Stakeholders weigh in on remuneration
10.04.2019 - A first of its kind UPU conference called for broad consultation from stakeholders on improving the systems used to remunerate international postal exchanges.
The conference, titled “UPU Remuneration Systems -New Frontiers for an Old World?”, was held
April 9 under the auspices of the UPU’s Council of Administration, which is meeting at the organization’s Berne, Switzerland, headquarters this week.
Opening the conference, UPU Director General Bishar A. Hussein called attention to the new format of the event, which opened the discussion on remuneration systems beyond the Union’s most direct stakeholders, bringing together speakers from commercial organizations, consulting groups and academia in addition to participants from UPU’s member countries and their designated postal operators.
“Today’s conference on postal regulation addresses the challenges facing postal remuneration, and the principles that member country governments should take into account in shaping the Integrated Remuneration System for the 2020 Abidjan Congress,” the Director General commented, stressing the importance of the discussions to the Union’s future.
The conferences first panel had participants discuss striking a balance between providing universal access and maintaining its position in the competitive cross-border delivery market.
Analysis Mason Partner, Ian Streule, started by highlighting the UPU’s role in ensuring universal access to postal services in developing countries, filling what he called the “access gap”.
Walter Trezek, Chairman of the UPU’s Consultative Committee and representative of Ecommerce Europe, pointed out that the postal network as it exists was designed for letter delivery, not for the wave of commercial items seen in today’s mail stream, which have placed increasing regulatory challenges on postal operators and e-commerce stakeholders. He said the UPU had a role to play in harmonizing regulations so that Posts can stay competitive in the market while bringing online and offline channels together.
On compensation, postal consultant Jim Campbell urged UPU members to consider gaps in the current system allowing for imbalances between rates for domestic customers and those for foreign senders.
Rounding off the first panel, China State Post Bureau Senior Policy Advisor Gu Chunhui noted that its universal service obligation means that the Post is sometimes the only access point for consumers in remote areas. She emphasized the importance of taking non-discriminatory measures in the development of the future solution to protect these vulnerable citizens.
The second session had panellists examine market drivers in the cross-border market, taking into consideration the postal network’s role in facilitating international trade.
Panellists drew together some common threads, focusing on the importance of customer experience.
“If postal organizations could operate seamlessly with an appropriate remuneration structure they would be a formidable force,” said Brody Buhler, Global Managing Director of Accenture’s Post and Parcel Industry Group.
Alex Dieke, Director Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH (WIK), a German consultancy firm, warned that in discussing the remuneration system as a “winners and losers game”, the postal sector has lost sight of the main stakeholder of the system: consumers. He suggested that the future solution focus on offering funds for investments needed to improve quality of service levels to ensure that there is a “level playing field” across the network.
Cullen International Director of Client Services, Peter Dunn, also advised UPU members to be wary of focusing on cost orientation in policy-making, noting that operators need to focus more on delivering value to consumers.
Should members decide to move toward self-declared rates, Copenhagen Economics’ Head of Competition and Dispute Support Services, Henrik Ballebye Okholm, suggested that the UPU transition gradually. He also stressed the importance of the multilateral frameworks provided by the UPU, thus avoiding a “spaghetti bowl” of bilateral rules needed to enable international mail exchanges.
The conference’s final panel focused on the way forward for reshaping the UPU’s remuneration systems, recommending that members consider the need to focus on compromise, creating a level playing field across the network and balancing price with service quality.
Postal Innovation Platform Manager, Bernard Bukovc, commented that while the current system of remuneration was not optimal, disparities in each country’s regulatory environment pose challenges to developing a totally new system.
“Let’s focus on an evolution of the system because everything else would be a risk to the business,” he said.
Asendia CEO Marc Pontet, who said that the UPU and its members should communicate a clear and concise vision for remuneration over that time, also advised a transition over 4 or 5 years’ time.
“Customers can adapt to price changes if they are notified in advance,” said Mr Pontet.
Brazilian Post Inbound Manager, Nailton Alves de Oliveira, supported the idea of considering investments to quality of service when considering the future remuneration structure.
“It is necessary to rethink the relationship we have with our customers – this relationship cannot only be based on price,” he added.
Finally, Jack Hamande, Executive Board Member of the Belgian Institute for Postal Services Telecommunications, and co-chair of the Council of Administration committee responsible for remuneration governance issues, said the half-day conference’s discussions left him optimistic that the Union would find a solution.
“I think there is a real willingness here to review the remuneration system in depth for the future,” Mr Hamande added.
UPU Deputy Director General Pascal Clivaz echoed this optimism in his closing remarks, adding that the conference “undoubtedly provided a platform for sharing this information, and for establishing collaborative relationships, that will strengthen the role of the UPU and its stakeholders” as members move toward a decision on the future of the UPU’s remuneration systems.
“The UPU is you and nobody else but you. You will decide the way forward for terminal dues,” he said.