Interview with Ivan Čulo, Hrvatska pošta

Ahead of the World Mail & Express Europe (WMX Europe) Conference in Dublin, we caught up with Ivan Čulo, CEO of Hrvatska pošta. Ivan will be speaking at WMX Europe 2019 and offers his thoughts on the conference and the future of the industry.

P&P – Tell us a little bit about yourself and your company.

IČ – Croatian Post is the biggest provider of postal services in the Republic of Croatia and the only provider of universal service in keeping with the provisions of the Postal Services Act. Each day around 2,500 postmen deliver 1,3 million items throughout the entire Croatian territory. With over 10,000 employees, Croatian Post is also one of the biggest employers in Croatia. Our development strategy Post2022 recognises emerging trends and therefore digitisation and corporate social responsibility are two foundations and development philosophies which enable us to fulfil our mission: Croatian post – at the service of citizens.

P&P – What will you be speaking about at WMX Europe this year?

IČ – Post2022 Strategy is in its third year of implementation and Croatian Post is in the middle of a huge investment cycle. The biggest capital investment in the history of Croatian Post – A new sorting centre, worth around 47 million EUR (HRK 350 million), will improve the quality and speed of all the postal processes. The works are in the final stage and by the end of the year around 1,400 workers will move to this state-of-the-art logistics hub. In December 2017 we invested in cutting automated sorting systems and in the new sorting centre we have begun the assembly of the new system for parcel sorting. This machine will allow us to sort up to 15,000 packages an hour with weights ranging from a hundred grams to 30 kilograms.

Also, one of the more interesting projects is our webshop Žuti klik (Yellow click) which is already proving to be a good investment. And looking in the future, we are currently developing several solutions for better delivery, especially “last mile” delivery.

But all these investments in technology could not be utilised without our biggest and most important strength – our employees. We have several ongoing projects I would like to share at WMX Europe. One of the most notable is our own Postal Academy.

P&P – What do you hope our delegates will take away from your presentation?

IČ – I hope that they can learn from our examples. Technology allows us to scale solutions faster than ever. That means that “small” companies can develop great solutions which can be transferred to “big” companies and vice versa. Knowledge and experience sharing are vital for development of the entire industry.

P&P – What do you feel are the biggest challenges facing your business today?

IČ – In the last decade entire world has faced tremendous change, and postal industry as well as entire logistics industry is no different in that context. We are witnessing a steady decline in the number of letters but at the same time we see an explosion in the parcel market. Of course, the growth is driven by the expanding e-commerce. This “switch” in contents of the postal bag is significant and all postal operators should adapt.  A usual, “last-mile” delivery poses the most demanding challenges for all logistics companies, but this is something we are all addressing for quite some time.

P&P – Apart from the presentations and content, what aspect of WMX Europe are you most looking forward to?

IČ – I am looking forward to meeting my colleagues and to discuss the current and future state of the market. We can all learn from each other and through dialogue and cooperation influence the post and parcel industry in positive and meaningful way.

P&P – How can we advance the post and parcel industry?

IČ – Innovation and emerging trends are always pushing parcel industry forward. But we can also advance, not only by creating new trends but by following and improving the existing ones.

P&P – How has the post and parcel industry changed in the past 5 years? What do you predict will happen in the next 5 to 10 years?

IČ – The biggest change in the past years is digitalisation which has changed the roots of almost every business on the planet. The post and parcel industry also follows this trend as more and more processes are digitalised. I think that e-commerce will continue to push the growth of the parcel market.

P&P – What is the biggest challenge in the post and parcel industry at the moment?

IČ – In my opinion, the tremendous growth in number and volume of parcels is the biggest challenge for the entire industry at the moment.

P&P – What are the most critical changes that we must make to face the future effectively?

IČ – Significant growth of business must be accompanied by equivalent growth in human resources and technology, particularly regarding information and communication technology. For the last few years we are discussing digital transformation and we are mostly referring only its technological aspect. But people are the biggest strength (or weakness) of every company and we need to find a way to keep and attract the best possible employees. Also, the question is how to develop the employees so their skills will enable the entire company to grow in modern markets.

P&P – What effect has Automation made on the post and parcel industry?

IČ – Automation accelerated all the processes, especially sorting. Generally speaking, any task a machine can do faster and better than a human will be automated in the near future (if it hasn’t been already). Counterintuitively, the number of postmen continues to rise, since the number of parcels is growing. And parcels are growing because e-commerce industry has automated many of the processes which now take place in the virtual world. This clearly shows that automation doesn’t necessarily lead to job loss. But it does mean that some employees need to be retrained because their skills need to align with the needs of the ever changing labour market.

P&P – Who is making the greatest advancements in the post and parcel industry, and what are they doing?

IČ – Everyone who is not afraid to look things from a different angle and to implement new, “smart” solutions into business. As I already mentioned, today you can make great advancements not only by creating trends but also by incrementally improving existing technology, processes and businesses in general.

P&P – What is the most interesting trend for 2019?

IČ – First thing that comes to mind is digitalisation. Digitalisation of businesses, processes, supply chains and essentially all parts of our operations. With current technology we can already improve many aspects of our business. We can offer new products, find new sources of revenue and respond to changes on the market faster and more efficiently. Different opportunities such as parcel sorting automation, pre-advance delivery notification, alternative delivery location, cognitive/predictive or 24/7 logistic can all be achieved through digital transformation.

P&P – What’s the one piece of advice would you give to companies starting out in your sector?

IČ – As for any business, if you are just starting you need to know a lot about the particular industry and about business in general, and you need to be on top with the market trends. But business requires more than just knowledge and expertise. You need to be courageous, bold and ready to learn. Learn from others and from their mistakes, because they are much cheaper for you than your own. And build your network. Attend conferences, build relationships not only with your partners but with your competitors also. In modern markets, synergies are becoming more and more common.

P&P – What impacts do you foresee from the New Silk Road for the European post and parcel market?

IČ – When we are discussing e-commerce today, we are talking about global trade. “Small packet” brought big change in delivery of goods from Asia to Europe. But now we already see some changes in postal services used by Asian companies (e.g. “Small packet plus”). The European Union is tackling this challenge with the Regulation on cross-border parcel delivery services.

P&P – With the EU pushing ahead with its clean air policies, what impacts do you see this having on the post and parcel industry, particularly in the larger European cities?

IČ – E-vehicles are slowly moving to the mainstream and all the major vehicle manufacturers are offering electric vehicles. There are still some difficult challenges ahead (e.g. charging networks) but electric vehicles, or to be more precise non carbon-based fuels, will become mainstream. Since vehicles represent a big share of overall environmental impact in logistics, e-vehicles are the logical outcome of clean air policies.

P&P – How can postal organisations adapt in the face of falling mail volumes? Can they really compete with new industry disruptors and faster moving global operators?

IČ – As I mentioned earlier, we are witnessing a steady decline in the number of letters but at the same time we see an explosion in the parcel market. I am quite confident that postal operators can compete because Post has been competing with disrupting technologies and business models for centuries. The biggest difference being that change is now more comprehensive and faster than ever before. Of course, not everyone can win or even survive but we can all actively partake in the development of the industry and through digital transformation create preconditions for strong and successful post of the future.

Ivan will be speaking at the World Mail & Express Europe Conference 2019. WMX Europe is taking place at Croke Park in Dublin (17 – 19 June 2019). Visit www.wmxeurope.com for more information.