Blasé Capital POST GHOST

In Denmark, by December 30, the state-owned mail service, PostNord, “will end its collection and delivery of letters entirely,” after 400 years. It will be the first European country to do so, and this was inevitable after a new law ended PostNord’s duty to make the service accessible to everyone at affordable prices. Another one removed the mail’s exemption from value-added tax that made it extremely expensive. Over the past 25 years, the number of letters dropped by 90 per cent in the country. Although other nations, including India, still have a vibrant mail service for traditional letters, their fate seems sealed, as they undergo restructuring, or have done so, to deal with digitised communication. However, there are a few trends that are discernible, and seem inevitable. If national and private postal services do not embrace requisite changes to combat them, their fate will mirror that of PostNord.

First, since traditional mail is dying, or dead, depending on the state of digitisation in a nation, postal services need to hug mail+ strategy. This includes a focus on faster, transparent, and trackable services like courier, and speed post. In India, although the iconic red, cylindrical red post boxes with spherical heads have not vanished, their numbers have dwindled. This year, the state-owned postal service stopped Registered Post after 50 years. More than traditional letters, these posts marked nostalgic, happy, and momentous moments in the lives of the past several generations. For these envelopes delivered news of employment, promotions, crucial events, money-related services, and others. Almost every family, which has members over 20, has received at least one registered post. In some cases, if the information was not conveyed through this means, it was neither legal, official, nor enforceable. Registered post was akin to an executive, or a judicial stamp, which was equivalent to certainty.

Many post offices have transformed themselves to fit into the virtual, connected world. “The profitable firm (in Italy) provides banking and insurance services as well as delivering letters and parcels. Postepay, its prepaid debit cards, introduced in 2003, are a great success with around 7.2 million in use,” states an article in a leading global weekly. A few weeks ago, Communications Minister Jyotiraditya Scindia told the Lok Sabha, “We are in the process of bringing a full business process reengineering exercise for (state-owned) India Post by which our delivery will become much more prompt, service oriented and digital oriented for the citizens.” He added that the postal department will have the best-in-class automation, which will make it the top logistics carrier in the world. In the recent past, India Post has begun to offer several non-mail services, including combining registered post with courier services, and planning to tie up with the stock exchanges to deliver investor-related information.

Global evidence shows that while state-owned posts languish, the private ones are in better shape. Take the example of Germany’s Deutsche Post, the state-owned service which was privatised in 1995, although the largest shareholder is a state-owned development bank. It “reinvented itself as a logistics company that also provides freight and supply-chain management services (warehouses and distribution). Britain’s Royal Mail, though partly privatised… has not done as well. In August (this year) it reported an operating profit for the first time in three years.” In this context, the future of India Post seems a bit wobbly. It can ape the private sector, and it has the assets to capture market share in logistics. But constant interference from the executive and legislative may slow down its transformation. Hopefully, it will not follow the destiny of the US Postal Service, which accounts for 37 per cent of global postal revenue but reported a $9 billion loss in November, with the cumulative loss at more than $100 billion. The US President Donald Trump has dubbed the expansive service as a ‘joke’, and threatened to fold its over 6,00,000 employees into another official agency, the Department of Commerce.

However, letters in the old form are not dead. Until recently, India, and another emerging market, Brazil, witnessed larger and growing volumes because of the vibrant and rising middle class. But the pandemic broke the momentum, or the letters’ back. E-commerce, couriers, and delivery of packages took off. Between 2022 and 2027, the number of shipped packages will increase by nearly 100 billion to more than 250 billion. More importantly, the decline in letters comes quite fast. Although it took 25 years in Denmark for a 90 per cent drop, the decline was 30 per cent in a single year in 2024. India Post may witness a similar trend, and suddenly find itself in a spot as the volumes of traditional letters dip, and simply vanish. Hence, it needs to move fast, and change faster. At present, it seeks private partnerships to enhance and upgrade services.

But privatisation may hold the final solution before the final letter (metaphorically) is sealed, stamped, and delivered. Here is Scindia’s prescription: “Live, breathe, and sleep parcels,” generate an annual revenue of INR25,000 crore from parcels in the next five years, achieve 80 per cent revenue contribution from the private sector, and develop a few post offices as next-generation ones to “set new benchmarks in accessibility, design, and service excellence.”