National postal operators have been tracking a decline in mail activity for years. This declining market share may have started with the rise of email, but it has taken a precipitous downward trend during the pandemic. When e-commerce activity increased during the COVID-19 era, integrators like UPS, FedEx, and DHL were well positioned to handle the ramp-up in parcel activity, taking even more work from national postal operators. To counter this lack of activity, postal operators have increased rates, affecting customer happiness. 

“Parcel and postal markets have clearly reached the point at which incumbents have no choice but to transform their operations and networks,” McKinsey researchers found in 2019 after surveying the international postal market. “At the same time, these incumbents are also at the start of an exciting transformation journey – one that can help them win the B2C e-commerce race.”

The fact that universal postal tonnage is more than 40 percent lower than before the pandemic is unavoidable. Due to shifts in consumer behavior, that tonnage is likely never coming back. The United Nations’ Universal Postal Union (UPU) predicts letter services will account for only 29 percent of global postal revenue by 2025, down from more than 50 percent since 2005. Many postal operators around the globe are still confronting lingering staffing and operational challenges nearly four years after the onset of the COVID-19 pandemic, and the predictability of deliveries has still not come back to pre-pandemic levels. While some postal operators bounced back from the pandemic to a relatively healthy new normal, there are some areas of the world where the post is still struggling.

For instance, the Australia Post called earlier this year for the government to remove the legal requirement for everyday delivery due to a 66 percent decline in letter volumes since 2008. This led to a $189 million loss in the letter portion of the postal service in the first half of 2023.

Market share for national postal operators is eroding at every corner. Some postal operators have created new revenue streams by partnering with parcel consolidators to help their customers leverage longer lead times and bulk shipping for savings. This arrangement is a win-win for postal operators and their customers.

Though the major global integrators saw revenues decline this year, UPS, FedEx, and DHL still dominate the marketplace. Landmark Global and Ascendia, while smaller than the Big 3, have successfully built a small parcel business of their own.  

According to BoxC’s CEO, Chad Schofield “e-commerce has continued to support integrator revenues, but national postal operators who strategically develop e-commerce parcel services have a chance to take back market share from this competition.” 

“By partnering with a technology provider that focuses on international e-commerce logistics, postal operators can diversify their revenue streams, create a focused small-package shipping operation and increase customer happiness”, added Schofield. 

These third parties can also assist national postal operators looking to win back e-commerce market share, aiding their quest by increasing their use of technology. By arming national postal operators with data – lead times, track and trace, and Customs documentation, for starters – these third-party agencies can equip national postal operators for the new normal. The UPU has found that “information about delivery is just as important as the actual delivery. The seller needs to have access to delivery information through a user-friendly, standardized, and widely available IT structure.”  

Third parties can also assist postal operators by creating opportunities to share in e-commerce revenues. Local operators are in the best position for last-mile shipping success, so creating lasting collaborations with top international shipping services is one way to diversify revenue streams without trying to directly wrestle business away from entrenched integrators like UPS and FedEx.    

National postal operators no longer can rely on letter service revenue and must develop an aggressive plan to win e-commerce small parcel activity from private competitors. When competing with entrenched competitors, there’s strength in numbers. That’s why national postal operators have historically utilized Universal Postal Union networks to enhance international cooperation. These networks, though, only served postal operators well in the old way of doing business. In this new normal of postal services, dictated by e-commerce parcel activity, UPU networks have been slow and unreliable.  

Challenges for postal operators are around every corner. Government regulations regarding delivery dues can have a wide-ranging impact on not only international postal pricing but also the popularity of certain shipment lanes. Simply put, no delivery dues or Customs regulation decision is made in a vacuum. Altering the fees in one area can significantly affect postal operators in adjacent regions. Postal operators must keep track of data regarding not only regulatory changes that directly impact them but also need to understand the broader international postal operator system and how regulatory and fee shifts in one part of the world will shift their business.

Members of the Universal Postal Union provide a needed service that stretches into remote sections of the world, but some see the UPU as a barrier to innovation. While the UPU claims postal operators need to be utilized more, a lack of funding and other support means that the innovation needed to fully use postal operations is a long way off. To create a better global impact and tap into the growing e-commerce markets in lesser-developed parts of the world, postal operators should embrace e-commerce shipping like the large integrators. To get there, partner with a trusted technology provider with the experience to create new revenue streams by capitalizing on the e-commerce trend.

It is not too late for national postal operators to adopt a new strategy. Postal operations are a significant economic driver; the UPU recently found that the complete absence of a national postal service would bring about a nearly 7 percent hit to GDP. But economic importance is not enough. To thrive, postal services need to upgrade their methods and think beyond letter delivery. Partnering with a logistics management platform provider that enables clients to control all aspects of international e-commerce logistics is the first step. Postal services are still relevant today, and they will be needed tomorrow, but to tap into the full potential of e-commerce delivery, they’ll need a little help.  

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