Rio Times says two major, global logistics companies are interested in purchasing Correios, the Brazilian postal service. President Jair Bolsanaro’s administration is reportedly planning to privatize what is currently a government endeavor. Both Amazon and Alibaba are exploring the prospect of buying the postal service’s already-existing delivery infrastructure. Obtaining the rights to Correios would give either company the ability to reach a population of over 200 million.

Amazon and Alibaba, already in a world-wide battle for e-commerce dominance, now appear to be looking to Brazil as the next front in their competition.

Losses And Floundering E-commerce In India

India Post became the country’s lowest performing public sector undertaking (PSU) with its deficit exceeding 150 billion rupees ($2.1 billion USD) in fiscal year 2019. Rising costs and falling revenue pushed India Post past the state-owned telecommunications company and airline as the PSU with the highest deficit, according to Financial Express.

India had anticipated that a growing e-commerce sector would help balance the postal organization’s budget, but according to The New Indian Express, those predictions have fallen short. Traditional postage, the Indian publication reported, fell in fiscal year 2019, while postal salaries kept rising.

Croatia Goes Green With Environmentally-Friendly Postal Vehicle Fleet

With the addition of 20 electric cars, Croatian delivery service Hrvatska pošta has signaled its interest in making its postal fleet more environmentally friendly. According to Balkan Green Energy News, Hrvatska pošta spent €170,000, in addition to a €53,000 grant from the Croatian government’s Environment Protection and Energy Efficiency Fund, on the new vehicles. The 20 electric cars will expand Hrvatska pošta’s green fleet, which previously consisted of 180 electric-powered bikes.

Australia To Spend $1 Billion Improving Package Delivery

According to The Sydney Morning Herald, Australia Post will invest nearly $1 billion in increasing delivery volume as it anticipates an exploding e-commerce sector. Just last year, the Morning Herald reported, Australian e-commerce demand rose an extraordinary 25 percent. Without corresponding investments in package delivery, the growth in e-commerce threatens to swamp the country’s postal infrastructure, an outcome that Australia Post, with this investment, is seeking to avoid.

Partnership With Chinese Company Boosts German Profits

Deutsche Post saw its profits rise over 4 percent in the first quarter of 2019, after inking a logistics deal in China. The agreement with S.F. Holding supported a jump in the German postal company’s quarterly earnings, while Deutsche Post continues to benefit from Germany’s growing e-commerce sector, Reuters reported.

App-Based Food Delivery Service Joins Canadian Union of Postal Workers

Service employees for Foodora, an app-based company that connects customers with couriers who deliver ordered meals, announced that they would join the Canadian Union of Postal Workers. This marks a new alliance between mobile-based workers and the traditional union members of the postal service. Both sides of the union expressed a desire to obtain better working conditions for Foodora contractors, who are not extended the same benefits as traditional employees.

Zambian Postal Strike Lasts Months

A crisis of unwritten paychecks led Zambian postal workers to strike in early 2019. Angry with Zambia Postal Services Corporation’s delinquent payroll practices, the strike stretched on for months before coming to a conclusion in late April.

Union officials claimed that workers missed months of paychecks, up to 25,000 Zambian Kwachas (nearly $2,000 USD), leading to evictions and struggles to pay for education. The strike ended with negotiations between the country’s postal union and the government to release the funds to workers.

Scandinavian Postal Crisis

Amid growing financial losses, Swedish postal service Postnord cleaned house, with both the CEO and chief of finance departing. The chairperson of Postnord’s board, Christian Jansson, said that “the pace of Postnord’s adaptation efforts needs to increase.” Losses exploded for the postal company last year, a “seven-fold increase on the previous year,” The Local reported.

Across the Baltic Sea, Finland’s Posti also indicated that financial costs would lead to job losses, with more than 120 staff at risk. The Helsinki Times writes that a decline in postal revenues is forcing Posti to try to save up to 200 million euros over the next three years.

Turkish E-Commerce Expansion In Africa

According to the Daily Sabah, Turkey intends to obtain a portion of the growing e-commerce market in Africa, with the Turkish Post and Telegraph Organization (PTT) announcing a plan to reach African consumers. Turkey sees the soon-to-be $75 billion market as an opportunity to increase domestic production and exports.

 

About the Author: John Cicchitti is a Research Fellow with the Consumer Postal Council.