What to do about SA's failing Post Office - TechCentral

What to do about SA’s failing Post Office

Duncan-McLeod-180-profileThe irony about the Post Office strike, former First National Bank CEO Michael Jordaan tweeted this week, is that the longer it drags on, the more its customers will move to electronic alternatives — never to return.

That the Post Office is in crisis is in no doubt. For more than 10 weeks, mail — letters, bills, magazines, assorted parcels — has been piling at its sorting centres.

The only surprise is there hasn’t been a bigger outcry from its customers. That consumers aren’t up in arms must give the institution real reason to be worried: if its clients have become blasé about the strikes, which have crippled the company with alarming regularity in recent years, it must mean they’re finding alternatives. Private courier companies will be smiling.

The question this latest strike raises is what should be done about the Post Office.

The strike comes a year after the UK privatised Royal Mail and floated it on the stock market, not without controversy.

Ultimately, privatisation may be the best outcome for the Post Office, too, although such a move would probably only happen under a post-ANC administration, one that realises that state-owned enterprises tend to be inefficient and act as a drag on the economy and the national fiscus.

A government that stubbornly refuses to sell the loss-making national airline, casting all logic to one side as it taps taxpayers for one massive bailout after another, is unlikely to adopt a different approach when it comes to the postal service.

Anyway, the Post Office is far from ready to be sold. In its current state, investors would give it a wide berth. For now, the state has no choice but to try and fix the mess.

Indeed, it’s the government that may have got the Post Office into its current mess in the first place. The latest strike appears to have started after the company said it could not afford to honour an agreement reached with labour and supplementary contracts that it entered into with workers. In particular, it hasn’t been able to honour commitments to make contract workers permanent.

Unreasonable wage increase demands from the Communication Workers Union haven’t helped.

But opposition political parties have blamed the financial woes facing the Post Office in part on the withdrawal last year of a financial subsidy meant to help it meet its obligation to deliver the mail in rural parts of the country where it’s uneconomical to do so. The Democratic Alliance and Freedom Front Plus believe the subsidy should be reinstated immediately, according to a report in Business Day.

The withdrawal of the subsidy, coupled with mismanagement and corruption, has plunged the Post Office into crisis, the opposition parties say. CEO Chris Hlekane is on special leave and Janras Kotsi, the head of the mail business, has been suspended.

Earlier this year, President Jacob Zuma, at the behest of former communications minister Yunus Carrim, ordered the Special Investigating Unit to probe “allegations of serious maladministration” at the Post Office, including “unlawful appropriation or expenditure of public money” and “improper or unlawful conduct” by its officials. It’s understood that investigation is ongoing.

"We deliver, whatever it takes. Well, sometimes."

“We deliver, whatever it takes. Well, sometimes.”

The problems cast serious doubt on government’s plans to use the Post Office as the vehicle to launch a state-owned bank. In fact, it’s laughable to think an institution that can’t deliver something as basic as the mail could be entrusted with people’s savings.

First, telecommunications and postal services minister Siyabonga Cwele must ensure the institution gets the basics right. Until last week, when he issued a terse statement urging the unions and the Post Office to play nicely together, the minister had been missing in action. Indeed, his approach to the entire sector, not just the Post Office, has appeared cavalier.

Most crucially, Cwele must ensure that the Post Office has the right leadership team in place to begin to address both its short-term problems and the long-term challenges of repositioning the company for the digital era. The Post Office could play a big role in fulfilment for the expected boom in e-commerce in coming years. It’s not going to do that in its current state.

  • Duncan McLeod is editor of TechCentral. Find him on Twitter
  • This column was first published in the Sunday Times

31 Comments

  1. What they fail to understand is that, unlike a mineworker strike where the strikers hold the cards, these guys have nothing. Us, business and consumers simply go elsewhere. I used SpeedServices for many years and I came to know the guys at the local post office very well. Our kids go to the same school so we had lots to talk about. That was then…I now have the same relationship with the people at Postnet, Berco & DHL. Wil I go back to the post office, no, simply because they have no regard for me, my customers nor my little business.

    I fully agree with the author, they have been troublesome for a long time, striking, losing parcels and stealing our goods. Nobody cares that they are going out of business. I do hope that my friends at the cocal post office find great jobs at a private courier company.

