News / What's the future for global mail after Covid has put its stamp on services?

© Natalia Bratslavsky

Europeans expecting mail from the US will need considerable patience in the coming months.

On 20 May, the US Postal Service (USPS) sent a consolidated shipment of mail from Chicago, New York and Miami across the Atlantic by sea, to arrive at the port of Rotterdam this week.

It was the fourth time the USPS resorted to ocean transport to move international mail since the Covid-19 pandemic hit international flows and the collapse of international flight schedules.

Border closures and the absence of passenger flights forced many postal agencies to suspend international mail shipments.

According to a report by the Universal Postal Union (UPU), global postal volumes dropped 21% year on year between 23 January and 14 May. Less than half of all postal shipments arrived at their destination the same week.

The list of causes, given by the postal association, runs from transport disruption and suspensions to capacity shortages and total stoppages.

In early May, the UPU warned that air cargo capacity for postal services was insufficient and called on governments to remove border blockages and loosen regulations, as well as fast-track permits for charter operations.

While the capacity crunch is easing, as more flights are launched and demand for PPE shipments is retreating from its peak, rates remain high and are not expected to fall back to pre-Covid levels for some time, as passenger traffic is unlikely to come roaring back. And a number of postal agencies have said rate levels are too high for them.

For their part, airlines are in no rush to load up with mail again while general cargo fetches high rates, said one carrier executive, adding: “It’s not the first product you go for.”

However, mail is regular and continues to generate considerable volumes. Air Canada has kept moving mail throughout the lockdown.

“We’re seeing a lot of mail across the Atlantic,” reported Tim Strauss, vice-president cargo. “We’ve been doing multiple charters for the UK’s Royal Mail postal service into Canada. Some of this is trucked to the US.”

China Post has moved containers of mail by ocean to Vancouver, where it is loaded on trucks of Air Canada flights to the US market. By some estimates, much of this is e-commerce.

“My guess is now that PPE demand has dropped, e-commerce from China is probably going back in the air,” Mr Strauss said, adding that he believes airfreight capacity will be available to carry the rising tide of international e-commerce moved by mail.

“We don’t see ourselves walking away from the mail business,” he said.

In its report on the impact of the pandemic on the postal business, the UPU outlines three scenarios of how the sector will fare in the aftermath of Covid-19: the pessimistic version sees postal agencies unable to recover fully; the second – deemed most probable – envisages them recovering from the short-term impact, but continuing to suffer volume decline in the letter segment; and the third sees them recover quickly and grasp emerging opportunities that could reverse long-term decline.

Horst Manner-Romberg, principal of parcel research and consulting firm M-R-U, said it was too early to judge the economic impact of the pandemic fully, adding that a clearer picture should emerge in the third quarter.

However, he doubted that some trends brought about, or accelerated, by the lockdown, such as using online channels for communication and invoicing, would reverse themselves.

“The ultimate question is, how will the consumer act?” he stressed.

At this point there is no indication that postal agencies or airlines are looking to change the terms of engagement, which suggests that a wholesale re-evaluation of the airline-postal operator relationship and the contracts for moving air mail is not on the cards.

Mr Manner-Romberg said there were alternatives for postal agencies to move some of their international traffic. They could pool their volumes to leverage their position vis-a-vis carriers, or they could resort to surface transport. Trucking between Europe and China takes 15-17 days, which could be a viable option, provided that postal regulations do not get in the way, he said.

Using seafreight is another possibility.

“Actually it’s not such an exotic solution. Some mail from South America to Europe has been moving that way for a long time,” he noted.