Only hope for the SA Post Office

If the South African Post Office plans to compete against the private sector, which has filled the gap left while the entity has been trying to reach financial stability, it needs to modernise its systems and regain public trust.

This is according to Bob Group CEO Andy Higgins, who told Newsday that the ailing state-owned entity must use its structural advantages to remain relevant in a rapidly evolving industry.

Declining mail volumes from the early 2000s and eroding trust among the South African public, caused by slow deliveries and stolen parcels, saw it eventually report a financial loss for the first time in 2013.

Since then, it has been downhill for the postal service, which cost South African taxpayers R7.9 billion in bailouts over the next several years.

This ultimately led to the postal service being placed in business rescue in 2023, resulting in a further R2.4 billion bailout.

While the Post Office attempted to get its finances in order, the private sector stepped in to fill the gap, which continued to grow given the rising popularity of e-commerce in South Africa.

Today, South Africans and businesses alike have several courier services to choose from, leading to increased innovation in the industry, such as smart lockers and counter-to-counter services.

For instance, The Courier Guy’s Pudo smart lockers allow customers to deliver and collect parcels at steel lockers across the country without worrying about closing or opening times.

Pep offers a courier service that allows packages of up to ten kilograms to be sent to any of its 2,600 branches nationwide.

However, Higgins believes there is still hope for the Post Office.

He says this lies with the entity’s structural advantages, as it is well placed to facilitate the cross-border shipping of small packets and low-value e-commerce items as South Africa’s designated postal operator within the global Universal Postal Union (UPU) system.

“Cross-border ecommerce is on the rise and SAPO could leverage UPU integrations to offer reliable and affordable options for international sellers shipping to South Africa and South African businesses shipping to other countries,” said Higgins.

“These businesses are currently forced to use expensive premium services making them less competitive.”

Significant modernisation and trust needed

While the Post Office still has a role to fulfill within the South African e-commerce and logistics industries, Higgins says that the entity needs to modernise its systems and regain the trust of the South African public.

Specifically, he says it needs to upgrade its tracking, customer notifications, and customs data flows.

Higgins provided the example of a recent parcel he had ordered from China that was shipped using the postal service, the only available shipping method.

Therefore, when it arrived in South Africa, the package was handed over to the Post Office, being South Africa’s designated postal operator.

Higgins shared his tracking link with Newsday, which showed that once it arrived in South Africa, it took 12 days to arrive at the “collection point for pick up.”

Because no information was provided, he assumed where the package would be delivered and went to look for it himself.

“Not receiving any tracking notifications, I had to make several assumptions but was ultimately able to track down my parcel at a local post office,” Higgins said.

“Once at the post office, I had to identify my parcel by manually searching through a handwritten list of hundreds of parcels in order for it to be located within the post office.”

Partnerships on the table

Communications and Digital Technologies Minister Solly Malatsi said his department plans to pursue public-private partnerships (PPPs).

Malatsi says this will assist in building an innovative Post Office and regain public trust without forcing the use of its services, such as the state-sanctioned monopoly on delivering postal items weighing less than 1kg.

“This comes at a time when postal services are transitioning away from monopolies.”

“The preferred outcome is for Sapo to get back on its feet by regaining the public’s trust, including public entities, not through compulsory use of its services,” added the minister,

Higgins argues that enforcing exclusivity to ensure the Post Office’s survival will result in higher prices, slower innovation, and regulatory workarounds.