Home Business News Controversial UN report claims many international postal services have failed to recover from Covid

Controversial UN report claims many international postal services have failed to recover from Covid

by LLB Reporter
26th Oct 23 12:06 pm

The United Nations’ Universal Postal Union (UPU) agency, which coordinates international postal policies, has issued a controversial new report stating that the letters market will collapse to just 29% of all postal revenues within two years and that the international letters and express parcels market is still suffering from the pandemic slump. It also says the UK’s postal system does not rank among the world’s top five countries.

The international delivery expert ParcelHero says the report, “The State of the Postal Sector 2023”, while a fascinating snapshot of the global traditional mail infrastructure, contains some surprising results. Most dramatically, it predicts that letter revenues will be far eclipsed by parcel revenues by 2035. Parcel services were worth just 11% of the entire postal market in 2005, but by 2021 parcels accounted for 32% of all mail revenues and the UPU says they will be worth almost 36% by 2025.

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘There’s certainly food for thought in the UPU’s new report into the traditional global postal market.

‘Many of its findings relate to what it terms “Designated Operators” – the official provider of traditional postal services – such as the Swiss Post in Switzerland and the United States Postal Service (USPS) in America. The report presents a particularly fascinating assessment of the traditional international postal industry. Some of its findings are not encouraging. Overall results between 2012 and 2021 reveal that the total volume of international letters for 2021, estimated at 1.8 billion items, was less than half the 2012 figure. Astonishingly, that represents less than 1% of the total letter-post volume.

‘The report is also discouraging when looking at traditional postal revenues. The UPU’s analysis for advanced economies reveals that, in 2022, real postal revenue, adjusted for purchasing power parity and inflation, plummeted by an estimated -8.4%. It says this decline was fuelled by “a confluence of factors”. These include a partial reversion to pre-pandemic online shopping habits and escalating inflation rates, exacerbated by the energy crisis stemming from the Ukrainian–Russian conflict.

‘Express mail services for traditional postal operators also tumbled. Express mail’s total tonnage experienced a decline of -29.3% between Q2 2019 and Q2 2023, while the total number of shipments plummeted by -49.3%. The UPU says: “The dismal performance of the express mail services category might point towards businesses and consumers opting for alternatives that may be perceived as faster, more reliable and cost-effective in the volatile environment brought about by the pandemic.”

‘That finding is reflected in its general conclusion that traditional parcel services face stiff competition from other market players, including specialised courier companies and third-party logistics providers.

‘However, the report identified one area of strong growth for traditional postal operators. The number of international parcel items sent using postal services experienced a 19.9% increase in 2022 over 2021.

‘Looking at the rest of the report, it’s a little surprising that the UK doesn’t rank among the top 5 countries in terms of postal excellence. Countries were measured against four key markers: reliability, reach, relevance (whether it’s meeting potential demand) and resilience. Switzerland tops the bill with a maximum score of 100 for an unparalleled seventh consecutive year. It’s followed by Austria, Germany, Japan and France. Globally, postal operators in continental Africa came at the bottom of the table, with their reliability score falling back from last year’s 6.7 to 4.8 this year.

‘The report also claims that the impact mail services have on the world’s economy is being underestimated. It estimates that the postal infrastructure contributes an average of 6.9% of a country’s GDP. This figure dramatically eclipses the traditionally quoted direct contributions of postal services to GDP, which range from 0.5% to 1.0%. That’s a calculation we find convincing.

‘While largely concentrating on traditional postal operators, the UPU’s latest report is a useful pointer to how the global post and parcel market is developing. In some areas, traditional postal services such as domestic letters still lead the field. However, in other areas, such as parcels to competitive international destinations, alternative services such as specialist couriers now dominate.’

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