An award-winning paper in the National Contest “Piórem Logistyka” organized by the portal www.logistyka.net.pl
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Adam Smith (1723-1790) claimed that man generally intends neither to promote the public interest, nor knows how much he is promoting it. He directs industry in such a manner that its product may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. And this end is the public good. The limited trust in the capabilities of the “invisible hand of the market” is undoubtedly evidenced by the postal services sector. Since the times of the Great Scot, the post office has not been freed from state patronage. The liberalization of the sector may only take place in the first decade of the 21st century. Such hope is provided by Directives 97\/67\/EC and 2002\/39\/EC of the European Parliament and of the Council of the European Union.
Market = supplier + product + recipient
The classical definition views the market as the entirety of commodity-money exchange relations taking place between sellers, representing supply, and buyers – representing demand. As a result of mutual relations between supply and demand, the third element of the market is determined – price. Price is a measure of the value of the good subject to exchange, i.e., the product. The product market can be defined as a group of buyers with similar needs and sellers offering a product or products serving to satisfy those needs. A part of the market for a specific product or group of products is a sector. Therefore, we can distinguish the sector of postal and courier services or the TSL (Transport-Forwarding-Logistics) services sector. In publications, the form “market” is adopted to define the name of the sector, hence the common names “postal and courier services market” or “TSL services market”. For the purposes of this paper, I adopt the term “sector”, e.g., the postal and courier services sector, the courier services sector, the express delivery sector. This is a view of the market in terms of a product or service (or groups thereof).
To define the entities creating supply, i.e., producers, we can also use the form “sector”, however, “industry” seems to be a more precise term. In Western literature, the term industry is common. It is usually used to define a specific field of economic activity, both production and service in a broad sense. On the other hand, a branch (line of business) is a collection of business entities offering the same or similar products or services for sale. The criterion for belonging to a branch may be the use of similar technologies – in the narrowest sense, or satisfying similar needs – in the broadest sense. That is why “branch” will be used to define the sector (group) of sellers.
Since the title narrows the scope of considerations to services, in the further part we will focus on services.
Polish publications mention, among others, the following service branches: wireless, construction, educational, financial, gambling, IT, cosmetic, courier, logistics (1) , marketing, medical, property protection, outsourcing, postal and courier (2), printing, service, social, cleaning, telecommunication, health. Our subject of interest is three related branches. More precisely, the main area, i.e., the postal services branch, and the others – due to their close relationship with postal services – are the express services branch and the logistics services branch. At this point, the question arises regarding the placement of courier services in this set. Until a more accurate definition is found, we can assume that both courier and express services form one group, in which the basic criterion is a short (express) delivery time. This prompts us to treat express services as a broader category, and courier services, which gave rise to this type of activity – as the main subgroup of express services. Let the differentiator be the role of a special messenger – the courier. However, it should be remembered that the courier criterion is not a sufficient differentiator, so the matter of defining express and courier services remains open.
Among the demand-creating market recipients, we can also distinguish sectors, i.e., groups with similar needs or requirements. Let us reserve the term “segment” for them. In the postal services market, we can distinguish segments of individual, institutional, and business customers. We therefore have a supplier branch, product sector(s), and recipient segment(s).
Definitions of postal services
From a technological perspective, a postal service is a series of successive phases, activities, and operations related to the collection, sorting, movement, and delivery of shipments from the sender to the recipient of the postal item(3).
Aleksander Panasiuk from the University of Szczecin defines a postal service as: the intangible and functional nature of a distinct economic activity aimed at satisfying consumer needs in terms of sending information over a distance, as well as material and nominal values along with market intermediation services (4).
On the other hand, he perceives the postal services market as a process by which service providers (postal operators) and service recipients (individual and institutional customers) determine the conditions for the provision (production) and use (consumption) of postal services, in terms of quantity, price, and purchase conditions, within the framework of the applicable regulatory system.
The future of postal services
The development of electronic communication methods affects the amount of written correspondence. SMS, MMS, or e-mail services are substitutive to traditional letters. In the consciousness of the average citizen, replacing written correspondence with electronic forms is obvious. More than one futurist might even expect the complete replacement of handwritten letters with electronic ones. Perhaps in a future even harder to define – but still. A further train of thought might lead him to the conclusion that since there will be no letters, the post office in the sense of an enterprise, i.e., an economic entity, will become redundant. There is, after all, the argument of the development of e-commerce, which requires the physical transport of goods ordered electronically to the recipient. However, alongside the postal services sector, related branches are developing: logistics and express delivery. They can successfully take over the functions of current postal companies.
Doom and gloom regarding the future of the current postal branch can be contrasted with an excerpt from the speech of MP Karol Działoszyński (5), during the parliamentary debate on the draft Postal Law in March 2000:
The development of electronic communication methods does not mean the decline of postal services at all. Although previously the fax, and for some time now electronic mail, has replaced some traditional ways of correspondence on paper to a certain extent, the Universal Postal Union, based on studies conducted in over 90 member countries, predicts a steady increase in the number of sent letters – until 2005 by about 2.5% annually. There is an upward trend here, because in 1995 the growth in the number of sent letters was 0.9%.
