Postal Dept. operating loss of Rs 5.6B in 2017

Ready availability of alternative modes of communication, decreasing use of international mail and parcel services and increasing operating costs are causing heavy losses to the Department of Posts (DOP).  According to the Central Bank’s Annual Report for 2017, the DOP’s operating expenditure has increased by 2.6 per cent to Rs 12.6 billion, resulting in an operating loss of Rs 5.6 billion during 2017, in comparison to the Rs 5.7 billion loss in 2016.

The Bank points out the need for continued efforts towards further diversifying the DOP’s services in line with global trends in postal communication in order to face this situation.

The postal network of the DOP included 653 main post offices, 3,409 sub post offices, 523 agency post offices, 101 rural agency post offices and four estate agency post offices as of end 2017.

Through this network, the DOP provided speedy and efficient postal services, financial services, and social and obligatory services, increasing its revenue by 6.4 per cent to Rs. 7 billion in 2017.

The Bank says that continuous operating losses reported in the recent past can be attributed to the enhanced performance of alternative modes of communication, reduction in revenue from foreign parcels and international post, and increasing administrative costs.

In order to recover from losses and to increase revenue, the DOP needs to formulate policies on costs and the pricing structure while diversifying its products and services further by incorporating technological advancement and international best practices to reduce costs and increase operational efficiency, says the Bank.

The high penetration of the post office network within the country, which reaches remote areas that are not covered by banks and other financial institutions, could be used to provide multi-functional services, the Bank points out.

The parcel delivery services of the DOP need to be enhanced by upgrading the existing delivery channels to be competitive with the current online delivery operators.

A major initiative taken in this regard is the launch of an e-commerce website in October 2017 as a trade facilitation programme that provides an online trading platform for the small and medium scale entrepreneurs to sell their quality products locally and internationally.

Similar projects that make use of the existing delivery channels and modern technology would enable the DOP to reach a wider customer base while minimizing losses in the future, the Bank points out. (GA)