YOU’VE GOT MAIL! THE CURRENT STATE OF THE POSTAL SECTOR

Economic, demographic and technological trends are driving rapid change in the postal industry. It's the same trends that we see in almost every other industry - digitalization, consumer demand for a more responsible business (including social awareness and green & circular economy), and technical, data-driven innovation.

While change was already on its way to a decades old industry, Covid-19 pushed the Postal Services sector forward more rapidly than any event in recent history. Gone is the time of paper-based manual processes, letterboxes, and national post offices with an operational perspective; the industry now calls for customer-focused services, real-time tracking, and personalized mobility.

Fewer letters and more parcels in postal networks is putting pressure on the industry, challenging current business models. In 2000, the Postal Service delivered roughly 200 billionpieces of mail, yet in 2019 it delivered less than 150 billion pieces, a 31.4% decline. This drop off in mail deliveries is costing the Postal Service greatly. Yet, ​​shipping and packaging services are up to nearly 6.2 billion pieces in 2019. Growth and profitability must come from new revenue streams, such as investment in logistics, banking, and delivery services. Amazon, eBay and Alibaba are trendsetters for the industry and those companies, whose success is indisputable, have the customer in focus constantly. New customers' expectations, together with global connectivity, is impacting the entire logistical chain.

The Internet has changed the game. Disconnected, decentralized, company-owned dedicated IT systems, local transportation, and local cultures were all replaced by a connected, cloud-based, globally transported and process-based global postal network, geared up to meet the future. Yet 2020 had different plans for the Postal Service. A labor shortage, the supply chain crisis and increased reliance on online shopping during the pandemic meant more purchases and returns than ever - with merchandise returns totalling $428 billionin 2020.

Digital platforms are being built to meet up with today's constantly changing needs, and the concept of data science, or big data, gives more and more insights to where the challenges lie. Technology is utilized to transform the back end for the postal business, which is also challenged by new consumer behaviors - something every sector has to get used to now that Covid has produced ever-evolving consumer demands. e-Commerce is booming, boosting the parcel business, with packages becoming smaller, lighter, and traveling shorter distances. But the postal industry needs to digitize further, enabling real-time analysis and the development of more holistic applications, which can serve customers in a more personalized way.

The industry has always been challenged by movement of goods from a transportation hub to the final destination - the capillary flow in the logistical chain. Today, these challenges are magnified by the labor shortage. We see robots and drones delivering to remote places, parcel motels are being introduced, and geotags identifying a real-world location based on mobile devices are a reality, but when can we see them put into action?

How willing is the postal industry to adopt and change? Well, with challenged business models and global trends putting pressure on the players, more and more digitization and global connectivity, we can already now see some collaborations, which is a sign of changing times.