India Dept of Posts can take a cue from cousins abroad

Even as the department of posts is trying to take shelter of a constitutional amendment to ward-off competition and stay afloat, its foreign counterparts in countries such as Japan, United States, UK, Canada, Germany, Australia, and New Zealand, are multi-billion dollar corporations that give a run for their money to private players such as Fedex, UPS and TNT in their markets.

In contrast, DoP managed less than a billion dollar (Rs 4,500 crore) in revenue during ’04-’05 and its losses are mounting every year. Worse, DoP revenues are stagnating, while its private competitors such as Blue Dart, First Flight and Overnite Express are growing in leaps and bounds.

So what’s ailing DoP? The biggest issue seems to be that of financial accountability. Globally, postal services are corporatised, with many of them even listed on the stock exchanges. This puts pressure on their management to remain profitable and grow their business. In contrast, DoP is a department and its losses are expenses of the government of India. As such, there is no incentive for DoP to run like a commercial enterprise.

Internationally, post offices’ strategy is to cash in on their nation-wide network of offices to offer as many valued-added services as possible, to the citizens and businesses. So, with the decline in traditional mail and stamp business, postal services diversified in booming businesses such as express logistics, personal banking, insurance, cash management and retail services.

German post is the world’s largest express logistics company and owns DHL. It also operates Post Bank, one of the biggest retail bank in Germany. Japan Post has announced a JV to launch a cargo-airline to take advantage of the fast growing market for international express cargo.

It’s already the largest insurer in the island nation. And the biggest of the US Postal Service, Postal is a $70bn corporation, competes head-on with Federal Express and UPS, without diluting its universal service obligation. While the latter two play the premium game, US Post is a value for money player and has launched a big cost-cutting exercise.

Its European and Japanese counterparts have emerged as one-stop providing financial services and third-party logistics, besides continuing to provide general mail and parcel service. Deutsche Post, for instance, owns Post Bank, one of the largest retail bank in Germany, while French Postal service La Poste has just launched its banking operations. Japan Post is Japan’s biggest insurer and one of the country’s leading financial service provider.

It’s the same with Britain’s post, which is a part of Royal Mail Group. It now handles personal banking, corporate cash services, travel and insurance services, bill payments and retail services.

Australia Post, on the other hand, appeals to GexEx by selling personalised stamps and collectors items such as Common Wealth games stamps. It also conducts Australian Lifestyle Surveys and then hawks them to the marketing companies. Canada Post is cashing on online shopping by tying up with e-Bay for shipping the merchandise bought on the site.