Irish postal operator An Post is profiting from strong public trust, re-focusing its core business on parcels (including new e-commerce services for local retailers), and considering its post-Brexit options, such as fulfilment services, according to CEO David McRedmond.
An Post has transformed its fortunes and is looking ahead confidently, he told this week’s Leaders in Logistics Post & Parcel Europe conference in Berlin, which was organised by Marketforce.
One year ago, the state-owned postal operator was facing a financial crisis with a projected loss of over €60 million for 2017, McRedmond told an audience of some 200 postal industry managers, suppliers and other stakeholders. The company had fallen into the red in 2016.
“For a company of our size, that would have been death,” he declared. “We had to do something radical.”
An Post convinced the Irish government to remove the existing price cap, allowing it to implement a dramatic price increase of 38% last April, he explained. As a result, An Post’s finances improved significantly to an operating profit of €8 million last year.
“We did a fantastic job of communicating this and people accepted it,” McRedmond emphasised. “We have had a complete turnaround. We have enough cash to get through a long period and are developing a strategy of where we want to go.”
A vital factor in acceptance of the steep price increase, the CEO underlined, was the very high public trust in Ireland’s national postal service, which delivers mail and parcels daily throughout the largely rural country.
Moreover, the improved financial situation has meant that An Post was able to keep most prices stable for 2018. The standard public stamp price remains at €1 and standard parcel prices are also unchanged, although the standard rate for an international parcel will go up from €1.35 to €1.50 as of April 4, 2018.
Looking ahead, the former head of the Irish telecoms and national TV companies said he did not believe postal operators could be replaced by digital services but needed to re-focus instead on parcels to serve the e-commerce industry.
An Post’s parcel volumes grew by 30% in 2017 due to increasing e-commerce and the re-launch of the parcel service with delivery on Saturdays and evenings and later acceptance times for businesses.
One major uncertainty for An Post, however, is how any UK-EU Brexit deal will affect the border between the Republic of Ireland and Northern Ireland. “We don’t want to be cut off. We want the border to be invisible,” McRedmond stated.
Brexit will definitely impact on parcel flows, with about 60% of international parcels to Ireland currently coming from the UK. “There will be a big need for fulfilment. We will have to see what the opportunity is,” he commented.
One important issue is that of so-called ‘zero hours contracts’ in the ‘gig’ economy where technology-based companies use crowdsourced workers such as for deliveries. He welcomed the Irish government’s recent move to ban such contracts and thus avoid downward price spiral.
Meanwhile, An Post this week announced a new service under the name eLocal.ie, offering e-commerce solutions and home delivery for local retailers using its trusted network. The service was launched this week in three towns, Ennis, Bantry and Mullingar, and will be tested there before an expected national rollout later this year.
With eLocal.ie, the postal operator will provide a next day delivery service for businesses and merchants to local customers. A key feature of the eLocal.ie service will involve An Post giving each retailer an online presence, displaying their goods and services, and enabling online orders.
Customers will therefore be able to shop online wherever they see the eLocal.ie logo and click and order via the retailer’s eLocal.ie page. Their purchases will be delivered locally within 24 hours or nationally within 48 hours, or can be collected in person from the store.
For example, a customer outside a town can order online during the day, An Post collects the order from the store in the afternoon and delivers it as part of the normal delivery round on the following day. The customer pays a €7.50 delivery charge (or €3.50 for ‘click and collect’) unless the retailer decides to absorb the cost in full or in part.
Garrett Bridgeman, Managing Director of An Post’s Mails and Parcels division, commented: “eLocal helps local business fight back by giving them the capacity to trade online and access our national delivery network. The service will also generate new business for An Post’s own mails network.”
As part of its improved parcel services, An Post offers AddressPal, an online service for international online shoppers, ReturnPal, an online shopping returns service, and Deliverybox, a wall mounted home post box.
