Who Owns Whom

The WOW report on the Courier, Express and Parcel Services (CEP) industry illustrates how this sector was not restrained by the lack of growth in the economy,      and how shifts in the market and the arrival of new technology has allowed the sector to more than double in the last decade.           This growth is also seen in other parts of the world due to the shift in buying patterns, the advancement of ecommerce, and the shift in importance from agriculture and manufacturing to the services sector. The poor performance and consequential demise of the South African Post Office also fuelled the growth in the number of small businesses, illustrating how resisting change and not adapting to new trends brought about by technology can be detrimental to organisations.

Is the courier industry in South Africa growing?

“The CEP industry’s revenue has more than doubled over the last decade, says South African Express Parcel Association (SAEPA) CEO Garry Marshall, and is currently the fastest growing transport sector in the country”, the WOW report says. It was only during the 2020 riots that a significant decline was recorded.

The WOW report refers to information provided by research company, Market

What is the size of the Courier industry in South Africa

Research, indicating that CEP revenue in South Africa was estimated at R44bn in 2022 and is expected to grow to R60bn by 2027, at a CAGR of 7.0%. It is worthwhile to pause for a moment and compare this growth rate for the next five years to South Africa’s forecast GDP growth rate of between 0% and 2%, with      the upper range reserved for the later years. As the services sector is growing at a much higher rate, the implication is that other sectors are doing poorly.

This is not all bad news, as services have become more important in creating wealth as an economy develops. The South African services sector has also taken advantage of new technology and positive market shifts in favour of the services sector. South Africa’s services sector is well-developed and is showing exceptional resilience. The CEP sector is testimony to such growth and resilience.

The Post Office and private sector growth

Interestingly, the growth of the      private sector CEP industry has been facilitated by the traditional postal services’ failure to respond to changing customer responsiveness, not being more market focused and as a result failing to provide efficient services.

Changes in demand      have drastically changed the way in which deliveries are made, with the Post Office being too slow to react to these changes . Simultaneously the number      and       forever increasing variety of parcels being delivered have grown exponentially. Home deliveries of food via g-commerce, which refers to selling products via Google platforms such as Google Express, is becoming an integral part of the wider ecommerce business, the fundamental driver of the CEP sector.

The Post Office failed to follow trends set by private sector competitors and tried to restrict them by going to court in a bid to reserve or severely restrict the right to deliver certain sizes of parcels. Even the taxi industry has encroached into the market by delivering parcels to rural areas. Inventiveness has landed a punch in the face of the Post Office, rendering it useless even to deliver mail.

The Post Office is currently in provisional liquidation, a not-so-desirable outcome for an economy grappling with high unemployment rates, meaning that over 12 000 people may join the unemployment queue.

How can state-owned enterprises be improved?

The provisional liquidation of the Post office brings into focus the need for the government      to stop subsidising inefficient and badly-managed state-owned enterprises. While government is looking      at ways to rescue this essential service, it would be important not to repeat its mistakes.

Post offices in other parts of the world such as Belgium, the Netherlands and Germany, to name a few, are      in private hands and listed on stock exchanges. South Africa can take a leaf out of their books and apply customised versions      to our unique environment. Balancing the need to improve access to services for the poor in rural areas with innovation, efficiency and profitability will better serve the country’s economy.

The status of the courier, express and parcel services industry in South Africa

The South African CEP sector, comprising      local and international companies, is leading the way in growing the South African economy. All it needs is further deregulation to boost its already stellar performance.

This would be of great benefit as the CEP sector aims      for market share in other African countries which are lagging behind in terms of infrastructure, logistics and weaker policy frameworks and regulations, and providing South African CEP the opportunity to excel in those markets.

The WOW report highlights challenges beyond South Africa’s borders, especially differing and complex custom processes, new restrictive postal regulations and heavy import costs and intra-trade barriers. It is still to be seen     if the new initiative by African governments in favour of free markets as embodied in the African Continental Free Trade Area (AfCFTA) agreements will reverse protectionist leanings.

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