The COVID-19 pandemic accelerated long-term postal trends away from mail and toward parcels and logistics. This led to higher-than-expected operating revenues, specifically in developed countries, and increased operating expenditures, according to the UPU’s latest Postal Economic Outlook report.
“The transformation is really shifting at a faster speed than before,” said Mauro Boffa, economist in the UPU’s Research & Strategy Programme. “We expect that to continue.”Closed borders, disrupted economic activity, labor shortages and cumbersome customs procedures disrupted the global supply chain, pushed trade costs higher and reduced transport capacity.
Airlines offered 50% fewer seats, more postal items were stranded, and international mail saw monthly tonnage of between -16% and -33% following the onset of the pandemic.
The World Bank indicates the global economy in 2021 will likely grow 5.6%, compared with a growth rate of -3.5% estimated for 2020.
“There’s still some considerable uncertainty,” Boffa said.
Letter post volumes plunged by 13.6% in 2020 compared with the five-year period from 2015-2020, which saw a 4.6% decline. International mail dropped 27.6% in 2020 compared with the five-year trend of -4.3%.
Domestic parcels grew by 17.7%, compared with the five-year trend of 15.2% growth.
This has had a mixed impact on operating revenues.
For the first time, demand for parcel post compensated for the loss of letter post, Boffa said. Operating revenues surpassed the five-year trend of 3.6% to reach growth of 6.5%, or SDR 292 billion.
On average in 2020, operators received almost as much revenue from parcels and logistics services (30.2%) as they did from letters (32.7%).
Operating expenditures grew by 7.9% compared with 2019 due to pandemic costs, including protective equipment and staff illness. Additionally, parcels are costlier to deliver.
“The picture is nuanced … raising questions about the ability of postal operators to grow sustainably,” Boffa said.
Revenue growth is mainly linked to operators in 14 of the most developed countries, which had already been modernizing for years, Boffa explained, with a huge part of the world lagging far behind.
Competition in the parcels business is strong. Designated operators have 32% market share based on a sample of 86 operators. However, half have less than 25%.
Staffing decreased by 3.9% and post office locations declined by 1.5%, highlighting a continuing problem, particularly in the developing world, Boffa said.
Still, operators adapted faster to supply-chain disruptions than the rest of the economy by developing flexible solutions.
Learn more about the latest postal statistics in the UPU’s 2021 Postal Economic Outlook, available here.