UPU reports pandemic’s economic impact on postal operators

By Paul Albright

Postal operations throughout the world were slammed over the past two pandemic years by a devastating combination of closed borders, labor shortages, reduced transport capacity, customs impediments and disruptions in the global supply chain.

Whether that will turn around in 2022 may depend on how quickly and effectively postal operators develop flexible solutions to keep the mail flowing, according to an economist at the Universal Postal Union.

Mauro Boffa, an economist with the UPU’s research and strategy program, says that while the pandemic hastened a sharp decline in letter post, especially in international mail, parcel post grew more than expected because of the shift to e-commerce.

Letter post volumes saw a 4.6 percent decline worldwide from 2015 through 2019 but took a sharp dip of 13.6 percent in 2020, Boffa said in an article in the winter edition of UPU’s magazine, Union Postale.

At the same time, there was a strong upward trend in shipping of domestic parcels. gaining 15.2 percent from 2015 through 2019 and 17.7 percent in 2020.

This led to income from parcel post compensating for the loss of revenue from letter post. To illustrate, operating income in 2020 was 32.7 percent from letter post and 30.2 percent from parcel and logistics services compared to 40.8 percent and 20 percent in 2015.

While revenue increased, operating costs also rose 7.9 percent in 2020 compared to 2019. This was attributed to costs in combating the COVID-19 pandemic such as disinfection protocols, protective equipment and staff who were ill, and to the fact that parcels are bulkier and more costly to deliver.

Staff often accounts for 70 percent of costs, according to Boffa.

He said, “Revenues grew at a surprisingly high rate, but expenditure went up even faster, raising questions about the ability of postal operators to grow sustainably.”

There were nuances in the positive revenue growth as well. Substantial growth was in 14 of the most developed countries that have been modernizing their systems.

“There is a huge part of the world that is lagging far behind,” Boffa said. “They didn’t modernize before the pandemic, and they’re not modernizing yet fast enough.”

In addition to stiff competition from parcel delivery companies, there was a 3.9 percent decline in postal staff and a 1.5 percent decline in the number of post offices.

This decline highlights the problem of access to postal services for populations in developing countries in particular. For example, the UPU article stated that in Africa 43.6 percent of the population is estimated to be without postal services.

While the UPU economist expects a continued shift away from traditional postal services, some operators adjusted more quickly to disrupted supply chains than others in the economy, proving that more adaptable solutions will allow the mail to keep flowing.

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