  2. Inqolobane Yesizwe on

    “post-ANC administration” LOL! There are so many assumptions with this phrase, one would think that techcentral.co.za has no editors.

  3. Yup… Enterprising companies can easily step up to fulfil the most critical needs. They might as well lie down and die for all I care. It’s just another State owned Fiasco anyway.

  4. Greg Mahlknecht on

    >The Post Office could play a big role in fulfilment for the expected boom in e-commerce in coming years. It’s not going to do that in its current state.

    This is important and is the reason we can’t just say “close it down, who cares”. The Post Office simply can’t go away. Courier services are just too expensive to push ecommerce down to the lower income citizens, and is an insurmountable barrier to entry for many home enterprises and small businesses.

    If you want some small component or something from eBay, you can get stuff as low as $0.99 with free shipping from China, because they have a cheap, well run postal service. Yes, it takes a month to reach here but opens up a doorway on to the ecommerce world for millions of Chinese. It could do the same here.

    As an example I knew a pensioner that made nails in his garage and sold them to a few hardware stores, they had massive markups; if I could buy the same quality nails (or nuts, bolts, etc) for half the price of a hardware store, I probably would. There are thousands of little industries that could be jumpstarted if the maker’s market changed from where they could catch a taxi to, to the entire world (or at least the entire country).

  5. At some point in the future, the notion of a post office is going to seem quaint and dated. Most of what post offices move (paper media) can easily be replaced with email, printers, even fax machines. If anything, this SAPO crisis should be a catalyst for getting internet access rolled out to the poorer, rural communities, so they have a viable alternative for communication.

    As for parcels, gadgets and gizmos, Google is finalizing autonomous drone delivery (see: Project Wing). At some point it’ll make more commercial sense to serve rural areas with regular drone dispatch, as opposed to vehicles (cutting CO2 emissions all the while), and then SAPO will really have both feet in the grave.

    Instead of throwing good money after bad here, I think we’d be better served by looking towards the future state of post and parcel delivery, and invest in that future economy, not the dated, broken one we have now.

  6. Courier services are only expensive for now – in the next few years, drone delivery will become a reality, and you’ll only need large, expensive trucks for major backhaul between delivery centers. So don’t count on the current state of affairs lasting forever.

    Honestly I’d rather have an innovative SAPO looking into drone pilot programs here in SA, to reach rural communities at a lower cost, with better efficiency, but that’s not likely to happen. So I’m on board with the “close it down, who cares” camp – there are viable alternatives available in 2014, and they’re busy creating the gap for other entrepreneurs to fill, like it or not.

  7. Greg Mahlknecht on

    The very nature of couriers (or drones) means they’ll always be WAY be more expensive than the traditional post office depot model. Remember that you go to the post office to get a parcel; this is key. When you said “only need large, expensive trucks for major backhaul between delivery centers” you just described the post office. It’s a very efficient logistical concept. China has shown that a postal service can be profitable at costs to the consumer that a courier service couldn’t dream of now or in the future.

    The drone idea sounds cool, but we’re a looooong way from that, and the technical limitations means it won’t be delivering large parcels, or doing multi-drops until there are fundamental breakthroughs in the base technology. Never mind the problem that they can’t realistically land in urban areas – the number of drones they’d lose on overhead lines and stuff would bring the project to a grinding halt.

    I did check up Google’s Project Wing – sounds like they’re making it more for emergencies, but they’re behind the curve here, some place in Germany is already using them for delivering pharmaceuticals to remote destinations. Sorry, but this isn’t the future of delivery.

  8. I think you misread most of my comment. I was talking about *rural* areas, not urban ones. Yes, I think drones will have a bad time in urban areas, which is why I did not mention urban areas, and urban areas aren’t even the problem – denser population, established infrastructure, and so on.

    On a cost-per-kg basis, I’m pretty sure that rural areas are the most expensive to serve. And when I say ‘rural’, I mean the mountainside mudhut towns in KZN, that have poor roads and infrastructure to begin with. They’re the ones that will be most affected by SAPO inefficiency, not us living in or near urban centers.

