Going postal: little used and mistrusted, Mexico's state postal system works overtime to prove itself.

Carlos Rodarte sends postcards to himself from almost every place he travels. Such a hobby seems strange, except Rodarte is the head of regional operations for Mexican postal service Sepomex. He's testing his own company's efficiency--and trying to change the image of his long-neglected state-run employer. "What better proof," he says, pulling dozens of postcards out of his desk.

Rodarte and his colleagues have a lot to prove. The Mexican postal system handles 700 million letters a year, which sounds like a lot but adds up to just seven pieces per inhabitant. Comparisons make it clear that Mexico's postal system is under-used by a skeptical public. Brazilians, for example, send out 8 billion mailings a year, which translates into 46 letters per inhabitant. Plus, Sepomex officials are also working in a statistics vacuum: It's difficult to gauge to what degree Mexican mail volumes have deteriorated over the years since past administrations inflated numbers. Despite low volumes, Sepomex operates at a loss.

According to data collected by Mexican pollster Parametria, a shocking 29% of Mexicans haven't even heard of Sepomex. Of those familiar with the mail service, 32% consider it to be slow and almost the same percentage prefer to use private messengers to hand-deliver documents, a common practice in Latin American cities. Given such grim realities, the government paid for a publicity campaign last year to encourage consumers to use the postal system.

"We have a perception problem," says Rodarte. But things are changing fast, he says. Mexico's Transport and Communications Ministry nearly doubled capital outlays in 2005 to US$17.8 million. The additional funds will go toward new vehicles, renovations at the country's dilapidated post offices and other infrastructure improvements. Despite the odds, Sepomex officials are determined to recover business and make Sepomex more efficient. "I work 12 hours a day; I don't even go out to lunch," says Rodarte. "We are not stuck in prehistoric times."

The heart of Mexico's postal service is Pantaco, the dispatch center that Bodarte oversees in an industrial area of Mexico City, which is already in tiptop shape. Most of the country's mail passes at some point through Pantaco. Two hundred tons of letters and packages leave here each day by truck. Pantaco's square, concrete design pays homage to the austerity of 1960s architecture, while its new, $1 million roof gives it the feel of an airplane hangar. Some areas of the depot are old-fashioned--international parcels arriving by land, for example, are still inspected by hand--but the dispatch center also boasts cutting-edge technology like security cameras, barcode scanners, and machines that can read and sort 70 letters per minute.

Bulk mail accounts for 90% of the correspondence that Sepomex handles, so Rodarte and his colleagues have focused their attention on retaining and attracting corporate customers. Many banks and other large volume users switched to private messenger services in the 1980s, after alternative services sprang up to compete with the national post. In recent months, though, Sepomex has convinced companies like HSBC Mexico to give the postal service another shot. "It's convenient for us to have different suppliers," says Boy Caple, head of public affairs for the U.K. bank. So far, Caple says, Sepomex is meeting expectations.

Mexican phone giant Telmex, which sends about 13 million telephone bills through the mail each month, is also pleased. Telmex has signed several commercial agreements in recent years to pass more business to Sepomex and reduce its reliance on private messenger services; today it's the public system's biggest client. Victor Cortes, who oversees Telmex mail, says he's noticed significant improvements in Sepomex's service, especially during the last two years. "Before, a lot of correspondence didn't even arrive," Cortes says.

Value added. By law, all mail weighing in below a kilogram is supposed to be delivered by Sepomex, and postal service provision is reserved by the state under Mexico's Constitution. The rules, though, are loosely enforced and there are many loopholes. Companies offering value-added services--like proof of delivery--are legal and even recognized by Mexico's Transport and Communications Ministry. "Each service offers something different," says Miguel Angel Rivera, chief executive of messenger and package service GSMexpress, which handles big accounts like ticket-sales company Ticketmaster.

According to Jorge Aldana, head of Sepomex's international affairs division, the Mexican postal service started heading downhill during the country's 1982 economic crisis. Things worsened two years later when a massive earthquake destroyed many postal facilities in Mexico City. Sepomex lacked manpower, so postal deliverymen stopped picking up mail, and many people soon started treating mailboxes as trash bins. Then people simply got used to living without the mail. "Confidence is lost in a second, and won in 20 years," says Aldana.

Yet people still needed to send letters. Private postal services rushed in to fill the gap, today providing 60,000 jobs and accounting for 1.2% of Mexico's $650 billion annual gross domestic product, according to Mexico's Messenger and Packaging Association. Sepomex, meanwhile, employs 19,500, down from 28,000 two decades ago. Just over 9,000 Sepomex employees are mailmen, each of whom handle roughly 500 units a day and earn a little more than $3,500 a year.

The private sector, meanwhile, has invested heavily. Companies like DHL--a unit of Germany's Deutsche Post--plans to spend $150 million to expand in the country over five years. Sepomex, on the other hand, competes with other government entities for federal funds and would be lucky to spend half of what DHL has committed. "The mail is really a low priority when there are people out there without water," says Aldana.

With few letters in hand and more distance to travel on delivery routes, morale is understandably low. "It's not what it used to be," says Armando Pasten, a mailman who has delivered in the capital's Zona Rosa neighborhood for 23 years. Colleague Francisco Javier Rodriguez says postal workers often feel like they're fighting a losing battle since private services have better technology and vehicles. "Sometimes a letter takes 12 days to be delivered within the country. It should only take three days, at most, if we're going to be competitive," Rodriguez says.

Meanwhile, the market in Mexico, like in many parts of the world, is changing as consumers abandon physical mail for faster or more reliable means of communication, like e-mail and electronic commerce. Eighty percent of the mail sent through the postal system each year is letters, bills and account statements, while another 14% is advertising and 4% is publications like magazines. The rest is packages. Researchers predict that within five years, electronic delivery will replace a large chunk of the account statements sent by mail in the country. According to Mexico's Federal Telecommunications Commission, Cofetel, 14 million people in Mexico--14% of the population--use the Internet.

Cachet. Package delivery companies are setting their sights on shipments weighing in at 70 kilograms or more. "Documents are a market segment that has been declining in real terms as technology grows," says Leticia Navarro, chief executive of DHL Mexico. The company claims a 25% share of the express-delivery market in Mexico, where it transports 250 tons of correspondence a day with the help of 1,500 vehicles--500 more than Sepomex. Aside from having more cash, services like DHL carry a certain cachet in the Mexican business world. In part because it's more expensive, but also because it works.

AMY GUTHRIE, MEXICO CITY