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A redundant service?


Comments / 1527 Views / Saturday, 17 June 2017 00:00


Sri Lanka’s postal service went on strike this week demanding the Government resolve key management issues in the 209-year service. But it is a public service that is in imminent danger of being outmoded by the internet. In 2015 the Postal Department suffered its largest loss yet of Rs. 5 billion, converting it from a dinosaur to a white elephant. 

Struggling under low public revenue and painful fiscal consolidation, the Government has had to make tough decisions on what institutions it can keep, reform or essentially lay to rest. According to its overall financial review of last year, the department’s total income was Rs. 6.7 billion, while its expenditure was Rs. 11.7 billion.

In 2014, the deficit was Rs. 2.9 billion, while in 2013 it was Rs. 2.8 billion. The rapid increase of expenses is linked to the Postal Department maintaining its traditional services of delivering letters even though they have become severely limited. 

In most instances bills and official documents are routed through the Postal Department while email, text messages and phone calls have replaced traditional letters to friends, relatives and other loved ones.

But the department has continued to maintain a significant number of employees, exacerbated by the salary increase dished out to public workers after last year’s elections caused expenditure to skyrocket in what has become, mostly, an obsolete office. 

Struggling to make ends meet, the department is trying to improve the use of Business Mail Service and Local Speed Post and the sale of stamps. The idea is to get postmen to collect bills from homes that will then be paid at the local post office. Such services of providing options to pay water bills, insurance premiums, examination fees and money exchange facilities may prop up the ailing service for a time but eventually online payment systems will bring back the same old problems. The postal service has also actively resisted allowing their old post offices to be converted to tourist hotels or restaurants, worsening the revenue situation. 

Sri Lanka is obviously not alone in having a loss-making postal service. The US Postal Department racked up $ 8 billion in losses before they were severely downsized and given different services. Most customer habits have made it clear that they no longer require a physical post office to conduct most of their postal business. The Postal Service of the future will be smaller, leaner and more competitive and it will continue to drive commerce, serve communities and deliver value.

Communities losing post offices might get smaller, authorised stations or licensed local vendors to provide traditional postal services. In other words, in most countries around the world the post office is increasingly privatising its business, brokering out services of its retail centres. That strategy has been underway for years now, successfully in many locations. Now, it is the path the post office takes to serving communities with physical locations.

But it’s clear that closing retail outlets is not enough to save the post office. Nobody needs mail service like they used to, in spite of its value and reliability. As much as the postal department will hate it they will eventually have to reduce staff.

Some people will hope the post office has a future it’s all about successful evolution. But technology is evolving faster than most people can keep up. Post offices were once the backbone of the community but it may be time to let them go.


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