But there'll always be rEal-Mail!

When 22 nations combined forces to create the Universal Postal Union (UPU) on 9 October 1874, they launched the world's largest physical distribution network. Despite the enormous technological progress since that time, the global postal service remains to this day the largest and densest communication network in the world. Today, more than 6.2 million dedicated postal employees sort and deliver an annual total of more than 400 billion letters, printed matter and parcels to every address in the world, while 700,000 post offices serve customers around the globe. So what has changed?

The environment in which the postal service operates today has changed dramatically, and all indications are that the pace of this evolution will continue to accelerate into the next millennium. Postal services are not only expected to keep track with developments in the technological field, but also with rapid economic and social changes. Postal customers are demanding much more than in the past. And if they do not receive the level of service they expect, customers will simply shift their business to other competitors in the physical distribution sector who are eager to expand their market share.

Greater competitiveness

The effects of fierce competition, higher customer demands and the advent of new communications technologies have convinced many postal services that they have to modify their operational and financial strategies in order to remain in the business. The UPU's Seoul Postal Strategy sharpened this focus by calling for postal services to operate on a more commercial basis. This means that postal corporate goals need to shift from merely providing a public service at a fixed price for everyone, to providing this service as one of many commercial players in a rapidly evolving and increasingly competitive marketplace.

Competition also no longer respects national borders. Globalization is becoming a central feature of all business. With falling trade barriers, expanding liberalization of markets and dramatic improvements in communications infrastructure, businesses not only face greater competition from abroad within their national borders, but are also seeking new opportunities in international markets. This effect is also felt within the postal service. Postal administrations will in future find it increasingly difficult to hide behind closed domestic markets, protected by a rigid postal monopoly.

Growth in letter volumes predicted

The outlook for growth in letter volumes is good. A recent study, Post 2005, undertaken by the UPU predicts an average increase of 2.5 per cent per year in letter volumes worldwide between now and 2005. This represents steady, if not spectacular growth. The growth outlook for international mail is even more optimistic, ranging from 3.4 to 5.2 per cent, depending on the region of the world.

The postal sector should, however, not fool itself into complacency. As part of the incredible explosion of communications that they are experiencing today, the fax, electronic mail, interactive communication and other forms of the new electronic commerce are growing at a much faster pace than physical mail. In 1995, physical mail accounted for nearly 20 per cent of the world communications market, fax and telephone covered 75 per cent, and electronic mail just over 5 per cent. It is expected that the share of telephone and fax will change little by 2005, but electronic mail is expected to double. The share of physical mail will fall to about 15 per cent of the total market. So even if postal services are showing real growth in physical mail volumes, they are actually losing overall market share.

Modern communication generates more mail. It is important, however, to point out that in most countries the whole population has access to the postal service. This is not yet the case for telephone and fax. Electronic mail is still very limited in many regions of the world.

Over the short term, the greatest substitution effect - that is the move from physical mail to other forms of communication - is expected to take place in the business to business mail segment in high-income countries, where more than 50 per cent of businesses are expected to use electronic mail by the year 2005. But the fact that many modern means of communication, such as the fax or electronic mail, actually generate physical mail should be seen as a positive sign for the postal world.

Technology - a challenge

Technological developments should therefore not be seen as a threat to core postal services, but rather as a challenge, since they create new opportunities for the postal sector to increase its share in the communications market. The effective utilization of technology should also result in an overall improvement in the quality of postal services and consequently increase global mail volumes. The ability of postal services to adopt new technologies in the most effective way will in the end determine their future development and competitiveness.

The postal industry is also exploring new areas not traditionally regarded as its core business of delivering mail, offering customers more value-added services. Commercial electronic products and services hold great potential and many postal services have already positioned themselves well in their respective markets, locally and internationally. This will enable them to respond effectively to the changing needs of their customers.

Adapt or die!

One thing is certain: all current providers of postal services, whether or not they enjoy monopoly protection, are facing a future environment quite different from the current situation, especially in the light of the information revolution. The challenge for providers of postal services is therefore to adapt quickly, introduce new services and products, and ensure speed and quality in order to retain their customers and expand their market share.

The human value of mail should, however, never be forgotten. A delicate balance is therefore needed between greater commercial freedom and profitability, and serving broader social issues. The postal service should always be inclusive, available to and affordable for everyone. This is, after all, one of the basic rights of every citizen of the world and what a true universal service is about.