Russian Post aims to expand its parcels, express and financial services businesses as well asmodernise postal operations under a new growth strategy designed to increase revenues by 66% by
2020.Under the development strategy for the years 2012-2016, the state-owned postal operator aims togenerate revenues of up to RUB 140 billion (€3.6 billion) by 2016 and up to RUB 208 billion (€5.4billion) by 2020 which will enable the company to increase investments in quality andmodernisation.
According to preliminary data, Russian Post increased revenues by 14% to RUB 120 billion (€3.1billion) last year while its net profit increased 45-55% to RUB 700-750 million (€18-19.3million).
The four-year strategy suggests increasing profitability through active development of postaland banking services, improved logistics quality and cost optimisation. The main objective is totransform from “survival” to stable and independent development as an efficient and modern nationalpostal operator, Russian Post stressed. “The package of planned measures will enable a large-scalemodernisation of infrastructure bringing it in line with the requirements of the growing distancetrade and ensure quick delivery of shipments to recipients.”
Designed by leading international consulting firm Boston Consulting Group (BCG), the documentlays the foundation for the sustainable development and market leadership of Russian Post. Theimplementation of the new strategy is expected to considerably improve the quality of postalservices and service culture and ensure access for customers to the wide range of financialservices across the country and in small towns in particular.
The product range will be expanded with quality services including a more individual approachwhile the implementation of strategic initiatives by Russian Post will be beneficial for thecountry’s economy as a whole boosting other sectors such as distance selling.
Russian Post considers the fast-growing express and parcel delivery market one of the mostpromising areas of activity where it wants to increase its market share from 33% to 46%. Thedevelopment of financial services including the creation of a postal bank is another potentialgrowth factor for the company.
Developing logistics capabilities for ensuring speed and reliability of transporting postalshipments and enhancing IT infrastructure for effective management of postal flows will helpRussian Post improve its service quality. “Growing network profitability can be reached throughimplementation of new services and improved labour productivity,” the company added.
Established in 2002 as a single federal state enterprise, Russian Post was formed from disparateregional postal enterprises. For several years, major efforts were directed towards creating acohesive, smoothly functioning postal network. The company moved into profit in 2009 after manyyears of heavy losses and has gradually improved results since then.
“Russian Post is now going through a critical time, with a growing social burden, rising costsof maintaining its network, modernisation of its infrastructure and logistics development andnegative global market trends. This adds to the liberalisation of the domestic postal market,increased competition and other risk factors requiring a speedy implementation of large-scalestrategic initiatives,” the company said.
The postal operator warned that delaying strategic decisions can lead to Russian Post beingforced out from high-margin markets retaining only the regulated services. “In this situation, itwould be difficult to talk about modernisation, introduction of new, affordable and modernservices, and the improvement of service quality.”
The announcement of the new strategy comes one week after Russian Post rejected widespreadrumours reported throughout Russian media about the upcoming resignation of its CEO AlexanderKiselyov. The postal operator claimed that while the new government is being formed, there havebeen attempts to snatch control of “the last state monopoly”.
Meanwhile, last weekend, Russian Post informed its customers waiting for mail from the USA andEurope about more possible delivery delays due to a number of foreign postal operators and airlinesviolating the norms of the Universal Postal Convention.
Delivery delays of US mail started in January with shipments handed over for delivery in the USAin the beginning of November last year thus delayed by two months. Earlier this month, Russian Postended an embargo on international shipments arriving at Sheremetyevo Airport in Moscow, from theUSA in particular, following a heavy backlog of mail that it claimed was related to the difficultfinancial situation of USPS. Russian Post made the US postal operator responsible for the backlogclaiming that USPS started using “different transit schemes for transportation to Russia”, throughIstanbul Airport, among others, in order to cut shipping costs.
