Postal firms must expand to survive


Middle East postal companies have just two years to become more responsive to demand if they are to survive the competition, said management consulting firm Oliver Wyman.

“Recognised brands such as the UAE’s Emirates Post must develop new strategies to deal with the liberalisation in the industry,” according to a white paper issued by the firm.

Government-owned postal companies must “develop business designs that align the organisation, products and services, network, and delivery systems without adding process inefficiencies and running up costs,” the paper said.

Speaking to Emirates Business yesterday following the release of the paper “Uncovering Value in the Middle Eastern Postal Market”, Manny Hontoria, Director of Oliver Wyman and co-author of the research, said regional postal firms have great potential to generate significant value but have limited time before regulatory liberalisation and e-commerce erode its competitive edge.

“There is a growing demand for quality services and postal companies should capture this opportunity. We may be looking at approximately two years from now before the sector becomes liberalised, allowing new players into the market,” said Hontoria.

Currently most of the countries in the GCC, except Bahrain, have regulated markets, which allow postal companies to set barriers for new entrants as deregulation occurs. Aside from the traditional letter and parcel services, postal companies have also been commissioned by various industries such as telecom aviation, government, logistics, insurance, global money transfer and private businesses.

The Oliver Wyman white paper mentioned that regional postal companies, such as government-owned entities, enjoy significant advantages like exemption from trade licence restrictions. The growing multi-national population and expanding industries in the region have also been economically favourable to postal companies.

“Large existing post office networks, recognised brands [such as Emirates Post in the UAE and Egypt Post in Egypt], a large local population and growing immigrant population, highly regulated markets, and low personal computer and internet penetration” are factors that could feed expansion and cross-selling opportunities in the region, the report said.

Hontoria said postal firms need to address both governance and recruitment-related issues. As government entities, he said postal companies require vision and the ability to execute new strategies.

“Another challenge is attracting the right kind of people to do the job. Shortage of talent is a critical concern for the industry,” said Hontoria.