The post office in a global dimension is at the same time a powerful logistical undertaking. In 1995, 403 billion letters were sent. Daily, 1.1 million various shipments are in postal circulation. This requires the work of 6 million postal workers worldwide. However, it is clear that e-commerce, which will affect all areas of the economy, will also affect the post office. Virtual commerce must be accompanied by an increase in the transfer of retail goods by post, which means a gradual change in the structure of the postal market. The transfer of packages and parcels will become the most attractive and desirable area of the market. A significant challenge is also the globalization of trade caused by the electronic economy – while currently 98 [% – note by M.S.] of postal shipments circulate in domestic traffic, in the future one must be prepared for a significant increase in retail goods trade with foreign countries by post. This is a major organizational challenge for the postal service and a regulatory challenge for foreign trade law.
This statement shows that in the near future nothing portends the collapse of the postal sector, and in some areas, its development can be expected.
Economic profile of the sector
Even assuming that the postal sector is not yet entering a phase of collapse, but is only changing its product structure, staying in the branch requires constant vigilance at the strategic level. This applies in particular to the group of public postal operators, in most European countries still protected by the barrier of market entry by the state. This group also includes the state public utility company Poczta Polska. This enterprise – according to assessments both internal and external – is not adapted to operate on a free market. It is hard to assume that this company does not see the coming threats. A way of assessing the reality in which it will soon have to function may be the economic profile of the sector (6) (Industry’s Dominant Economic Characteristic). This method is a simplified characteristic (7) of the sector, among others according to the following features:
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Adam Smith (1723-1790) claimed that man generally intends neither to promote the public interest, nor knows how much he is promoting it. He directs industry in such a manner that its product may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. And this end is the public good. The limited trust in the capabilities of the “invisible hand of the market” is undoubtedly evidenced by the postal services sector. Since the times of the Great Scot, the post office has not been freed from state patronage. The liberalization of the sector may only take place in the first decade of the 21st century. Such hope is provided by Directives 97\/67\/EC and 2002\/39\/EC of the European Parliament and of the Council of the European Union.
Market = supplier + product + recipient
The classical definition views the market as the entirety of commodity-money exchange relations taking place between sellers, representing supply, and buyers – representing demand. As a result of mutual relations between supply and demand, the third element of the market is determined – price. Price is a measure of the value of the good subject to exchange, i.e., the product. The product market can be defined as a group of buyers with similar needs and sellers offering a product or products serving to satisfy those needs. A part of the market for a specific product or group of products is a sector. Therefore, we can distinguish the sector of postal and courier services or the TSL (Transport-Forwarding-Logistics) services sector. In publications, the form “market” is adopted to define the name of the sector, hence the common names “postal and courier services market” or “TSL services market”. For the purposes of this paper, I adopt the term “sector”, e.g., the postal and courier services sector, the courier services sector, the express delivery sector. This is a view of the market in terms of a product or service (or groups thereof).
To define the entities creating supply, i.e., producers, we can also use the form “sector”, however, “industry” seems to be a more precise term. In Western literature, the term industry is common. It is usually used to define a specific field of economic activity, both production and service in a broad sense. On the other hand, a branch (line of business) is a collection of business entities offering the same or similar products or services for sale. The criterion for belonging to a branch may be the use of similar technologies – in the narrowest sense, or satisfying similar needs – in the broadest sense. That is why “branch” will be used to define the sector (group) of sellers.
Since the title narrows the scope of considerations to services, in the further part we will focus on services.
Polish publications mention, among others, the following service branches: wireless, construction, educational, financial, gambling, IT, cosmetic, courier, logistics (1) , marketing, medical, property protection, outsourcing, postal and courier (2), printing, service, social, cleaning, telecommunication, health. Our subject of interest is three related branches. More precisely, the main area, i.e., the postal services branch, and the others – due to their close relationship with postal services – are the express services branch and the logistics services branch. At this point, the question arises regarding the placement of courier services in this set. Until a more accurate definition is found, we can assume that both courier and express services form one group, in which the basic criterion is a short (express) delivery time. This prompts us to treat express services as a broader category, and courier services, which gave rise to this type of activity – as the main subgroup of express services. Let the differentiator be the role of a special messenger – the courier. However, it should be remembered that the courier criterion is not a sufficient differentiator, so the matter of defining express and courier services remains open.
Among the demand-creating market recipients, we can also distinguish sectors, i.e., groups with similar needs or requirements. Let us reserve the term “segment” for them. In the postal services market, we can distinguish segments of individual, institutional, and business customers. We therefore have a supplier branch, product sector(s), and recipient segment(s).
Definitions of postal services
From a technological perspective, a postal service is a series of successive phases, activities, and operations related to the collection, sorting, movement, and delivery of shipments from the sender to the recipient of the postal item(3).
