Post Office replaced in South Africa

Before the South African Post Office (Sapo) first became technically insolvent roughly 10 years ago, trust in the institution had already waned, and courier services effectively replaced it, with extensive networks reaching most of the country.

With e-commerce rapidly growing over the past ten years, South Africans and businesses alike have needed a reliable way to send and receive packages nationwide.

Sapo would have been the ideal candidate for this job due to its universal service mandate, which requires it to serve all South Africans, wherever they are.

However, declining mail volumes since the early 2000s saw Sapo enter financial distress in 2014, requiring millions in state bailouts.

In addition, Sapo’s reputation for late and slow deliveries and some of its employees stealing people’s packages eroded its trust among the South African public.

This left a gap in the market for private companies to act on, and that’s exactly what they did.

Today, South Africans have several courier services to choose from, and this competition has led to increased innovation in the industry.

For instance, Pep Stores has used its extensive network of 2,600 shops nationwide to offer a store-to-store delivery service where customers can send packages of up to 10 kilograms.

For reference, before Sapo entered business rescue, it had 1,023 branches located across the country.

However, unlike Pep, these branches are positioned with Sapo’s service mandate in mind.

Another innovation has been the self-service package locker offered by The Courier Guy’s Pudo and Bob Group’s Bob Box.

This allows customers to collect and deposit packages at lockers, which can be sent to any other locker in the country.

Pudo currently has 1,500 lockers scattered across the country, allowing users to send packages deposited to another locker or an address.

In the case of Bob Box, this service is currently only available to online retailers to send packages to customers. However, it will soon be launched as a customer-to-customer service.

Bob Group MD Andy Higgins told MyBroadband that their lockers are manufactured in South Africa and battery-powered to protect against power interruptions.

He says Bob Box uses a courier-agnostic model, allowing them to partner with multiple third-party couriers to handle logistics across the 120 lockers.

This number is expected to increase to 150 by the end of the year.

Aramex has also put its spin on improving the convenience of couriering a package with its store-to-door service.

The service has 1,300 dropoff points in shops around the country, where customers can deposit the package and have it delivered to an address.

Post Office considering privatisation

The Department of Communications and Digital Technologies (DCDT) is considering partly privatising Sapo to modernise its operations and increase its competitiveness.

Minister Solly Malatsi said the department asked the National Treasury for support in forming a task team to “pursue private financial and operational partners” for the Post Office.

“This will enable serious consideration of privatisation scenarios as a preferential option to further funding from the fiscus,” he said.

“It is with the goal of an innovative and competitive Post Office that it would be strategic to look into its current exclusive license on reserved postal services.”

Malatsi said the Post Office must build public trust without forcing the use of its services.

“This comes at a time when postal services are transitioning away from monopolies,” he said.

“The preferred outcome is for Sapo to get back on its feet by regaining the public’s trust, including public entities, not through compulsory use of its services.”

He said the goal is to foster an open, competitive environment promoting service excellence.

The minister explained that the funds previously committed to the Post Office will be based on a revised business plan by Sapo’s business rescue practitioners.

He added that further retrenchments or salary withholding must be avoided to attract new talent and improve staff morale.

“There has already been necessary but aggressive downsizing. Now, a motivated and stable workforce is essential to the success of any recovery plan,” said Malatsi.