    If you had read up on Project Wing a little more, you’d have learned it can currently carry up to 2.5kg in a single load, and they’re aiming to have it haul that load at distances of 150km+, all running on an electrical charge. And that’s the 2014 prototype – you can bet they’ll reach and exceed those goals in the years to come.

    And how can you point out a current use case for drone delivery, and then in the very next breath say that it’s not the future of delivery? Are you implying that Germany is wasting it’s time on a pointless project, and yet that still somehow puts them ahead of the curve? I’m confused.

  9. Greg Mahlknecht on

    >I think you misread most of my comment

    Your first paragraph was a blanket endorsement of drones and your second paragraph said you’d be happy to close the post office down, and one could only assume from your message, replaced with a drone-like system, seeing you mentioned nothing else.

    >On a cost-per-kg basis, I’m pretty sure that rural areas are the most expensive to serve.

    Yes and no. They’re obviously more expensive to get a vehicle there, but that can easily be countered by delivering less often. Remember I’m talking about a basic postal service, not a next-day delivery service like drones and couriers provide. And we’re talking general non-critical goods delivery here, so a truck going there every week instead of every day is fine.

    >And how can you point out a current use case for drone delivery

    I was recognizing a GOOD use case for it. Emergency situations where cost or scale aren’t an issue. Delivering

    I think it’s a great niche delivery system – the problem is we need mass delivery systems. It’s still cheaper and probably quicker to load up a truck with hundreds of kilos of packages and deliver them on an optimized route.

  10. Only diamonds are forever. The ANC will depart as so many others did. Alternatively a new and young generation of South Africans will form the next government, those not dedicated to feathering their own nests but have an interest in the progress of this country

  11. Here’s the fly in the ointment: Too many services are still far too reliant on the SAPO to deliver, from, as the FNB chappy Jordaan should know but seems he doesn’t, CREDIT CARDS by REGISTERED MAIL, vehicle registration renewals (why they cannot be emailed to Pay Pal outlets still floors me) Municipal rates/service statements and other legal doc deliveries. May I advise readers that many, many people in Azania do not have the luxury of the internet at hand. Normal letters and parcels or ultra snail mail have I think long gone the way of Postnet/internet.
    As to the minister called Cwele well this must be the most arrogant and truly bungling incompetent on the cabinet. Cwele is the Poster Child of everything that’s wrong with the ANC since that catastrophic day they took over the wheel at the Union Buildings. My take on Cwele is that he’s being rewarded by Zuma and nothing more, this man is no more than a knuckle dragger from the old struggle days who couldn’t run a Boerewors stand let alone an important cabinet portfolio. He’s now covering up his total uselessness by his blunt and offensively aggressive attitude…In short, HE’S BLOODY CLUELESS.
    I trust that Postnet realise what a friend they have in Cwele!

  12. Why don’t you read the article again

    “would probably only happen under a post-ANC administration”

    the author used the word “would” and not “will”.

    maybe your ANC education has failed you too.

  13. This strike has been grinding on and on for weeks and months, and it’s patently obvious that this ANC deployee Cwele hasn’t the faintest idea or the political will as to how to resolve it ,so why hasn’t the DA got him and his cadre buddies to appear in parliament and give a formal Please Explain as to just what is ACTUALLY going on?
    Or will Mrs. Zille and her underling leave things to the only Action Men we have down there to embarrass the hell out of Cwele with a further round of hat-banging…it seems this is sadly the only ‘language’ the ANC reacts to anyway!

  14. The only thing the PO is good for is to pay my car licence. Else you wont find me using snail mail

  15. “in the next few years, drone delivery will become a reality” I cant wait, because I will be first in line to steal one of these drones. It would be a lovely toy to have!!

  16. I have several magazine subscriptions that are outstanding in their sorting centres. Go! has already lost my renewal. Getaway will too. Snail mail is unreliable, Too many of these miscreants are shooting themselves in their own “foots”! Swines!

  17. Obakeng Manopole on

    The Post Office must just catch up with the market. Its very sad to to see how SOCs continue to be run like there is NO competition in what they offer. Our leaders need to work with us “Young/Entrepreneurs/Private Sector” to understand where to go. The advent of technology is continuing to shower markets with “substitution competition” and it seems the old folks at state owned enterprises can only do damage control all the time. Very reactive and very much against progress. It must be understood that demand for products and services of better quality plus open global markets changes all scenarios for every industry that has continued to operate in monopolistic manner.

