World Postal Service: Digital Transformation Creating Digital Divide in E-Commerce

While many note that it’s generally cheaper to mail e-commerce goods than to send them by private shipper — a fact that doesn’t escape the notice of Amazon and other retail giants — the myths that traditional mail is an outdated form of shipping or too slow to meet customer expectations still persist. The world’s connected postal services have undergone a considerable amount of digital transformation to meet the demands of modern-day cross-border e-commerce. However, that transformation comes with a cost.

The world’s postal delivery services have always been adept at delivering even to rural and remote places for the same small fee. But that is changing as the digital transformation continues and inadvertently creates a new kind of digital divide.

A digital divide created by any means can have rather severe, albeit unintended, consequences.  For example, consider the recent near breakup between the U.S. postal service and the Universal Postal Union (UPU), an agency of the United Nations (UN). The UPU is the body that makes it possible for mail to travel across borders unimpeded and at a set low cost. The proposed break from the UPU almost resulted in U.S. voters abroad either not being able to mail in their vote for the 2020 election at all or having to choose a private delivery service for around $60 per ballot. That could have resulted in many Americans abroad not voting at all or not getting their votes returned in time to be counted.

Fortunately, the UPU third Extraordinary Congress wrapped up on a high note for mail patrons around the world. UPU members including the U.S. agreed in the Sept. 25^th vote to “accelerate rate increases to the system for remunerating the delivery of inbound international bulky letters and small packets. Self-declared rates are to be phased in starting as soon as 2020. Under the agreed solution, member countries that meet certain requirements — including inbound letter-post volumes in excess of 75,000 metric tons — would be able to opt-in to self-declare their rates starting 1 July 2020.” The UPU now also has set thresholds to buffer low-volume developing countries from these sudden changes to the earlier agreement and the subsequent impact.

However, the UPU’s work in continuing to improve efficiencies in order to remain competitive with private shippers on speed, reliability and cost continues. Therefore, digital transformation continues unabated in several member countries. But not all countries are progressing at the same rate. A digital divide exists and is quickly becoming more pronounced.

UPU’s Bishar Hussein

“Postal networks have the potential to lead the way in providing both citizens and businesses with affordable access to the economy through the delivery of e-commerce items, but for the entire sector to benefit from this opportunity it will have to work to reduce inequalities across the network,” said UPU Director General Bishar A. Hussein.

The UPU announced today the release of its Postal Development Report 2019. The report’s findings are drawn from the UPU’s postal big data, official postal statistics and surveys in order to measure the…

…performance of postal operators in 172 countries on “reliability, reach, relevance and resilience,” according to David Dadge, communication and events manager at the UPU.

UPU’s David Dadge

The report found that gaps in postal development have increased over the past year, creating a growing hurdle for cross-border e-commerce. That situation must be addressed promptly as the UPU says cross-border e-commerce is one of the fastest growth areas for postal operators.

The report also scored regional postal operators in the report: “Industrial countries received an average grade of 68.9 out of 100 in the index, up one point from 2018, while average scores for Eastern Europe and the Commonwealth of Independent States (49.8), Asia-Pacific (29.5), Arab region (27.29), Latin America (22.7) and Africa (20.6) provided evidence of the growing gap.”

In regards to the scoring of individual countries, Switzerland took first place, the Netherlands held onto second and Germany came in third.

Even with improvements cited in several other countries such as Poland, China, Tunisia, Colombia and Nigeria, the widening postal development gaps are posing significant threat to the global network. However, there is opportunity there as well.

The report found “evidence that, while reducing gaps within regions is important, the strongest effects are in terms of reductions at the global level. Thus, the road map for postal development needs to be a global one, highlighting the important role of developing multilateral solutions.”

The UPU is encouraging countries to invest more in their own postal services and to help with development on the global level. Where such investment increases ultimately appear, and by how much, remains to be seen.

But in any case, the world’s postal network is central to the daily lives of citizens around the globe and to vital functions in each country such as voting. It is also at the heart of cross-border e-commerce and, indeed, in cost containment for shipping costs in every industry.

The digital transformation also brings about the same issues for postal operators as it does in other industries. Keep an eye out for budget increases as this may represent new opportunities for vendors, channel partners and security professionals in the near future.