Repositioning EMS to Compete

Emma Okonji examines the place of EMS in the 21st century courier business and the need to reposition it for effective competition

From 1985 when the Nigerian Postal Service (NIPOST) was carved out of the postal division of Post and Telecommunications Department, up to 1995, NIPOST was an extra-ministerial department under the supervision of the Ministry of Communications, designed to promote the development of economic postal service for the federation. Then was the boom era for NIPOST, whose major lines of operations were sales of postal stamps, delivery of parcels and bulk delivery of dividend warrants and share certificates.

But in 1986, NIPOST, in collaboration with other Universal Postal Union (UPU) member countries, established the Expedited Mail Service (EMS), as an arm that will manage courier business for NIPOST. The establishment of EMS Nigeria was a response to the incursion of private courier companies into areas otherwise regarded as the preserve of NIPOST. The private courier companies were seen offering significantly higher quality document merchandise delivery services than the traditional services rendered by NIPOST through its post offices.

At that time, NIPOST became the centre of attraction for job seekers because it was generating huge revenue for government and paying jumbo salaries.

But with the spread of internet in Nigeria from 1995 to 2000, the activities of NIPOST, including revenue generation, started shrinking, as most people no longer visit post offices to buy stamps for posting of letters. People then preferred the electronic mail posting via the internet, where instant response is received within few minutes of posting, which eliminated delays in receiving mails via post offices, operated by NIPOST.

The emergence of Global System for Mobile Communications (GSM) in 2001, became the straw that finally broke the camel’s back, when Nigerians started using their mobile phones for quick communication, via short message service (SMS), otherwise known as text messages, and the era of letter writing and posting via post offices, began to go away. The situation no doubt, affected the sales of postal stamps, which was the main stay of NIPOST.

The emergence of internet and GSM were the two major technology development that slowed down development of NIPOST, but government did not give up on NIPOST, believing it could still flourish in the area of courier service, through the EMS Nigeria, especially with the emergence of e-commerce, which opened avenue for online purchase and delivery.

In order to reposition the EMS courier business, Nigeria, last week, played host to a four day Africa regional EMS symposium, which was organised to address the operational performance and quality improvement of EMS service across the African region.

Repositioning EMS

Worried that EMS business across the African region, including EMS Nigeria is losing steam, the region last week, met in Lagos for a four day symposium to discuss ways of repositioning EMS operations for effective competition with private courier operators across the African region.

The symposium and workshop was organised to assess the EMS operational performance and service quality across the African region, with a view to repositioning EMS for effective service delivery and innovativeness in the African continent.

EMS operators that were represented at the symposium by dignitaries from over 22 countries across Africa, were of the view that EMS offers the cheapest courier services across Africa, with expectations to attract higher volume of customers

But they explained that EMS operators do not have larger control of the courier market, despite its cheap services. The symposium therefore  discussed several ways  through which managers of EMS operations could gain better understanding of the courier market, in order to create efficiency, greater customer satisfaction and how to generate more income for EMS.

EMS Nigeria appears to be the last hope of NIPOST, having lost out in postal services, which are no longer in vogue, due to emergence of new technologies. Another aspect of service delivery for NIPOST is in the area of bulkpost, which is also fading out gradually, as registrars now prefer to either store annual reports into discs, or send them as electronic copies to shareholders. The only viable option left to NIPOST  is the courier aspect of its business, being handled by the EMS department. It had been argued at various fora that EMS could become competitive with private courier operators and share the revenue string with them, occasioned by the emergence of e-commerce, where buyers will always need the courier service for delivery of all online purchased items. EMS Nigeria has the wide reach and network to play big in the courier sector, but must be innovative to remain relevant in the courier business, where competition is at its peak.

Minister’s position

In his keynote address at the opening ceremony of  the symposium, the Minister of Communications, Adebayo Shittu, said it was imperative to return the lost glory of NIPOST through the repositioning of EMS Nigeria, and commercialise it where appropriate.

