Big Issues addressed at Puerto Vallarta

John Modd, Director Mail, Triangle Management Services
World Mail Review May 2008

The most recent World Mail & Express Americas event was held in Mexico in late February 2008. The location was the pretty coastal resort of Puerto Vallarta, a magnet for people from the United States and Canada seeking some winter sunshine by the beaches of the Pacific Ocean.

The number of attendees at the event was an all time record, and general feedback was that the conference programme was also the best so far.

In a previous issue of World Mail Review we provided some insights into the mail markets in Latin America, where in many countries the national posts were no longer the market leaders, and private postal companies had become major players. The reality of this was borne out in the conference.

At least three big themes emerged during presentations and discussions:

• The degree to which there was a legal postal monopoly in each country; and the extent to which that monopoly was in reality upheld.
• Was the way forward co-operation or conflict between public and private operators?
• The growing maturity of the private postal sector.

The legal monopoly and the reality

 

As we were reminded several times during the debates, in some countries – Brazil and the US were perhaps the most significant examples – governments and the national posts had clearly outlined and upheld the legal monopoly. Of particular interest was to hear how this issue was being taken forward in the United States under its new regulatory regime, and to gain some insights into the relationship between the Postal Regulatory Commission and the USPS.

At the other extreme were countries which had opened up their markets in a more controlled way, had legislated to allow competition, and had put in place regulation to oversee the competitive market. Argentina was seen to fit this model, as did Colombia where, we were told, there were 280 licensed competitors to the national postal service. However, there were also over 600 unlicensed ones. The  licensed ones paid a fee to support ‘the social delivery services’ of the national post. No prizes for guessing the unlicensed did not, thereby creating a very unlevel playing field.

For perhaps the majority of countries represented at Puerto Vallarta, it became clear that the reality was a grey area between enforced  monopoly and regulated competition. The letter of the law might provide the national operator with monopoly powers, but in practice over time – and usually because of the poor quality and lack of security of the national post – strong private competition had emerged, and had become very successful.

The general feeling of the delegates was that once the genie of competition had been let out of the bottle it was very difficult to put it back in. Customers did not take kindly to having choice taken away from them. Governments could not easily shut down successful private postal companies which had become significant employers and taxpayers. Quite often, government departments were among their main customers!

The host country, Mexico, appeared to be one of those facing this kind of dilemma. A hitherto virtually moribund national operator – SePoMex – was now under strong new leadership and was determined to improve its quality and product offerings. Its position was that it needed the vigorous enforcement of the legal monopoly in order to  secure its finances and underpin its universal service obligations.

Yet the current reality appeared to be that private postal operators were well established in Mexico and had most of the major generators of mail in the country as their customers. Watch this space . . .

Co-operation or conflict

 

The type of conflict that might develop in Mexico was not generally seen as the way forward. Most speakers, whether public or private, saw co-operation as the best policy. In general private operators felt that, not only must they co-operate with each other, but a strong national post was in their best interests, to help grow the market and to provide additional capabilities they would not wish to develop themselves. This point about co-operation with national posts was also heavily emphasised by all the global players who presented. FedEx, UPS, TNT Express, DHL Global Mail all outlined well thought through strategies for working in partnership with local players, public and private.

The growing maturity of the private postal sector

 

It was evident from both presentations and the delegate list that, in a sign of increasing industry maturity, private mail operators were  forming their own national associations.

At least two were present in Puerto Vallarta. AECA represented the private operators in Argentina, whilst the recently formed AMEDEM outlined how it was an association bringing together the four main private players in Mexico – ALF, ampm, QualityPost and SCM. An interesting piece of information this Association shared with the audience was that, whilst they broadly operated in distinct geographical areas, each one followed the needs of its customers – and if that meant opening up in the backyard of another association member, so be it. Competition and co-operation could happen side by side, without conflict.

Furthermore, we learnt that national associations had now come together in a Latin American Association of Private Postal Operators, ALACOPP. This organisation had already had constructive discussions with the regional UPU organisation (UPAEP) and appeared to be looking to join the UPU Consultative Committee.

Other insights

 

The quality of addresses continued to be a major cause of concern for delivery operators. Delegates heard of some initiatives to improve matters either through full addressing projects or at least some sort of postal coding system. Particularly interesting was what was happening in Costa Rica where the post’s addressing project had  become a strategic project adopted by the government for the country as a whole.

Security was also an ongoing issue, and it was clear from a number of presentations that this was now high on the action priority list. In a  very relevant presentation, Royal Mail outlined how it had experienced significant declines in its Latin American volume flows over the last few years. The British postal service issued a plea for national posts in the region to work with it to drive up quality and security, and regain those lost volumes.

Parcels volumes were generally growing well, reflecting economic  growth. For mail the link between letter volumes and economic growth was not felt to be as clear as it used to be. The more developed the post, the more likely there was to be evidence of volume decline. However, it was generally felt that there remained real opportunities in many countries to grow direct mail from current very low levels – in particular if the addressing issue could be resolved.

For speakers, delegates, and exhibitors alike, the other big plus of the Americas event was seen as the opportunity to network – with old acquaintances and new colleagues. As much learning and benchmarking went on informally as in the official conference sessions, which it was felt could only be good for the health of the industry.

As one speaker put it, it was like a two day ‘speed’ MBA course in mail and express!