Challenges of the Postal Industry

Parcel delivery has become an increasingly competitive market with more and more entrants stealing market share from post offices.
The parcel delivery market size has grown strongly in recent years. It will grow from $474.15 billion in 2024 to $502.57 billion in 2025 at a compound annual growth rate (CAGR) of 6.0%. The growth in the historic period can be attributed to E-Commerce growth, rising customer expectation, regulatory changes, and last-mile logistics. (The business Research Company, 2025).

The major companies operating in the parcel delivery market are Amazon.com Inc., United Parcel Service Inc., Deutsche Post AG, FedEx Corporation, Japan Post Holdings Co. Ltd., SF Holding Co. Ltd., La Poste, Emirates Post Group Company, Poste Italiane S.p.A., DPDgroup, Hermes Europe GmbH, International Distributions Services Plc, Canada Post Corporation, Toll Group Pty Ltd., Purolator Inc., General Logistics Systems B.V., PostNL N.V., Sociedad Estatal de Correos y Telégrafos S.A., PostNord AB, Singapore Post Limited, Aramex International LLC, Omniva AS, Shadowfax Technologies Pvt. Ltd., Blue Dart Express Limited, Swiss Post Ltd

According to a report on USPS, The Postal Service is a labour-intensive organization, with labour accounting for 76 percent of costs. (Office of the Inspector General – RISC-WP-20-001, 2019). The same is true for many Post Offices who have to deliver mail 6 days a week whilst maintaining their network of retail spaces.

Post offices are generally slow at adapting to change and adopting new technologies due to the high capex investment, a result of management’s conscious decision, lengthy and bureaucratic procurement processes, legal obstacles, or a risk-adverse culture.
Meanwhile their competitors advance quickly and a far quicker at adopting new technologies and introducing them to the market.

How do post offices remain relevant in the digital age? Gen-Z have very different expectations in terms of speed and service to those of the generations before them. Gen Z will expect post offices to be ‘smart’ with extensive digital services.

With the decline in letter volume and a falling market share of parcel delivery it is imperative for post offices to diversify in order to find new sources of revenue generation. Post offices that continue to focus their business on letter and parcel delivery are finding it increasingly difficult to remain sustainable and financially viable.

In the digital age customers expect fast service. If customers have to wait in line and cannot complete their transactions in a fast and efficient manner, they will look for alternatives. Speed and efficiency are key to customer experience and satisfaction.

Digital security and data protection are now fundamental to all businesses. Going digital can not only improve the security of the postal system, but it’s integral to sustain customers’ trust. As posts are privy to sensitive information, being accountable for any lags in the system, privacy or otherwise, is essential to protect their reputation.

If posts are to remain relevant, providing a 24/7 service could be key to enabling this. A post office that only opens from 9 till 5 does not fit well with the busy working lives of many. Providing the ability to print labels and send letters and parcels around the clock would be very convenient for a large proportion of the population who may not be able to visit a post office during their opening hours.