According to him, since the establishment of EMS Nigeria in 1986, it has operated as the courier and business arm of NIPOST, with the responsibility for effective and efficient collection, conveyance and delivery of time sensitive correspondence, documents or merchandise, both locally and internationally.

Shittu,  however,  noted that the postal sector, particularly in sub-Sahara Africa is caught in a vicious circle of poor financial performance, which led to lack of investment, thereby preventing either improvements in the quality of service or expansion, which generates lower usage of the sector and Mail volumes, which further perpetuates the circle.

“Given the scenario, government must take, within the shortest time frame possible, some remedial and long lasting measures to improve the postal system,” Shittu said.

According to the minister, while there is a tendency to conclude that the regional challenges are universal, it is essential that we tap into the peculiarities in operations of other countries since our underlying focus remains the same, which among others, include building public confidence in EMS, its products and services, creating possibilities and arriving at a reasonable pragmatic solutions to the shared problems and challenges.

“I see a greater role for EMS in providing access for trade facilitation for small and medium scale enterprises through e-commerce. In spite of the unfavourable economic climate in many African countries, the courier business is still one with promising prospects,”Shittu said.

“The federal government on its part, will ensure an enabling environment for NIPOST to fulfill its mandate by facilitating passage of the Postal Reform Bill and the implementation of National Addressing System among others,”Shittu promised.

NIPOST’s view

The Postmaster General (PMG) and Chief Executive of NIPOST, Adebisi Adegbuyi, in his welcome address, said his assessment of the NIPOST when he came on board, was that of a government agency endowed with huge potential  but bogged down by bureaucratic bottlenecks and limited capacities for experimenting and thriving business models that have stood the test of time in other climes.

He, however, said many postal administrations in sub-Saharan Africa, were bedeviled with similar plights, except for few African countries like Morocco, Tunisia, Kenya and South Africa. Adegbuyi called on operators of postal services in Africa to join forces with a view to not only repositioning EMS, but also to working for inclusive, innovative and complete integration of the continent.

He said NIPOST would leverage the exponential growth of e-commerce, which offers plethora of opportunities for greater business collaboration with medium and small scale entrepreneurs, as this would go a long way in improving NIPOST revenue base, creating jobs for the unemployed and ultimately stimulating the nation’s economy.

UPU’s optimism and strategies

 Encouraged by the global exponential growth of postal and EMS services, the Director General of the UPU, Mr. Bishar Hussein, who was represented by the Manager EMS unit, UPU, Ms Jane Dyer, quoted the recent Accenture and Ali Research, which states that the global business to consumer (B2C) cross-border e-commerce market, is expected to generate $1 trillion by 2020 from $230 billion in 2014.

He said the traffic of international packages, including EMS and small packet items, was about 692 million in 2016, which is an increase of nearly 22 per cent, over the previous years.

“By the end of 2020, it is expected that more than 900 million people around the world will be international online shoppers, with their purchases accounting for nearly 30 per cent of global B2C transactions,”Hussein said.

He added that the e-commerce boom would generate more business for postal administrators, as they deliver purchases made online, especially for the B2C market.

According to him, the market conditions would bring about increased growth of EMS over the next four years. “While there is a risk of increased national protectionism, which could adversely affect global trade, the continued growth in demand driven by cross-border e-commerce, coupled with the execution of the EMS Business Plan (2017-2020), is expected to result in increased market share across the EMS global network,” Hussein said.

Global EMS growth

Hussein was of the view that about 76 per cent of the total population in the more developed regions of Europe and North America are internet users and that more than half of those users, shop online. While online shopping in developed markets around the globe continues to grow, baselines in other regions such as the African region are much lower and thus poised for even more explosive growth in online shopping.

He therefore, advised that EMS operators should ensure high quality service delivery through consistent reliability and visibility as well as give customers the value added features that they want.

He , however, said the African region’s EMS export volume grew by five  per cent in 2016, largely due to outbound increases by South Africa, and through impressive double digit growth by Nigeria and Ghana.

Highlight of the symposium was the launch of the EMS Business Plan (2017-2020), which Hussein urged EMS regions in Africa to collaborate to drive further growth of EMS.