Interview – Posts ‘must speed up and improve or lose out’ on parcels

Postal operators urgently need to speed up innovations, improve customer experience and restructure their networks or lose out to faster-moving competitors in the dynamic parcels market, according to a top postal industry expert.

Quicker decision-making and cost reductions are also vital if posts want to transform their business and grow profitably, André Pharand, Accenture’s Global MD Post & Parcel, told CEP-Research in a hard-hitting interview at last week’s Deliver 2019 event in Estoril, near Lisbon, Portugal.

Earlier this month, UPU research showed that the world’s postal operators are failing to profit fully from the e-commerce boom and are losing share of the fast-growing parcels market. Although Posts have increased their parcel volumes and revenues strongly in recent years, they are lagging behind the overall parcel market growth, and thus have a declining market share. Designated postal operators had only 38% of the worldwide ‘parcel post’ market compared to 62% for competitors in 2017, according to UPU figures.

Against this background, Pharand was critical about how many postal operators are only slowly adapting their structures and business activities, and appear to be tied down by “conservative governance”.  

“Decision-making is poor. They have an overly cautious step-by-step approach, and there is an aversion to risk,” the experienced industry expert claimed. In addition, slow and complex procurement processes meant there could often be a ‘long time-lag’ in developing new business activities.

“They often work in a four-year cycle… (but) you cannot run a business with an innovation cycle of four years,” Pharand declared. Moreover, some postal operators seemed to be “suspicious” of external partners and preferred to rely on internal expertise, even if this took longer. “I’m worried that Posts do not have the agility to do things in time,” he commented.

Customer experience is another essential area for improvement, according to the Accenture consultant. “Posts have got to do something with customer experience. For example, UPS MyChoice was already launched years ago, (yet) some posts cannot provide proof of delivery to customers.”

Pharand also emphasised: “Posts have to do something about unit costs.” In theory, he underlined: “Posts can deliver products at the best cost and with the best customer experience.”

Moreover, customers are demanding faster deliveries but traditional postal networks are not designed for rapid deliveries, especially to urban areas. “Posts and parcel carriers are based around hub and spoke models. But Amazon is getting inventory closer to customers, they do not need hub and spoke,” he pointed out.  

“As the market moves to next day and same day, the way Posts are structured and with their costs it’s a dynamic market and they cannot compete. Unless they do something, they will be left out of the last-mile market. It’s about winning or losing in city deliveries,” Pharand concluded.

As Global Management Consulting Lead for Accenture's Postal and Parcel Industry, Pharand has over 20 years’ experience in Strategy and Transformation in the postal and parcel industry and has worked with over 18 different postal operators, global integrators, last mile players and eCommerce retailers on many different business issues over the years.