Aleksander Panasiuk from the University of Szczecin defines a postal service as: the intangible and functional nature of a distinct economic activity aimed at satisfying consumer needs in terms of sending information over a distance, as well as material and nominal values along with market intermediation services (4).
On the other hand, he perceives the postal services market as a process by which service providers (postal operators) and service recipients (individual and institutional customers) determine the conditions for the provision (production) and use (consumption) of postal services, in terms of quantity, price, and purchase conditions, within the framework of the applicable regulatory system.
The future of postal services
The development of electronic communication methods affects the amount of written correspondence. SMS, MMS, or e-mail services are substitutive to traditional letters. In the consciousness of the average citizen, replacing written correspondence with electronic forms is obvious. More than one futurist might even expect the complete replacement of handwritten letters with electronic ones. Perhaps in a future even harder to define – but still. A further train of thought might lead him to the conclusion that since there will be no letters, the post office in the sense of an enterprise, i.e., an economic entity, will become redundant. There is, after all, the argument of the development of e-commerce, which requires the physical transport of goods ordered electronically to the recipient. However, alongside the postal services sector, related branches are developing: logistics and express delivery. They can successfully take over the functions of current postal companies.
Doom and gloom regarding the future of the current postal branch can be contrasted with an excerpt from the speech of MP Karol Działoszyński (5), during the parliamentary debate on the draft Postal Law in March 2000:
The development of electronic communication methods does not mean the decline of postal services at all. Although previously the fax, and for some time now electronic mail, has replaced some traditional ways of correspondence on paper to a certain extent, the Universal Postal Union, based on studies conducted in over 90 member countries, predicts a steady increase in the number of sent letters – until 2005 by about 2.5% annually. There is an upward trend here, because in 1995 the growth in the number of sent letters was 0.9%.
The post office in a global dimension is at the same time a powerful logistical undertaking. In 1995, 403 billion letters were sent. Daily, 1.1 million various shipments are in postal circulation. This requires the work of 6 million postal workers worldwide. However, it is clear that e-commerce, which will affect all areas of the economy, will also affect the post office. Virtual commerce must be accompanied by an increase in the transfer of retail goods by post, which means a gradual change in the structure of the postal market. The transfer of packages and parcels will become the most attractive and desirable area of the market. A significant challenge is also the globalization of trade caused by the electronic economy – while currently 98 [% – note by M.S.] of postal shipments circulate in domestic traffic, in the future one must be prepared for a significant increase in retail goods trade with foreign countries by post. This is a major organizational challenge for the postal service and a regulatory challenge for foreign trade law.
This statement shows that in the near future nothing portends the collapse of the postal sector, and in some areas, its development can be expected.
Economic profile of the sector
Even assuming that the postal sector is not yet entering a phase of collapse, but is only changing its product structure, staying in the branch requires constant vigilance at the strategic level. This applies in particular to the group of public postal operators, in most European countries still protected by the barrier of market entry by the state. This group also includes the state public utility company Poczta Polska. This enterprise – according to assessments both internal and external – is not adapted to operate on a free market. It is hard to assume that this company does not see the coming threats. A way of assessing the reality in which it will soon have to function may be the economic profile of the sector (6) (Industry’s Dominant Economic Characteristic). This method is a simplified characteristic (7) of the sector, among others according to the following features:
- market size measured in natural units and annual sales revenues,<\/li>
- scope of competition – local, regional, national, global,<\/li>
- market growth rate measured by percentages of annual sales growth (decrease) and the life cycle stage of the sector,<\/li>
- number of competitors and their relative market shares, determining the degree of concentration of the sector,<\/li>
- number of buyers and their relative size,<\/li>
- level and possibilities of forward and backward integration,<\/li>
- height of entry and exit barriers,<\/li>
- pace of changes in technology and commercialization of new products,<\/li>
- degree of differentiation of products of competing companies,<\/li>
- occurrence of economies of scale effect in production, transport, and mass marketing of sector products,<\/li>
- capital requirements.
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Footnotes
(1) www.mbe-pl.pl\/
(2) www.boss.com.pl\/
(3) Aleksander Panasiuk, Usługi pocztowe, PWN, Warszawa 2003, p.35 (after: The Cambridge Encyclopaedia, Cambridge University Press, Cambridge, New York, Port Chester, Melbourne, Sydney 1990, p.967).
(4) Ibidem.
(5) www.dzialoszynski.pl
(6) Grażyna Gierszewska, Maria Romanowska, Analiza strategiczna przedsiębiorstwa, PWE, Warszawa 2002, after: A.A. Thompson, A.J. Strickland, Strategic Management, Concepts and Cases, R.D. Irwin, Homewood, III, Boston 1996.
(7) Compared with Porter’s “five forces” analysis, see: Michael E. Porter, Competitive Strategy. Techniques for Analyzing Industries and Competitors, PWE, Warszawa 1996.
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