Cross-border postal exchanges fall 21% through pandemic

Dive Brief:

Cross-border postal exchanges have fallen 21% between Jan. 23 and May 14 compared to the same period last year, according to a report by the Universal Postal Union.
Constraints on the airline industry resulting from the coronavirus pandemic have made it harder for postal services to move mail. The UPU's Emergency Information System saw an increase in reports of worker shortages, force majeure cases, disruptions and full suspensions throughout the year, according to numbers in the report.
As of May 2020, only one exported item is marked as received for every 2.1 weekly items exported. The average time it takes for parcels to clear customs has grown considerably during this time, according to the report.

Dive Insight:

Lockdowns make it difficult to get mail to some locations. A faltering aviation industry has left a vital transportation leg handicapped, and the demand for the service is falling as global individual income becomes more precarious, according to the report.

"In this context, the drop in cross-border volumes is undoubtedly explained by the technical disruptions in the delivery network, in particular the growing mismatch between inbound and outbound flows, expressed through the stranded mail indicators mentioned above," the report said, calling the current environment at "logistical no-man's land."

The issues experienced by the global postal system are highlighted by the stranded mail spread, which the UPU defines as comparing the 2020 stranded mail ratio to its baseline value in 2019. The value now shows it is 71% more difficult for exports to reach the destination country compared to last year.

But as the global health emergency has given life a global economic crisis the world's postal services will also, to varying degrees, struggle financially. The report says postal operators whose income significantly relies on international mail is "at risk of seeing a substantial decrease in operational revenues."

"Businesses tend to use postal services as an intermediate product necessary for their production," the report reads. "Since these firms have been reducing their supply of products because of the COVID-19 outbreak, a subsequent reduction in the demand for postal services is expected to follow."

The economic downturn could also increase consumer use of digital alternatives to hardcopy letters, bills and paperwork, the report notes.

The UPU outlines three potential scenarios for how the pandemic could affect the global postal service: pessimistic, expected and optimistic. In the expected outcome increased parcel and logistics volume from e-commerce would keep postal revenue stable. "While it may not compensate completely for the potential loss in the letter-post segment, it provides a steady stream of liquidity that helps postal operators attempt to eventually overcome the crisis," the report said.

As this unfolds, the UPU says maintaining service levels is the best way operators can prevent losing customers. "If they are seamlessly connected with business partners, they will be able to resume operations more quickly and bank on opportunities offered by cross-border e-commerce, especially once economic activity resume," the UPU wrote.