Brazilian government seeking to modernise postal services

The Brazilian government is bringing in new legislation aiming to modernise the Brazilian Post and Telegraph Corporation (ECT or Correios) and allow it to provide new products and services.
Provision 532 has been sent by President Dilma Rousseff to Brazil’s Congress seeking more powers for Correios to expand its logistical support, operate in foreign countries, become a shareholder of other companies and set up subsidiaries to run services.

The legislation updates regulations dating back to 1969, and could allow the Post to run its own postal bank, rather than using financial service partners, run its own air cargo network and get involved in mobile and digital communications.

Government minister Paulo Bernardo said: “We are incorporating current resources to the management of the Post Office to ensure that they continue providing excellent service to citizens. From now on we will have more legal options to act, with the possibility of acquiring an equity interest in companies, and for subsidiaries set up to operate abroad.”

The legislation aims to make the Correios logistics system more integrated with the sale of products, allowing the Post Office to handle all stages from the preparation of shipments through to home delivery.

Correios would be given the powers to establish offices abroad to help manage the processing of mail and parcels, although plans need to be drawn up on where best to locate foreign offices.

The issue of how to manage the air cargo network is still under debate. Hopes are that arranging longer-term contracts, becoming minority shareholders in an airline or air cargo firm, or setting up of a new subsidiary to run the service might bring cost savings for the service, which currently costs around R$300m a year (about USD $185m), as well as tackling service bottlenecks.

A potential move into digital postal services could include digital certification products, registered email and electronic messaging services, as well as extra e-commerce support and even a section of the Correios website that could provide an online marketplace for retailers, making use of Correios logistics.

Regarding mobile phone services, Correios would act as a virtual operator – buying up unused network capacity from existing mobile phone providers to sell low-cost phone credits to its customers.

While the minister suggested postal banking and mobile phone operations were possibilities, he said studies were currently underway on the proposals for new postal services, and that “it does not mean that such services will necessarily happen”.

A new contract for a financial partner to provide postal banking services is already in the process of being arranged, with an auction planned for May 31 to award a new five-year contract starting in January 2012, following a decade of the service being run by the bank Bradesco.

According to the postal services secretary Luciana Pontes, the new legislation approved by President Rousseff would also strengthen the social development role for Correios and bring in modern private sector-style management practices to improve corporate governance.

Under its new president Wagner Pinheiro, Correios is reviewing its decisionmaking structure and has restarted its recruitment process to catch up with the natural attrition in its work force that have seen services suffering from staff shortages.

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