Parcel deliveries do not have to be a dog fight
The first time I went to a post office was in 1996 to get an envelope and stamps for a Niknaks competition. I didn’t win the competition, nor receive any written correspondence from Simba to say it had received the submission from my six-yearold self. I did get the envelope and stamps though.
Back then the Yellow Pages was the most relevant and localised database of households and firms, but now precious few fill out the telephone number box in the manual forms to be found in government departments.
And as Lunga Siyo of Telkom Business told the Financial Mail, the remaking of the 70-yearold Yellow Pages platform is about turning it into a hub for Telkom’s fintech offerings. The dominant fixed-line business no longer prints reams of telephone user data because few homes still have traditional telephone lines.
Similarly, few of us still send letters in stamped envelopes, let alone small parcels through the red organisation.
Simba no longer runs the competitions it ran, with tokens and Tazos hidden inside the popular maize snacks it sells, but the Post Office still hopes people will buy envelopes and stamps and hopes against hope that these will be delivered.
A lot has happened since 1996; now retailers such as Pep dispatch small parcels, and letters if you like. The Post Office recently reminded us that it actually has a legal monopoly on non-food parcels under 1kg, and the communications authority confirmed this view. The question many irate customers whose parcels are late or never arrive ask themselves is: why is the Post Office in financial and operational distress despite this monopoly?
This is a typical example of a “failed rent management framework”, and we find ourselves considering a monopoly position the Post Office has never felt it needed to use until it couldn’t pay landlords and creditors.
Does this mean legislation should be passed to entirely undo this? Not necessarily.
The Post Office needs to consider its value chain and accept some hard truths. Vertical integration made sense when postal services were a key network industry. They no longer are, but parts of that chain of activities — dispatching, courier, logistics and parcel back-handling — are still relevant, with the “last mile” being a combination of inperson and digital touchpoints.
So, for instance, while you may purchase and pay for a good on an e-commerce platform, the delivery still needs a “warm body” and real logistics to drop the parcel at your door. The real question is, if the Post Office is to play in this market as the only licensee, how do we frame the market relations of those who already operate in it, contrary to the Postal Services Act of 1998? The answer to this does not need to be as antagonistic as the court challenges have suggested.
Rather than playing across the chain, even in areas where technology and other incumbents have already eaten their lunch, the Post Office would not need frequent state capitalisation if it had kiosks of the same service providers (PostNet, Mukuru et al) in its expansive real estate network on the retail end.
The Post Office could charge rentals, handling, agency and other fees, similar to the role played by Airports Company SA in the aviation sector.
The Post Office, as the only player in the handling of small parcels, has an opportunity to crowd other players into a framework that makes use of the fact that post offices are often in locations where DHL and others may not find it feasible or economically viable to enter.
The task of policy should be to align existing public capacity to the immediate task of reorientating its business model and expanding the market to accommodate existing actors.
This does not have to be the existential scrap both sides are apparently readying themselves for.