Tipping points for the global postal sector

The postal sector is currently facing several phenomena, or “tipping points”, having an impact on the way it operates today and in future. These include:

1.     Shifting business models
Postal operators’ business models are changing, evolving from mail-centered activities to non-mail activities. This is reflected in the changing composition of postal income. The bulk of postal revenue used to be generated by the letter-post product. This is changing, with postal revenues increasingly coming from other sources such as logistics and financial services. For instance, since 2013, less than 50 per cent of the revenues of the 20 largest Posts in the world were being generated by mail.

2.     Shifts in the composition of postal traffic
While letter-post volumes are going down, parcels are steadily going up. With the development of e-commerce, the items being processed through the postal network are clearly moving from documents to merchandise. For instance, the international tonnage transported through the global postal network has increased by more than 48 per cent over the last three years, representing a more than 14-percent compounded, annual growth rate between 2011 and 2014).

3.     A shift in the postal network architecture
The traditional post office and delivery systems are being transformed or challenged by new network architectures and new delivery models. For instance, several big e-retailers are currently developing alternative same-day delivery networks.

4.     A shift in consumption models
C
onsumers have been increasingly moving online and transforming their consumption habits from a fixed off-line location to a 24-hour connected mobile platform. Moreover, their ability to produce and increasingly print their own goods in 3D will turn them into “prosumers”.

5.     A shift towards a new financial system
The recent global economic and financial crisis combined with the evolution of technology is increasingly confronting the traditional financial system to the emergence of alternative payment, savings and lending systems. Traditional banking may have started an irreversible decline and is currently challenged with the development of alternative financial systems by Internet platforms (e.g. peer-to-peer lending) and new players (e.g. Apple and mobile payments, M-Pesa in Kenya) as well as digital currencies (bitcoin). Postal operators that offer financial services must position themselves in this new financial order.

6.     Emerging and developing countries increasingly produce more output and trade
While this trend was not found for postal exchanges over the last three decades, the share of total international postal traffic exclusively exchanged between industrialized countries is declining, from 46.3 percent in 2011 to 33.3 percent in 2014 (as measured by tonnage transported through the UPU’s system). However, general economic convergence between industrialized countries and developing countries continues to seem faster than postal convergence.

7.     A shift towards a more collaborative and circular economy
People are increasingly creating new peer-to-peer platforms to give and share instead of marketing and selling products or services. A circular economy is being developed in response to environmental and sustainability concerns. Young generations today prefer to share than own. The development of inequalities also stimulates people to find new ways of achieving better standards of living. Companies have also understood the increasing value of cooperation versus competition, resulting in what we now commonly call “coopetition”.

8.     A data revolution
Tomorrow’s Internet of Things will give rise to unprecedented amounts of data through connected sensors and machines, making today’s big data small by comparison. Artificial intelligence fed by smart algorithms will support human judgment. Logistics will be tremendously impacted by the data revolution and the Internet of Things. Security and privacy concerns will be extensively debated in this new revolutionary framework. Well-managed, big data could be the new green energy by the people for the people.

9.     A demographic shift of power to digital natives
While several generations are still thinking “analogically”, new generations are “digital” and have a different sense of what constitutes the value of any service or product.

10.  A threatened environmental and resource balance
Sustainability is no more a debate, but a development requirement in the current state of affairs. The logistics solutions behind trade and human activities are mostly ineffective and inefficient given the current fragmentation between different players and the lack of synchronization of their activities. The logistics Internet is still to be created in response to the 21st century sustainability challenges. Can the Universal Postal Union be transformed into a Universal Logistics Union?