  18. Obakeng Manopole on

    Well lets just say, the ANC is not immune to competition……….Infact, the Post Office, Telkom, Transnet, SAA and many of the State Owned Enterprises are not and will never be immune to competition. Therefore it only makes sense to keep the customer happy by understanding and meeting their “ever changing and dynamic” needs. The world is moving forward, and the whole globalization discourse is really doing a good job at breaking borders. Anyone who thinks they can lead forever without making an effort to keep the supporters happy is flirting with their very own extinction or a potential wipe out.

  19. Only on techcentral could someone say “Google is finalizing autonomous drone delivery” with such confidence. There are many less geeky and technical solutions that could replace the PO, not everything needs batteries.

  20. To be honest while cost helps I don’t think it’s the complete game changer. Reliability, trust and speed are though. SAPO has none of those.

    If you compare ecommerce in the UK, you can get delivery for free more often then not, Amazon does next day free delivery for a fixed yearly fee. Goods are delivered by Royal Mail and a number of other courier companies, some operated as franchises. Competition is rife.

    Nothing beats ordering an expensive GPS watch on Friday afternoon and have it arrive before your race on Saturday.

    Nobody even thinks that something would get stolen.

    Until South Africa gets like that their really isn’t any competition by ecommerce to bricks and mortar. And SAPO has proved that they aren’t the vehicle for it; they’re unreliable, nobody trust anything of value with them and they deliver when they feel like it.

  21. Greg Mahlknecht on

    That’s kind of my point. We need the post office to be the company you and I both want it to be, as the courier services aren’t going to drive costs down anywhere near post office prices, it’s just not possible as they offer different services. The two biggest ecommerce sites, Kalahari and Takealot, are running at a loss. Their prices are similar to brick and mortar (if you shop around for 5 mins), I can’t help but think their free delivery over R250 is killing them; it has to cost them R50 or more, surely? That’s their profit margin gone right there.

    >Nothing beats ordering an expensive GPS watch on Friday afternoon and have it arrive before your race on Saturday.

    Couldn’t agree more, and for high value items like that couriers will always be the best option. My points were aimed at servicing the lower end of the market. The customers that courier companies will never have interest in serving because it doesn’t fit their model and they have the luxury of just ignoring it.

    When they’re not on strike, SAPO is actually pretty decent. I buy a lot of stuff online and take advantage of free/cheap shipping for the stuff I don’t need in a hurry, and I’ve never lost a parcel in many years (the last one I lost was a registered parcel from Canada, which never got to the Canadian border, Canadian mail lost it). They have cleaned up their act a lot. My parcels being stolen doesn’t even cross my mind.

  22. They’d first have to roll out proper network signals at this rural areas. Your ISP are also refusing to do that because it is not profitable. How do you then move that drone?

  23. Maciek Granicki on

    I saw this on twitter yesterday – @IvoVegter “How to fix the Post Office: put October’s salaries in the mail.”

  24. Ditto. I am changing all my subscriptions to “electronic” but my recently renewed 5 year Car subscription rankles; had I an inkling that this strike was going to take place, I would not have renewed it. My other problem is finding an alternative for out of print books that I order from Alibris and Amazon …

  25. Imagine no more uninvited junk mail and flyers cluttering up your post box because you no longer have one! And you don’t have to worry about getting to the post office on time to gain access to you post box because they restrict access to the boxes after hours.

    Life will be simpler for some. My elderly [85 year old] mom relies on snail mail for all her accounts, statements, etc. and is not computer literate so last week I went on line and set up most of her accounts to receive electronic statements with some added benefits. She is so chuffed with the process all done on a tablet that she is thinking of getting a tablet herself to become “independent”.

    Necessity drives change.

  26. @Joe We capitalising on this and converting customers to electronic. No customers are looking to go-back once the Post Office gets going again.

  27. Its a shame you can’t post packages electronically, but I myself don’t mind paying a little bit extra for safe and convenient delivery.

  28. Pick & Pay are now also running a parcel service at very good rates – cheaper than PostNet, and reliable

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