- Global letter volumes forecast to decline between 25 and 40 per cent over next five years because of rising popularity of digital media
- Current postal models look increasingly unsustainable
Governments and regulators urgently need to address the issue of declining postal volumes and changing patterns of communication and develop new policies that integrate postal with other communications policies, including broadband availability, a new report by advisory firm KPMG suggests.
The study “Delivering Tomorrow: Sustaining and future proofing mail services” calls on governments, regulators and operators to take a “holistic approach” in creating sustainable models for the postal network of the future, as postal operators worldwide are being forced to address their business models and operations at unprecedented speed.
John Fletcher, Director at KPMG’s Economics and Regulatory Team, comments:
“Declining volumes of mail and the rise of electronic communications represent a real challenge for postal services globally. Governments and regulators must take an open mind to emerging alternatives to traditional postal services. With the current model looking increasingly unsustainable, it is all the more important that new models are debated and discussed. The answers to these questions are not clear-cut.”
Global letter volumes are forecast to decline between 25 and 40 per cent over the next five years as the rising popularity of instantly available digital media – Books, CDs and DVDs – decreases the desire for physical delivery, However, in many jurisdictions, including Australia, the EU, the US and Canada, postal provision is protected in law, governed by the terms of a Universal Service Obligation (USO). Many USOs restrict the ability of operators to adapt services to changes in postal demand. EU countries for example are bound by the Third Postal Directive stipulating a five day a week minimum delivery of letters, packets and parcels.
As operators globally are responding to changing consumer demand by introducing secure electronic ways of communication (e.g E-Postbriefservice in Germany; iPostservice in Finland) the current USO model may no longer be financially viable, the report argues.
John Fletcher comments:
"It appears that several postal USOs are obliging operators to literally over-deliver causing them to incur unnecessary costs and leaving their cost bases critically misaligned with their revenues. This could result in an unsustainable spiral whereby falling volumes cause price increases which further accelerates the move from physical to electronic media.
"Without a change to the way USOs are defined, subsidy from within the industry or directly from government may be hard to avoid. What now seems preferable is for USOs to be fundamentally realigned with the evolving social and economic requirements of consumers.”
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About KPMG KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with nearly 11,000 partners and staff. The UK firm recorded a turnover of £1.6 billion in the year ended September 2010. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have more than 138,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.