On my radar: Post Office must adapt or die

2014-11-10 06:45

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There seem to be two distinct reactions to the postal strike, which is dragging into its third month.

The first is a cynical one from those who no longer rely on non-digital forms of communication and see postal services as obsolete “snail mail”. It goes along the lines of: “The postal service has always been so bad that I didn’t notice they were on strike.” Ouch!

The other sentiment comes from people who still rely on the postal service, not for letters, but for parcels and packages (I’m one of the crowd), and the sentiment is that of exasperation, which was summed up in a social-media comment: “What’s dragged on longer, the Middle East crisis or our postal strike?”

Much like the public sentiment towards Eskom and e-tolls, the public has had enough of the SA Post Office (Sapo) services and they are taking their business elsewhere, like couriers or independent service providers like PostNet.

The deadlock in negotiations between the Post Office and the Communication Workers’ Union (CWU) hinges on two things: casual workers insisting on permanent contracts with benefits – which the Post Office cannot afford – and “gross inefficiency” by management, which has resulted in a recorded net loss of more than R361?million in the past financial year.

The Post Office strike is entering its third month as postal workers across South Africa continue with their wage demands. There seems to be no end to the mail delivery strike as thousands of undelivered items are added daily to the increasing piles in Post Office depots. Picture: Emile Hendricks

It’s a catch-22 nightmare. Martie Gilchrist, the communications manager of Sapo in the Western Cape, revealed in an interview with News24 last week that the last time the Post Office had made a profit was in 2005, and it’s been downhill ever since.

At the end of September, the minister of telecommunications and postal services, Siyabonga Cwele, told Parliament the overdraft on the Post Office’s current account had jumped by R90?million since June to R323?million in August.

Combine that with the revelations of R2.1?billion in irregular expenditure in the past financial year and the future looks bleak.

In many ways it’s déjà vu. The last postal strike cost the Post Office R55?million. This one is costing R75?million, and counting.

CWU general secretary Aubrey Tshabalala said the Post Office needed to be preserved to provide vital services, especially for poor and rural communities. He’s correct, but does not factor in the global trend of a steady year- on-year 5% decrease in conventional mail.

The Royal Mail services in the UK are facing the same challenges, not ongoing strikes, but rather a battle for relevance in a digital era. Presumably this is a challenge for all postal services worldwide.

The needs in urban areas are focusing on parcel delivery as consumers increasingly convert to online shopping.

For any e-tailer, the competitive edge falls directly on their ability to deliver as fast as possible. The Post Office’s haphazard offering already puts it at a competitive disadvantage for this growing business opportunity.

While there may still be a need for rural/outlying areas to receive traditional post, the cost of having a person deliver, on foot, letters to far-flung rural towns and villages becomes exponential.

The further you move away from an urban mail centre, the less cost-effective it becomes to continue a traditional mail service: again, this is an uncomfortable catch-22.

But the pressure does not end there. In the UK, Amazon is already embarking on a new same-day delivery service called Pass My Parcel. It uses newsagents and convenience stores as collection hubs instead of using Royal Mail’s services.

This is the fast-growing “click and collect” model that is emerging in e-commerce.

In 2008, Amazon blacklisted the postal services due to parcel theft, but later resumed using their services. After a three-month strike, I doubt very much that Amazon, or any other online retailers, will have any faith left in the Post Office.

In Singapore, SingPost, the national postal operator, is already aligning itself with a digital future and embarking on transforming its services.

Last month, it opened its eighth concept Post Office, which offers a 3-D printing service that prints out affordable prototypes and customised objects like gifts, accessories and figurines. Holland was the first country to convert its flagging post offices into 3-D printing hubs.

I can’t help feeling that the Post Office is fiddling while Rome burns. Its attempt to diversify has been to offer services like renewing car licences (only in five provinces) and paying municipal bills online, which is hardly going to propel it into a digital future that looks increasingly tied to e-commerce.

As for the CWU, I’d rather it fights for specialist IT training for its members, like 3-D printing, as this is clearly where post office services in other parts of the world are heading.

From a trendspotter’s point of view, this strike is playing out like a farce – in slow motion.

The union is making demands on empty coffers while the workers are fighting for jobs in a doomed service industry. No matter which way you look at the situation, it is going to end in tears.

It’s a bit like fighting for jobs and wage increases in a factory that still manufactures fax machines.

Chang is the founder of Flux Trends. For more trends, visit www.fluxtrends.com

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