Although it plays a vital role in connecting people, businesses and government across the globe, the postal industry is grappling with its greatest challenge yet: digital disruption.
On the one hand, the traditional core business of mail delivery is in decline as communications move online; on the other, the industry faces fierce competition in the rapidly-growing e-commerce parcel market. As a result, posts are shifting from state-owned monopolies to commercial companies, from mail dependency to diversified portfolios, from a well-charted history into a dynamic, uncertain future.
Despite these structural shifts, posts continue to sustain growth, generate profit and invest in tomorrow. On aggregate, total postal industry revenue reached €392.3bn in 2017, up €7.2bn on 2016 results. Mail revenue fell €3.2bn as structural volume declines were in part offset by price increases. Fuelled by e-commerce, parcels and logistics were the two engines of industry growth in 2017, up €9.0bn and €1.5bn respectively.
Meanwhile, posts continue to leverage their vast physical presence and dense networks as they innovate, improve and expand their business-to-consumer services. Many are teaming up with integrators, e-retailers and start-ups to further bolster e-commerce volumes. Others are introducing same-day shipping, offering real-time tracking and trialling drone, robot and car boot delivery.
2017 at a glance
In 2017, the sector recorded 2.8% revenue growth, with an acceleration in the first half of 2018 through an increase of 4.6% year-on-year. Ongoing e-substitution and e-commerce growth continued to widen the performance gap across business units, with revenue down 2.3% for mail and up 11.0% for parcels. Profitability remained strong for both divisions, with efficiency initiatives, network optimisation and capacity investment set to continue in the years ahead.
Apart from mail, the three main sources of industry revenue are parcels and express, financial services and logistics and freight. While mail still represents over 40% of industry revenue, posts continue to pursue growth outside the core. Most are becoming more diversified: close to three quarters have seen their mail revenue share fall since 2012.
Postal operators are also seeking growth opportunities abroad. For posts with international segments defined as either revenue generated by subsidiaries abroad or from customers outside the domestic market, international revenue has increased over the past five years and in 2017 represented close to one quarter of total revenue on average, though shares ranged widely across operators. Most posts have grown international revenue since 2012, with five achieving average annual growth above 10%.
E-commerce is booming. As more and more shoppers move online, around 10% of retail sales worldwide are now made online, almost half of which are done via a mobile device. Apparel and footwear, media products and electronics are among the items most often purchased online, and food and drink sales are growing rapidly.
In 2017, parcels volume growth rose to 14.3% on average, up from 8.4% a year earlier. Most posts also saw parcels revenue improve in 2017, with e-commerce-driven growth for both domestic and cross-border B2C volume commonly reported as key growth drivers; others saw revenue rise steeply as a result of acquisitions; on average, revenue growth accelerated to 10.8%.
Want to know more? The full version of the IPC Global Postal Industry Report 2018 includes over 140 pages of industry and operator analyses. The report is available to IPC members for free, and is also available for purchase by non-members. A full table of contents, as well as further details on how to purchase the report, are available here.