4 Postal Industry Trends to Embrace in 2016

January 29, 2016

postal industry

Postal organizations continue to evolve, and rightfully so. Logistics companies are consolidating, and growing quickly to increase their global reach and capabilities.

Here are 4 trends we are seeing among postal organizations as the new-year takes off.

Growing parcel volumes

Mail volumes have been on a consistent decline since 2007. In fact, mail volumes globally have declined at an annual rate of 5%. This type of decline has affected all postal operators across the world.

The challenge for postal operators is to grow parcel volumes. This means that they need to operate more efficiently in their established markets, but more importantly find new markets. ECommerce sales will exceed $3.5 trillion within the next 5 years. Because of this, retailers are pouring millions into their online strategies. More online sales are now done in Asia Pacific than North America. And the biggest market is…

You guessed it, CHINA.

As a postal, if you are not looking towards China as a market, you need to rethink your strategy. Alibaba on Singles’ Day alone racked up $14B in sales. The growth rate of eCommerce in China is at a staggering 20%.

China ecommerce market

Coming out of China, last mile delivery to the Buyer is usually (98% of all cases) performed by the domestic postal under the UPU regulation using Economy Letter (non-RM), Registered Mail (RM) and for a small part EMS. The domestic postal is reimbursed following the UPU regulations and in many cases this leads to non or hardly profitable business, still coping with huge volumes.

However where the postal can act as a shipper coming out of China and into its domestic market and neighboring countries the profits and margins are significant. Youredi has worked with our partners to deliver this capability to a number of postal operators seeking to do business in China.

 Acquisitions, Mergers or Alliances

If postal operators need to grow their parcel businesses rapidly, there is no better way than through acquisitions. We only need to turn back the clock to the early 2000’s when Deutsche Post began to acquire shares in DHL. By 2001, Deutsche Post held a majority ownership, and in 2002, completed the purchase. Now, operating under the name Deutsche Post DHL, it is the world's leading mail and logistics services group.

In February 2015, Japan Post purchased Toll Group, a transportation and logistics company with operations in road, rail, sea, air and warehousing. With an Asia Pacific focus, Toll operates a network of 1,200 sites across 50 countries. Japan Post's intention for the acquisition were to drive forth global operations. Now a privatized company, Japan Post will look to its sale of shares to continue with acquisitions and further grow its global presence. http://bit.ly/23whUeq

 Growing data complexity and the necessity of the cloud

Postal Operators have always been slow to move with the times and invest in technology. The challenge with the traditional way of doing things is that many of the existing systems do not provide the agility and speed to meet the demands of the new world. It is all about the data, big data. Big data presents new opportunities for data integration, visibility and analytics. The investment and duration of the projects that postals involve themselves in is to slow and expensive.

What postals need, is agile, low cost cloud solutions that can be up and running in mere days or weeks. Recently, we were in conversation with a postal operator about there IT upgrade around imports/export and custom clearances; a project that was originally going to take nine months. With modern cloud solutions, this can be done in six weeks.

A recent Gartner research report on Global Logistics, published in November 2015, suggested that 49% of respondents indicated that growing volume, variability, and velocity of data were factors contributing to supply chain complexity.

Work to your strengths.

The first documented use of an organized courier service goes back to Egyptian times, 2400 BC, where Pharaohs used couriers for the diffusion of their decrees in the territory of the State. Postal organizations have interacted with people closely for many centuries, albeit door-to-door deliveries or post offices in small communities. With that knowledge and connection with their customers they have a unique opportunity to exploit that as some Postal Organizations have done by providing additional services like banking and insurance. The list of these services could be extensive.

Analytics can be used to determine how, why, when, and where customers interact with you, Similar to the way retailers gather information about their consumers.

The question we all ask ourselves is, “What will the postman of tomorrow be, and how will we interact?” Well, postmen will now be able to turn up to your office. You will now be able to interact with them via mobile. Parcels and letters will be delivered by drones or self-guided vehicles to a locked box/parcel locker location of your choice (Much of this activity happening at night).

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