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March - April 2000
Post offices thrive despite e-mail boom



Post offices of the world, take heart!

Despite challenges from e-mail and the Internet, postal systems represent a growing industry that is vital to both developing and developed countries, say senior postal officials of the United States, Canada, and Latin America.

Take the case of the United States Postal Service. With its 800,000 employees and 40,000 offices, the business takes in $63 billion a year, making it the eight largest enterprise in the United States. Projections show the service will grow 2.3 to 2.5 percent annually until 2010, according to Richard Porras, the service’s chief financial officer.

"This is not a dying industry," he said recently at the IDB.

Moreover, postal systems in developing countries will grow even faster, at an annual rate of 5.8 percent. In Latin America, many postal systems are in need of modernization and reorganization to meet the challenges of a more competitive century, and this "presents a fertile area of activity for multilateral financial institutions," Porras said.

The U.S. Postal Service is interested in helping postal systems around the world become more competitive and economically viable and is ready to cooperate with the countries of the region and with the IDB to help carry out reforms, Porras said during a recent briefing on "Postal Reform in Latin America and the Caribbean" at the Bank’s Washington, D.C., headquarters. The event was hosted by Larry Harrington, executive director for the U.S. on the IDB Board of Executive Directors.

Gary Halprin, director of international business relations for Canada Post Corporation, noted that a strong and efficient postal service has a multiplier effect on a country’s economy, assisting small business, banking, insurance, manufacturing, retailing, and processing industries.

In a strong economy, consumers spend a lot more money on postal services, measured as a percent of gross national product, than do poor countries, he said, and that is an indication that the stronger a nation’s postal service, the better its economy and the better off its population.

In the United Kingdom, every $1,000 in gross national product brings in $8.40 in postal revenue. Other developed countries, such as the United States, Canada, and Italy, have similarly high postal income levels, Halprin said.

On the other hand in Turkey every $1,000 in gnp brings in 86 cents in postal revenue; in Brazil, the measure is $2.69 per $1,000.

Halprin described Canada’s postal system as a case study of an ailing system that was turned around by reform and converted into a viable enterprise,.

In the late 1970s and early 1980s, "everything that could go wrong, did go wrong," Halprin said. The system lost money, faced union conflicts, had a poor public image, low customer and employee satisfaction, and poor service.

In a five-year turnaround program, the Canadian system was converted into a state enterprise with a focus on customer service, new products and technology, according to Halprin.

Mario Felmer Klenner, secretary general of the Postal Union of the Americas, Spain, and Portugal, described an efficient postal system as an "economic engine," providing a "significant return" to productive investments in the sector.

In addition to Canada, he described Chile, Costa Rica, New Zealand and Uruguay as countries that have carried out successful postal reforms. Argentina has recently become the only country in the world with a privatized postal system, a project supported by $129 million in IDB financing approved in 1999.

Ricardo Toledo Carranza, general manager of Correos de Costa Rica, S.A., said that a recent postal reform in that country converted a system that had a deficit of $6 million a year from salaries alone into a state enterprise with a budget surplus.

Despite the growth of e-mail and the Internet, the public relies on the postal system to "deliver a package, a physical package," Toledo Carranza said.

-- Daniel Drosdoff



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