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Challenges and opportunities

Transformation in the Postal Industry

The whole world is experiencing a major succession of shocks, real seismic earthquakes and also shocks to the global economy, which are hitting financial markets and currencies, affecting all of us in some way or another. These impact on every sector, but for the postal industry, the global economic challenges are just one more in a long list of factors driving change and leading to major transformation. The quantum shift involved for posts is more significant because most had remained unchanged for generations. Until recently, most posts were public sector mono-poly providers of a traditional range of services with an impressive legacy and heritage but ill-prepared for the 21st century and often described, quite accurately, as industry dinosaurs.

But in the last decade they have been ‘hit’ by a succession of meteoric challenges including: the progressive liberalisation of the market, especially in Europe; increased demands from regulatory authorities and governments; the digital revolution which has transformed channels of communication; customer behaviour which has also changed to reflect the wider use of internet and mobile technology in particular; environmental pressures on the use of non-renewable energy and the production of harmful emissions, as well as the con-tinued debate about paper and physical media.
Posts now face the combined challenges of declining volumes of traditional mail and rising costs, with the additional threat of competition. Meanwhile, new entrants are appearing in the postal market, with innovative products and services and lower, more flexible cost structures.

This has raised a lot of very difficult questions for monopoly incumbents who are obliged to service the universal service obligation (USO), burdened in many cases with high levels of fixed costs, strong unions, little flexibility and legacy systems, equipment and traditional thinking. How can they suddenly react in an agile way, become more customer oriented and innovative, focusing more on revenue generation and creating value than purely on volumes?

However the combination of potential threats has spurred many of the traditional operators into thinking and acting quite different and radically – hence the radical transformation that is taking place across the sector. This is evidence that ‘necessity really is the mother of invention’. Now they are under real financial pressures, the combination of lean programmes, efficiency and cost containment measures and innovative thinking is driving many operators, who were hitherto slow to react, into moving much faster. They are beginning to recognise where value is created, what products and services are profitable and how to use their current technology in the most innovative and effective ways. Importantly, they are also looking for new technology enablers for some widely diversified customer solutions.

So large scale equipment that was designed for volume, clearly has the capacity, but is now being fine-tuned to support value-adding features, such as intelligent forwarding, customer tracking of large mailings, revenue protection, address cleaning and many other applications that can use the range of intelligent data in or around the envelope or parcel.
The main trend that all consistently report is a steady increase in 3-dimensional items, packets and parcels, with a fall in the traditional letter format. This poses some new operational challenges in the pipeline and logistics but creates as many new opportunities to deliver new last mile solutions and engage with both receiving and sending customers, again by deploying latest technology.
New materials handling and automation solutions are extremely important as means of driving down staff costs but still improving efficiency and reliability. So robotic solutions and clever use of technology is increasingly relevant and helping the post to reinvent itself as leading edge. Some postal providers are also diversifying into warehousing and distribution, including pick and pack to complement their long standing expertise and reputation in logistics and delivery.

In Europe it is possible to look at the first nine months of a liberalised market and see that it has been the stimulant for a great deal of fresh thinking, fresh approaches to the market and building of new service solutions enabled by existing or developing technologies. All is not lost and the future is looking more exciting all the time, especially if you factor in the new ideas coming into the market from the ‘non-postal posts’.

The opportunities for posts include making a conscious decision to think positively about the future and to continuously innovate in order to re-engage all business customers and consumers with fresh, exciting and different products and services that are relevant to their current needs, so as to re-shape the market and build on their core strengths, such as universal presence, brand awareness, trust and delivery capability. Increasingly, different companies and businesses, including suppliers are using every opportunity to collaborate with each other but also with customers and other stakeholders to explore and develop new approaches and new thinking – in short, to re-invent the post for a new age.

Physical mail still has a great future and there are many customers and businesses that have not yet realized or seen what mail can accomplish for them and the value it can bring to their own business aspirations. To think of physical mail as something that can bring and convey value for the sender and recipient is still one of the world’s biggest secrets.
The key for the postal industry is to inte- grate the physical and digital, so that in a multimedia, multi-channel world and with a strong pedigree and legacy in physical delivery, posts can create new customer touch points in the digital world, including social media, to provide new ways to access their wide range of capabilities for a new generation of customers.

TEXT: DEREK OSBORN PHOTOS: DEREK OSBORN ILLUSTRATION: SHUTTERSTOCK

Derek Osborn
Derek Osborn, Expert in the postal industry, Whatnext4u
New materials handling and automation solutions are extremely important. So robotic solutions and clever use of technology is increasingly relevant and helping the post to reinvent itself as leading edge.