“Republic of the Savior!”

Lic Marlon Granados Pinto, director general of El Salvador Post, provides an insight into the workings of the Central American country’s national operator. With a population of 5.7m inhabitants, El Salvador is the smallest country in Central America. It covers an area of 21,040 sq. km with 14 regional departments and 262 municipalities.

Correos de El Salvador is the national public postal operator. It is 100% government owned, with no private sector investment. The post is overseen by the Government General Directorate. Correos has no administrative or commercial freedom, and prices must be approved by the Ministry of Economy. In the director general’s view “those issues do not allow Correos El Salvador to compete with the same conditions as the private operators”.

The government must guarantee the availability of postal service in the country, in accordance with the national constitution and also international treaties.  It has been a member of the Universal Postal Union (UPU) since 1879.

The universal service obligation is the right of every person in El Salvador. “This means access to basic postal services which can guarantee equality, legal security, freedom, no discrimination, no violation of the mail, and no interruption to service,” the director general explained.

The postal market is liberalised and there is no regulator. Granados estimates that the national postal market in 2008 amounted to 60m pieces: 56m pieces of traditional mail and 4m courier items. Of this total Correos delivered 14.2m items or about 25%. This generated $6.6m of revenues for the post, $4.5m from traditional mail and $2.1m from courier services. Companies sent 10.5m items ($2.8m revenues for the post) and individuals 3.7m ($3.8m).

A relatively high proportion of total volume is actually for international destinations, something over a quarter. This international bias is also reflected in the fact that, although the post’s domestically generated volumes are only 14.2m, overall Correos El Salvador processes 20m units annually. USPS is a major partner, since 75% of international volumes go to the USA. This means that it receives about 5.8m units of inbound international mail.

Granados explained that Correos has experienced a decline in mail volumes. However, he believes e- substitution is not yet having a significant impact, whilst Internet activity is helping to grow the parcels market by 20% a year. This “has motivated us to look for new market segments and to the diversification of products and services in order to maintain the level of revenue. Currently Correos El Salvador is financially stable,” said Granados.

The post owns 165 postal outlets nationwide, 30 of which are connected to the institutional network. In addition, there are 50 postal agents that offer limited services. The company employs 1,125 people, 70% of them belonging to operational divisions and the remaining 30% to administrative and support areas.

A transport network based on 11 primary routes connects 100 offices on a daily basis, Monday to Saturday, while 32 secondary routes have weekly connections. More than 85% of mail is delivered within the national territory in less than 24 hours. “This is also the case for the international mail, delivered to the international air mail companies in less than two hours from the point of collection at national level. This is required in order to fulfill the quality standards,” Granados told us.

The director general added: “Correos El Salvador aims to be a competitive governmental institution, based on the quality of our services. We are planning to implement a territorial strategy, with geographic criteria to define the commercial actions. Other projects include postal codification to improve the handling, sorting and distribution of big volumes of mail, in order to improve the delivery times.”

Letters, postcards, direct mail and business units are delivered to the addressee six days per week, accounting for 85% of total volume. Parcels are delivered to local post offices (5% of total volume); whilst the remaining items are delivered to P.O. boxes (10%). Correos has 265 postmen.

For Granados one of the main problems is the address system. “There isn’t logic in the national address system or the numeric sequence in the streets and avenues of urban areas. This makes the delivery difficult, and the situation is even more complex in rural areas. In addition, there isn’t an established postal codification.”

Correos’ main competitors in parcels are DHL, UPS and TNT, which together hold more than an 80% market share in the courier market. Urbano Express, Urgente Express and Gigante Express are major players in the national territory and represent 70% of the traditional mail market.

Correos El Salvador offers a range of products and services consistent with those offered by most national posts. Granados is particularly proud of the EMS service. “EMS is our premium service. It has received international awards due to the high quality of its service. In 2008 the UPU awarded our EMS service with the EMS Silver Cooperative award. Our EMS service was ranked fifth worldwide and first among the Latin American countries. We aim to be accoladed with the golden award in the future.”

Another interesting product is Postalito pack. This a priority parcel delivery service to the USA with a two kilo maximum weight and where the packing material is free. The product has a competitive price.

A real opportunity for Correos is remittances, which yield around $3bn to the local economy. Some 2.2m El Salvadorians live in the USA for instance. Correos does not currently have a remittance product, but is planning to offer one in the near future.

Moving the discussion on to technology and people, the director general outlined two IT programmes where Correos El Salvador is linked into UPU systems, namely: IPS (International Postal System), a powerful tool developed by the UPU Postal Technology Centre. This application supports the national and international operational processes, search system and tracking services; and the Rugby arrangements, the claiming system for EMS units.

Correos El Salvador has connectivity in more than 30 offices nationwide and aims to increase the number of offices connected during 2010.

Granados’ overview was that “our employees have better salaries and benefits than the employees of the private sector. The company doesn’t have automated processes. All processes are manual but supported by information technologies. ”

When quizzed on his role, Granados said: “I believe I can bring my professional experience and knowledge to Correos El Salvador in order to make it a profitable company with high quality services. I enjoy the challenges of this position but the economic recession which affects the growth of the national economy is my main concern.”

Granados outlined how Correos El Salvador will improve “by quality and quantity” in marketing (through new services and an increased presence in the market); in human resources (training, recruitment and personnel selection for example); in Infrastructure (construction and refurbishment of post offices, etc); postal equipment;  and the re-engineering of operation processes. All these activities “will help to increase the revenue in order to benefit the State, the workforce and the society.” he concluded.

“Where there is a good government there is a good post office.”

Biography: Lic Marlon Granados Pinto

Granados is a lawyer and a notary. From 1990 to 1997 he was managing director of the REAN Imports company and of the Goodyear subsidiary in El Salvador. From 1998 to 2000, Granados was a governmental lawyer and a member of the National Attorney’s Office. From 2001 to mid 2009, he was managing director and legal representative of Granados Consortium and Associates.

This article is featured in the March 2010 issue of the Mail & Express Review. If you do not receive the industry-leading magazine and don’t want to miss out, subscribe by clicking here.