During the lockdown, posts were one of the few essential services which continued to serve the population. How did posts respond to the crisis?
The posts responded in a variety of ways. All posts were faced with the initial problem of cross-border mail flows being hindered because of border closures and the loss of commercial air transport. The other issue was the impact on the workforce. During the lockdown, the postal employees were among the first exposed, both those sorting and those distributing the mail. Whole facilities had to be closed down when COVID-19 outbreaks occurred or even just one COVID-19 case had been found at a facility, leading to operational disruptions. The mail decline and the huge jump in packets and parcels volumes also had a significant impact on the posts and the way they operate.
How did the COVID-19 crisis affect consumer habits?
The crisis has been going on for quite a while now, and it may continue for an extended period. It has led to a change in consumer behaviour. Customers have become more comfortable with online shopping. These new habits are not going to go away; what was a temporary adjustment has become a more long-term behavioural shift in many aspects and areas. Meanwhile, letter mail volumes have decreased significantly, and there is an expectation that much of that decline will not return.
How did the sudden e-commerce increase impact posts?
Traditionally, postal operations would look at the number of items, but as the postal business transforms, it will more sense to look at the work content. Letter mail volumes have declined, while packets have increased, but you cannot just replace one by the other. The space and technology are very different. Packets can be much more work intensive. This causes huge operational changes. The expectations for parcels and packets also diverge from mail. Consumers expect tracking for the items they order online. We also cannot forget that the e-commerce market is very competitive, with lower margins per item as compared to traditional mail. Increased packet and parcel revenues do not necessarily produce the same net income as the mail revenue that was lost.
Which strategies could posts implement to adapt their business models to these new realities?
The most critical priority for posts is to realise that the market is driven by consumer expectations. Major e-retailers are expanding their own delivery networks – with own vehicle fleets, warehouses and local fulfilment centres – to be able to provide speedy and reliable delivery. Posts need to live up to those consumer expectations if they want to compete with e-retailers and other market players. Posts could gain competitivity by proposing cheaper tariffs against longer transit times, but the question is how much longer consumers are willing to wait for their parcel and for which price. Again, the problem is that lower prices may produce revenue but the tighter margins will limit the impact upon income. The bottom line is the ultimate financial measure.
How can IPC help them in this rapidly changing context?
The postal sector is changing quickly and as posts move into the e-commerce marketplace, they are faced with increasingly rapid change. The market has reacted very quickly to the COVID-19 crisis and posts have to react quickly too. Market intelligence plays an important role in that. IPC can help posts to make informed decisions thanks to its solid range of market intelligence and research. IPC allows posts to keep an eye on what the current trends and expectations are, as well as looking forward to future opportunities and challenges. The researched performed by IPC staff is of very high quality and is done with knowledge of the postal industry.
This inhouse research is a driving force behind IPC’s array of services, which make interaction with the consumer easier. Consumers want the same experience when buying internationally as domestically. To achieve this, timely transmission of data is key. New solutions such as the Postal Delivered Duties Paid solution can truly make a difference in the cross-border e-commerce experience.
What impact has the COVID-19 crisis on the sustainability agenda?
Th climate change debate has maybe slipped from the world’s attention due to the pandemic but the issue has not gone. We saw a huge impact on CO2 emissions, as countries went into lockdown and road traffic imploded. Posts individually have continued to set an example and considerably reduced their footprint over the past ten years, which has not changed over the past year. The focus will continue to be about reducing carbon emissions through the type of energy used to power the postal network, as well as alternative fuels for the vehicles used to transport and deliver mail. Beyond carbon reduction we need to continue to focus upon the recycling and reuse of the items used in the postal network.
