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The postal industry is experiencing its most significant transformation in decades. With letter volumes in steep decline and parcel demands soaring due to e-commerce growth, operators worldwide are being forced to fundamentally rethink their business models and operational approaches.
We’re seeing a global shift. Australia Post is reducing letter delivery frequency, Royal Mail is challenging six-day service mandates, and PostNord will stop delivering letters altogether by the end of 2025. The Universal Service Obligation is being redefined to reflect a parcel-first future.
This shift represents more than just a change in product mix, it’s driving a complete reimagining of how postal networks operate and serve customers.
The dynamic supply chain imperative
Traditional postal operations relied on predictable letter volumes and static planning systems. But the e-commerce era demands something entirely different: dynamic, responsive networks that can adapt in real-time to changing customer expectations.
“Smart organisations are moving from static planning to systems that update constantly by the second, by the hour, by the day,” Bob explains. “It’s not just about one part of the supply chain – it’s about creating an end-to-end view that’s holistic, dynamic, and gives you solutions rather than just data.”
This transformation requires postal operators to abandon legacy forecasting methods and embrace intelligent systems that can process real-time data across the entire network. The most successful operators are implementing AI-driven analytics that can predict demand patterns, optimise routing decisions, and adjust resources dynamically.
AI isn’t specific to just one part of the supply chain. It needs to integrate across the entire process from manufacturers and their suppliers through to final delivery.
Customer experience driving operational change
As postal operators grapple with declining letter volumes and surging parcel demands, customer experience is central to all business decisions.
One of the most visible examples of this is the rapid growth of out-of-home (OOH) delivery options. What began as a contingency for missed deliveries has evolved into a preferred service channel for some customers, who are actively choosing parcel lockers and collection points over home delivery.
Bob points to InPost’s expansion in Europe as a prime example. “InPost has rapidly expanded, with over 82,000 locations in its out-of-home network, of which automated parcel machines make up 57 percent of these points,” he says.
But the growth of OOH delivery reflects a deeper change in customer expectations.
Not only is out-of-home used for attempted failed deliveries, but it’s also now about giving consumers and customers choice and convenience. We should also make sure that we consider ease-of-use both at checkout and at point-of-collection or delivery.
This customer-driven approach is forcing postal operators to reconsider fundamental assumptions about convenience and service design. Where traditional models prioritised doorstep delivery, modern consumers also value control and flexibility.
The transformation isn’t happening uniformly across the industry. Some operators are leading the charge while others struggle to adapt their legacy infrastructure and processes.
“Some delivery providers offer significantly more out-of-home drop-off/pick-up options than others,” Bob observes. “While many operators utilise the post office networks, often these function as separate entities, with differences in ownership and strategic priorities.”
This disparity creates both challenges and opportunities.
“When it comes to parcel lockers, adoption remains low for many players when compared to others like InPost and Amazon,” Bob says. “By offering incentives to consumers, such as cheaper pricing, faster delivery, and easy checkout, whilst also managing messaging such as ‘environmentally friendly’ and ‘convenient’, those leading in this space can drive volume where they want to – it’s a win/win.”
The competitive advantage increasingly goes to operators who understand how to use incentive structures and customer education to shape demand patterns in their favour.
Balancing speed, cost, and reliability
One of the biggest challenges facing postal operators is managing the tension between competing customer demands. While speed often dominates headlines, Bob believes the reality is more nuanced.
There is tension between achieving speed, reliability, and cost. Consumers need choice, but in many cases must choose between speed and price. There’s a trade-off.
This tension is particularly acute in the current economic environment, where cost pressures are mounting while customer expectations continue to rise. Successful operators are learning to educate customers about these trade-offs while offering flexible options that allow different customer segments to prioritise what matters most to them.
The simulation advantage
Looking ahead, Bob sees simulation technology as a key enabler of the intelligent supply chains that postal operators need to build. Simulation allows operators to test scenarios and optimise performance before making real-world investments.
If you took the whole end-to-end supply chain and asked, ‘what would a perfect transaction look like?’ simulation is the tool to find the answer, then figure out how to implement it.
This capability becomes critical as postal networks become more complex and customer expectations more demanding. The ability to model different scenarios, test operational changes, and predict outcomes gives operators the confidence to make bold transformations while minimising risk.
For postal operators navigating the digital transformation, Bob emphasises that success requires more than just technology investments. It demands a fundamental shift in mindset – from reactive, static operations to proactive, dynamic systems that put customer experience at the centre.
“Greater efficiency gives you the opportunity to invest in the core parts of your business that you want to grow,” he says.
According to Bob, the digital transformation isn’t optional for postal operators.
“In postal, it’s about survival through growth. If you can’t move volume, you’ll lose customers, full stop. The real question is not if the industry will transform – it’s who will lead it. Are you headed for collapse, or poised for a smart supply chain revolution?”
Postal transformation is not a future ambition; it is today’s competitive advantage. The operators who master this transformation won’t just survive the shift from letters to parcels, they’ll emerge as leaders in the intelligent supply chain era.
For further insights in the postal and parcel industry, access the full whitepaper or short video series.
This article was originally published by Philip Hazell at MHD Supply Chain on July 21 2025.