World’s postal organisations set out plans to deliver a high technology

Edouard Dayan of France's La Poste, elected thisweek as director-general of the Universal Postal Union, will take over the venerable United Nations agency at a challenging time for the world postal industry.

In rich nations, "snail mail" has lost ground to email and the web, and national posts face stiff competition from private operators in the parcels sector, where they now have only a quarter of the domestic market.

Instead, posts have responded to privatisation, deregulation and the explosion in communications technologies by turning themselves into high-tech commercial enterprises offering a range of mail, logistics, financial and other services, often internet-based.

This has meant painful cost-cutting for many. More than 1m postal jobs have been lost in the past decade. Thousands of post offices, mostly in rural areas, have been shut.

At the same time, some posts – such as Deutsche Post, Europe's largest postal group, which last week announced it would close 1,000 post offices in Germany by the end of next year – are expanding abroad, building global networks through acquisitions and alliances.

"Changes in markets, changes in technology, and changes in regulations and stakeholder roles . . . have transformed the postal landscape," Thomas Leavey, outgoing director-general, said in his opening address to the 2,000 delegates attending the UPU's governing congress in Bucharest, which ends on on October 5.

Yet in the developing world, millions of the rural poor cannot even buy a stamp or post a letter.

Although the post is the world's largest physical network, with 650,000 outlets and 5m employees, one in 20 of the world's population still has no access to a basic postal service and in some African countries the proportion is as high as a quarter.

Helping its 190 member countries meet these very different present-day challenges is no easy task for the UPU, the world's second-oldest international agency (after the International Telecommunication Union) established in 1874.

Today, the UPU congress is due to approve a revised world postal strategy, a four-year plan for governments, postal regulators and operators, that makes universal service its first priority.

The strategy calls on countries to aim for permanent provision of good quality basic postal services, at affordable prices, at all points in their territory.

To help them do that, the poorest countries will get more financial aid from the UPU, funded by a revamped "terminal dues" system that regulates what postal operators pay each other to deliver international mail.

To respond better to the pace of change in the industry, the UPU is also trying to speed up its own procedures and make them more open. In Bucharest, delegates agreed to hold the congress every four years instead of five and establish a consultative committee representing the private sector and other stakeholders.

Conventional mail volumes are still increasing in the developing world and the outlook for the parcels business is also promising, partly because of the growth in online shopping. But for posts in both rich and poor countries the future is likely to be online.

Already 40 per cent of UPU members offer online postal services, 20 per cent offer email services, 13 per cent offer online bill payments and 13 per cent sell goods via the internet. More than a third operate internet kiosks in post offices.

Within five years, the UPU says, most posts hope to offer logistics services and "hybrid mail", where mail is sent electronically to the post centre, printed and delivered to the destination.

Financial services are another potential growth area that already contributes as much as half the revenues of some posts.

Many posts offer current and savings accounts, and act as agents for payment of pensions and other benefits. Postal banks and other postal financial institutions hold over Dollars 3,000bn (Euros 2,414bn, Pounds 1,657bn) belonging to more than 700m account holders worldwide.

The World Bank argues that posts in developing countries could be an ideal channel for promoting development through provision of basic financial services, including credit to small savers and low-income communities. But progress in this direction has been scant.

However, the UPU is now trying to boost members' share of the huge market for cross-border remittances, worth perhaps Dollars 200bn a year on some estimates.

Juliana Nel, a UPU spokeswoman, says predictions of the death of posts have been exaggerated.

"There is a general feeling of optimism at this congress about the future of the postal service, for both traditional mail and the new electronic business", she says.