Almost every national postal service in the developed world has been hit by a significant and ongoing decline in letter mail over the last decade or so.
According to PricewaterhouseCoopers (PwC), in the UK alone total inland letter volumes declined by 3.1% annually from 2005 to 2008, and by 6.3% annually from 2008-2013. This decline is expected to continue into at least 2023 at a rate of 4%.
A similar situation has befallen Canada Post, which said in a recent release that letter mail volumes, the bread-and-butter of the postal service, were down 32% in 2018 compared to 2006, and falling.
While Emirates Post Group does not release detailed information regarding year-on-year volumes and package types, Abdulla Mohammed Alashram, acting group CEO of Emirates Post Group, told Logistics Middle East that the organisation is facing a similar challenge.
“We have seen a huge drop in the letter mail business for the last ten years globally,” he says. This presented Emirates Post Group with a major challenge, because most of its revenue was coming from letter mail a few years ago, and its equipment and processes were geared toward sorting and delivery such items as fast as possible.
“We have NEC machines that can sort more than 5,000 small and medium envelopes in an hour,”“We have NEC machines that can sort more than 5,000 small and medium envelopes in an hour,” he says by way of example. But, while the decline in letter mail was primarily because of the emergence of digital communications, it also gave rise to an explosion in e-commerce in the Middle East, and Alashram has highlighted this as the future of EPG’s operations. “Letter mail is fading away, but the e-commerce is where the revenue is going to come from in the coming years. That’s our focus now. Our courier and express services are where we are going to be investing money in the future.”
Letter mail, however, will remain a core part of what EPG does. “The portfolio of products and services varies from a small envelope, to a large envelope to packages and larger items,” says Alashram. “We do around 45-million shipments per year, on average we’re handling around 125,000 per day.” What will change, though, is the type of equipment EPG is using, and the way it utilises its network across the UAE.
“We have 120 post offices across the country, 11 distribution centres and more than 1,000 couriers making deliveries,” he says. EPG’s delivery fleet is split 70/30% between cars and bikes, all of which are currently being re-branded in the organisations new livery. The new logo reflects the changing nature of the postal service in the years to come, as it focuses more on the last mile.
“We can’t specialise in every last mile option, but we definitely want to be the most efficient last mile option within the country in terms of next-day and the more traditional three-to-five day delivery,” says Alashram. “We aren’t focusing 100% on same-day, because it comes with its own unique challenges and you need the volumes to make it economically feasible. With next-day or three to five day, that’s where we’re going to get the largest volumes.”
EPG says it has a very competitive last mile delivery capability in the UAE.
According to Alashram consumers in this region tend to only be willing to pay extra for next-day or same-day on very high-end products. “So same-day is more of a niche of a high-end product,” he says.
“We’re also going to be making last mile more accessible for the customer, utilising our existing network, which is unparalleled, so we’re going to have delivery points around the city with locker machines, or customers can collect from one of our 120 branches with a form of click and collect.”
This is where Alashram’s approach to the challenge presented by letter mail becomes apparent. The decline has impacted the postal service, but he sees it as an opportunity. “We see challenges as opportunities, we try to tackle and find solutions to these challenges in a way that presents new opportunities for the business.”
In addition to utilising its existing network, EPG is also considering the deployment of a package sorting machine for its e-commerce operations. “We will start with just one in Dubai and then possibly another in Abu Dhabi depending on demand. These machines can sort 15,000 items in an hour, so we really will only need one to begin with,” he says.
EPG will put out a request for tenders in the next 6 months, and plans to have the package sorter in operation within the first half of 2020. But it isn’t just new equipment and its national network of outlets that EPG is investing in.
“For e-commerce there are a lot of things we’re doing“For e-commerce there are a lot of things we’re doing. In the service portfolio we’re offering new services such as cash on delivery, pickup and delivery, returns, there are all changes we’re making to our offering to meet the needs of e-commerce companies,” says Alashram. “The way we scan our packages using handhelds, the barcodes, our card machines on payment delivery, all of these things have to be equipped to carry out the changes we want to make.”
Customers are also becoming more demanding in that they want faster delivery and they want greater visibility. Alashram says this is where the use of new technologies is of key importance. “Visibility in terms of tracking wasn’t something we were talking about five years ago, but now it’s extremely important,” he explains. “Technology has enabled us as well as the express couriers to better manage the last mile, its at the back-end that the key success factors are seen.”
According to Alashram the more control, visibility and ability to track patterns and plan ahead you have the more you can succeed in the last mile. “This is extremely important now as the letter mail falls away because that’s always been a market where we had a monopoly, but now with e-commerce, we’re competing directly with the express logistics companies,” he says.
“Our greatest strength though is our network and infrastructure within the UAE, we’re unparalleled for local delivery and so for e-commerce companies delivering locally, there’s no one with a stronger network,” he adds.