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The decision by the Bermuda Post Office to expand its international courier service should have come as no surprise to anyone. After all, its Business Plan 2020 was announced in the House of Assembly a year ago and one of the deliverables was parcel-delivery partnerships.
In my last opinion, “To privatise or not”, I stated public transportation should remain a public service because of the positive benefits that also align with the country’s existing challenges and goals. That is, to help ease road congestion, reduce the number of traffic accidents, help the environment, and reduce the cost of living.
While there is a good argument to be made to maintain and even grow Bermuda’s public transportation services, I do not see a similar type of path for the Post Office. In this context, I question the Government’s strategy of increasing competition and causing friction with one of its important stakeholders that creates jobs.
During the unveiling of the Business Plan 2020, it was disingenuous for the minister to claim: “The Bermuda Post Office’s value chain, as compared to its competitors, relies heavily on its competitive price points.” While competition is healthy in a market to keep prices and rates in check, is it a fair fight for a government institution that operates at a significant loss to take on private businesses that must operate at a profit to maintain themselves?
I am cognisant of the dwindling traditional business model of the Post Office, and I get that the aim is to make more revenue to decrease its deficit. However, at what cost? There is now no love lost between the Government and the e-commerce packaging sector. Whatever relationship there was, it is no doubt now worse.
More importantly, the trust within the overall retail sector is broken, as overseas shopping is blatantly being promoted by a government that should be instead providing economic security and assistance to businesses that operate within the island.
This situation reminds me of a video that previously went viral on social media. It depicted two gazelles locking horns and battling against each other, fighting over what I presume was territory. The two perceived enemies were so occupied and focused on their disagreement, they did not notice a real threat that was lurking on the horizon. Frame by frame of the video, there was danger running towards them. The gazelle onlookers quickly left, as soon as it was apparent a lion was coming to join the fray, with the hope of having a five-course meal. The two in dispute kept on fighting and, unfortunately for one of the gazelles, the lion got its wish.
The two gazelles fighting for territory are reminiscent of the Post Office and the local e-commerce packaging business. The lion, which is the king of the jungle, is Amazon, and it is the real danger to the courier business in Bermuda, along with the local retail sector overall.
Many of us are aware that Amazon has been devouring its competitors in its own home market in the United States and that it is the No 1 overseas retailer Bermudians and residents use when shopping online. What many are not aware of is Amazon Air, which has been the fastest-expanding airline to date.
Amazon Air is a cargo airline that operates exclusively to transport Amazon packages. It leases most of its cargo aircraft, but recently added to its fleet by purchasing used Boeing jets from other airlines. The number of aircraft at Amazon Air was forecast to double in size within the past year, taking full advantage of the pandemic and the challenges it has had on airlines. Amazon has clear ambitions to build its own air-freight empire.
How this will pan out for Bermuda, who knows. Our small market may not be feasible for Amazon to fly its own plane to the island. However, one cannot rule out the possibility. Amazon’s goal is for customers to sign up to its Prime service, as it is a key driver of its long-term success. To be able to offer Amazon Prime there must be an option for fast delivery, which is usually two days. The only way to achieve this is with its own plane. Like the lion looking for its next meal, Amazon is a beast, and it wants its brand to remain sticky to get customers to continue purchasing its products.
One of the stated goals of the Bermuda Post Office is to position itself to offer services to small and large businesses. It remains to be seen whether its initiatives, which are outlined in Business Plan 2020, will be affected by the decision to promote online shopping overseas.
To achieve the Post Office’s overall aim to increase its revenues, the focus should have been on its strength, which is last-mile services. I have a few suggestions that could have also been explored, which would not have ruffled anyone’s feathers.
Work with e-commerce packaging businesses, not against them
Instead of increasing the competition with local businesses in this sector, the Post Office could position itself as the last-mile deliverer and complement them — whether that would be delivery by hand or by pick-up at one of its post office facilities throughout the island. This logistics programme could be then used as the last-mile deliverer for goods purchased online from local retail businesses, which have a lot of room to grow.
Direct mail is not dead
In fact, direct mail is making a comeback. The more online advertisements there are popping up on every social-media platform, businesses are finding it more difficult to break their message through to the consumer. Direct mail now has a better response rate than online advertisements and e-mail campaigns as people become more overwhelmed with digital marketing.
There are only a few retail businesses on the island that periodically use direct-mail flyers to advertise their products. I do not know the reasons for the low take-up. However, this looks like an opportunity to create a bi-weekly or monthly flyer drop service island-wide, or by parish to accommodate small businesses.
Create own digital platform
The Post Office needs to broaden its last-mile delivery by asserting itself in the digital space. E-mails are becoming less secure, and it is very easy to create fake and fraudulent messaging. By creating a digital platform that requires a secure two-step log-in procedure, all government bills and important notices could be posted for retrieval instead of sending correspondence through regular e-mail.
Privatise a service
As the Post Office is transitioning towards package delivery, the service that should eventually be put in private hands is the selling of stamps to the public. This would not be breaking any ground, as other countries do use this type of model already. It would help to decrease the overhead for a declining service while not impacting on our obligation to provide an accessible and affordable means of communication.
Kudos to the Post Office for creating a plan that will shape it for the future. It was good to involve a reputable company such as KPMG, although it appears to me its scope was a little narrow. That said, it was a misstep for the Post Office to establish its own link to a US-based courier provider, causing mistrust within the business community in the process.
Whether Amazon becomes more of a threat to local retailers, I do not know. Amazon does have a habit of taking out its competitors and cutting out the middlemen from its supply chain.
The MyBermudaPost service is short-sighted, and it makes the challenges that local retailers face in operating their businesses on the island even more difficult. It is important to remember the overseas online retailers do not employ Bermudians, do not support other local businesses, and do not pay payroll and other government taxes. This is not a focus on the big picture.
• Malcolm Raynor has worked in the telecommunications industry in Bermuda for more than 30 years. Benefiting from Cable & Wireless’s internal training and education programmes held in Bermuda, Barbados, St Lucia (The University of the West Indies) and Britain, he rose to the level as senior vice-president. An independent thinker possessing a moderate ideology, his opinions are influenced by principle, data and trends