UPU conference on postal reform continues shaping postal services with global regulatory insights

During the UPU’s Council of Administration (CA) session on 2 May 2024 (S5), the postal regulatory community gathered at the Conference on Postal Regulation to discuss the wide variety of approaches to postal regulatory reform being adopted by governments and policymakers in response to market trends, technological innovations and the surge in customer demand for e-commerce.

Opening the conference, UPU Director General Masahiko Metoki emphasized the critical need for postal service reform owing to declining letter-post volumes and the highly competitive market environment in the age of e-commerce, which threatens the sustainability of universal postal services. He also added that “policymakers and regulatory authorities around the world are trying to reform and modernize their postal regulatory framework to secure the long-term viability of the postal sector and the universal postal service”.

Reforming postal services in the digital era

In the keynote addresses delivered by Prof. Pier Luigi Parcu and Dr Anna Renata Pisarkiewicz from the European University Institute, the urgent need for comprehensive reforms in the postal sector was highlighted. Prof. Parcu stressed the need for regulatory adjustments that account for shifts in consumer behaviour and technological progress. Challenges such as financial sustainability, technological integration, competition from private carriers and big tech companies, and the efficacy of last-mile delivery were discussed alongside the necessity of environmental and social sustainability reforms.

Dr Pisarkiewicz also highlighted the critical need for strategic reforms in labour management, digital integration, and the creation of flexible regulatory frameworks aimed at boosting competitiveness and ensuring equitable market practices. The speakers then outlined a number of critical challenges for regulators, such as needing to continuously adapt their policies and regulations to maintain a level playing field, prevent monopolistic practices from emerging market players, encourage innovation, and protect the interests of consumers and smaller businesses.

How postal regulation is keeping pace with the challenges

The first panel, led by Dr Rajeev Venugopal, representing Canada as Co-Chair of CA Committee 2 (Postal Policy and Regulation), explored two different regulatory responses devised by postal regulators in Denmark and Uruguay. These two contrasting approaches were presented by Mr Michael Birch, Director of the Danish Ministry of Transport, and Mr Luis González, Postal Services Manager of the Communications Services Regulatory Unit from Uruguay.

Mr Birch provided details on the recent updates to Denmark’s Postal Act, driven by shifts in the postal market. “This new legislation, effective from 1 January 2024, reflects an assessment of the Danish postal market that concluded that the market can effectively deliver on the needs of citizens and businesses for affordable and quality services and thus abolished the designation of a single universal service provider, levelled the playing field by applying the same rules to all postal operators, and ended the government funding of the universal service obligation,” explained Mr Birch. However, he also added that targeted regulatory intervention is still required so that postal services for vulnerable users and remote islands, as well as international services, continue to be secured. The new Postal Act also provides for a “safety net”, which means that if the market were to fail to deliver the desired outcomes, the ministry could intervene and appoint a postal operator to convey postal items in return for compensation.

Meanwhile, Uruguay has embarked on a very different path of postal regulatory reform, initiated in 2006 to address the mismatch between the existing regulatory framework and the realities of the postal market. With the support of the UPU and the Postal Union of the Americas, Spain and Portugal, it employed the Integrated Postal Reform and Development Plan (IPDP) methodology to formalize its postal sector. As a result of this approach, the universal postal service was defined with clear conditions for its provision, and a robust financing mechanism was established, aiming to modernize services and set specific roles and responsibilities for all market players. Mr González pointed out that the reform was well-timed with the support of the new government, ensuring robust and unwavering backing throughout the process.

Adapting innovations and regulatory strategies for a dynamic global landscape

The second panel, which was chaired by Ms Nermin Hassan representing Egypt as the other Co-Chair of CA Committee 2, saw experts from Belgium and Saudi Arabia discussing future regulatory orientations and the competencies needed by regulators to adopt new practices in a changing postal regulatory landscape.

Mr Joost Callaert, Senior Advisor at the Belgian Institute for Postal Services and Telecommunications, explored future directions for postal regulation from both Belgian and European standpoints. He shared the changing roles and responsibilities of the Belgian national regulatory authority since its establishment more than 20 years ago. Drawing parallels with the development of regulatory frameworks in other European countries, Mr Callaert recognized that the remit of regulatory authorities is changing to include new competencies such as collection of traffic data and other information from all operators active in the postal delivery market. (This information could be used to determine compliance with working conditions, for instance.) Regulatory authorities must also focus on end-user and consumer needs, for example through transparency in pricing and conditions for the delivery of parcels.

Mr Mohammed Alkharashi, Director of the Saudi General Transport Authority, presented the “regulatory sandbox” concept: an innovative regulatory approach designed to test new ideas and methods on a limited scale under close regulatory supervision. Implementation of the regulatory sandbox for parcel lockers in Saudi Arabia has revolutionized last-mile delivery by enhancing convenience for consumers and improving operational efficiency for postal operators. Mr Alkharashi explained: “As the sector continues to evolve, the adoption of new ideas and innovative regulatory approaches to support them will be crucial in fostering innovation, protecting consumer interests and ensuring the sustainability of the postal ecosystem”.

Beyond a one-size-fits-all solution

The various postal regulatory models illustrate, in different ways, how the distinction between traditional postal services and other delivery services has become blurred, resulting in changes to the material scope of sector regulation and the creation of new roles for regulatory oversight. Another important takeaway emphasized by the Co-Chairs was that effective regulation should not adopt a one-size-fits-all approach, but rather consider the unique historical and geographical aspects together with the political and cultural contexts of each country, placing citizens at the heart of regulatory frameworks.

UPU Deputy Director General Marjan Osvald concluded the conference by reiterating the importance of sharing “our thoughts, experiences and progress related to postal regulatory reform in pursuit of our shared mission – to ‘stimulate the lasting development of efficient and accessible universal postal services’, as stated in the UPU Constitution”.

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