T&T’s services sector has the potential to tap into international markets worth trillions of US dollars and increase the country’s foreign exchange revenue, Permanent Secretary in the Ministry...
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TTpost: Managing our subventions
The T&T Postal Corporation (TTPOST) is reporting July 2013 year to date revenue of $74.8 million, said chairman Dr Franklin Ali.
The corporation in its early stages in 2006 employed 1,200 employees, but that has been reduced to an estimated 1,100.
Ali, who is also the chief executive officer at the Government Human Resource Services (GHRS) Company Ltd, spoke to the Business Guardian last week Wednesday at Mulchan Seuchan Road, Chaguanas.
Commenting on the performance of TTPost, Ali said there have been increases in such operating costs as salary adjustments, administrative costs and operating expenses.
Though the corporation generates its own revenues, it is not 100 per cent independent and therefore depends on government subventions.
“In 2009, the corporation received $47 million in subventions, and for 2012/2013 it was at $40 million. At the end of the day, the aim is to increase operating revenues, manage our costs and, in so doing, manage our dependency on subventions.”
He does not see TTPost’s subventions decreasing.
While globally, social media and the Internet have almost consumed the traditional mail market, Ali said based on TTPost’s volume of letters and parcels inbound and outbound, total volume in 2009 was 68.1 million and 63.1 million as of September 2013.
“What you are seeing is decline in traditional mail over the last five years. However, the biggest revenue earner is bulk mail. What we are seeing for the past five years is that it is holding steadily between 36.3 million and 35.2 million. Now that is important to us because it is saying the business community continues to generate mail and continue to use the postal service. The down side is that type of the business is not growing exponentially and that’s the life blood of revenue for the corporation.”
One of the services TTPost previously provided was Bill Pay, which was discontinued in 2011. In a statement in early October 2011, TTPost said it was confident this decision “is in the best interest of the postal service in sustaining its long-term viability.”
Ali said trends are showing that postal administrations throughout the world are offering banking services, financial services and electronic services.
“The fact that we have given up Bill Pay some time ago to me was a very poor move. Where we have positioned now nine/ten months after this board has taken up its mandate, we are saying we need to get the basics right. If the business is about mail, are we delivering on time, is our service good and what are our customers saying?” he said.
He said it is important for the business community to have a reliable courier service, and therefore TTPost’s service in that market segment has to improve.
“In addition to having partnership with major courier companies where they can ship things down for us to deliver, we need to target the large companies here, to suggest to them they shouldn't use their own messengers, give it to TTPost couriers. We should be targeting business to business market such as T&TEC and TSTT. Why outsource to private operators when we have the largest courier network that can take your packages, and take it anywhere in the country?”
He said before that can be established, the business community needs to be convinced the quality of service is up to standard.
“I don't see us doing what some of the developed countries are doing - they are going into banking services. I don't see us being a player in banking services. If you look at the spread of financial institutions, they are at almost every point in the country. If we are to enter into that market, given the fact that our network of offices have been reduced, our physical infrastructure is not conducive to banking type operations.”
Ali said TTPost has lost a part of the business-to-business courier market to small entrepreneurs who penetrated the market.
“There are about 15 or 17 domestic courier companies. I would say 90 per cent of those have what you would call very entrepreneurial management style. They are loose, they are lean, they are privately owned. TTPost, we operate on the basis of good industrial relations, so we don't have the flexibility of the smaller, highly entrepreneurial entities.”
As at September 2013, courier revenue contributed to approximately 10 per cent of the total revenue for TTPOST.
“What we want to do is not just get more foreign volumes in, but to target the business community in T&T. Within the next 12 months, I think we would want to hit at least 18 to 20 per cent. That can be accomplished if we think about the model differently.”
The option of warehousing and inventory management is being explored.
“We need to enter the warehousing market. We need to offer warehousing and inventory management, process and package goods and deliver them,” he said.
The T&T Postal Corporation Act needs to be revamped to accommodate the changed postal corporation.
“We have, through the board, submitted a comprehensive review to the line ministry and the process would kick in from there. There is a real need to revise and amend the Act as it exists now.
“There were certain elements of the Act that were no longer applicable. It was built specifically for the transformation in 1999-2004. Coming out of that, there is some clause in there that is no longer applicable. Secondly, there were some areas in the Act that we needed to clarify, we needed to amend, and when we did the review, we were very clear on how we wanted that to go forward.”
Justifying the need for a change in the legislation, Ali said the parameters have changed, the business model has changed, the environment has changed.
Postal service is seen as a utility. This means careful thought should be put into the level at which postal services are priced. He said if standards are to be set and service is to be delivered, independent monitoring should play a pivotal role.
Asked whether the Regulated Industries Commission regulates TTPost, he said: “At this point, the RIC is not the entity that regulates TTPost. It may be something that should come into the mix going down the road. It is important if you are talking about quality of service, there should be a regulatory aspect behind it.”
TTPost has the power only to set prices for its non-core services such as courier services, direct mail and unaddressed mail. But the “20 grams letter mail, the commercial mail from the banks and insurance companies, that is something that is beyond the corporation's control when it comes to setting price.”
While accountability and transparency is on the front burner for state enterprises or entities, Ali is confident the practices at TTPost s in tandem with the standards required in the Procurement Bill.
Emmanuel George, Public Utilities Minister, on May 11, 2012, while piloting the T&T Postal Corporation Amendment Bill in the Lower house, said the global recession had affected TTPost, as also the United Kingdom’s Royal Mail and the United States Mail Service, are both struggling. Without appropriate survival mechanisms, he said, this was a position in which TTPost could also find itself. He said the company had added new features, including TTPak, but this also faced competition.
George said the previous postal entity had required a $14 million subsidy from Government. TTPost was formed with a US$14 million injection and subsidies dropped. But George said subsidies again crossed $14 million in the period 2010- 2011.
Colin Lucas, then managing director of TTPost in a July 2006 interview had said: “A lot of things are yet to be done. There is still a proper human resource system which has to be in place and there are additional industrial relations issues,” he said.
He explained there were two commercial realties of a postal service: one of profitability and the other of providing an essential service.
“A key mandate from the Government is to achieve a sustainability viability which the organisation is yet to achieve. We need to take the business structure apart and focus on the key deliveries,” Lucas had said.