The South Africa Post Office (SAPO) is one of many state-owned entities in South Africa including Eskom, South African Airways, Denel, etc. In its traditional form, the postal sector has been driven on the supply side by three main stakeholders: governments, regulators and designated postal operators (SAPO 2017). The first two entities define the basic policies and rules governing postal services, while the third has the legal obligation of ensuring the delivery of basic postal services to all citizens within a given territory – the so-called ‘universal service obligation [USO]’ (Ambrosini, Boldron & Roy 2006). The designated postal operator in South Africa is SAPO for both domestic and international postal products or goods. In this regard, the delivery of postal items remains one of the core functions of SAPO.

The traditional post office focused on the shipping of parcels and letters as well as the selling of stamps. However, the span of services and activities the modern-day post office provides is much broader and wider. Postal services operate in areas such as logistics, financial services, e-government, health care and other public services.

The impact of modern technology, and specifically digitalisation, has had a major impact on postal services worldwide. Increasing connectivity across the globe has impacted the volumes of domestic letters and parcels. Two significant trends have played a major role in this (Bruno et al. 2021): (1) e-substitution – the substitution of traditional postal letters by electronic forms of communication, including social media and (2) e-commerce – giving a significant escalation and growth in parcel volumes. The decline in traditional mail volumes is structural and irreversible (eds. Crew & Brennan 2016:v; Dragendorf et al. 2019; Falch & Henten 2018; Matúšková & Madleňáková 2017; Nikali 2008; Wolak 1996). This decline dates to the late 1980s and early 1990s where there was a significant increase in different interpersonal communication modes. Online information services became available, there was a reduction in telephone and fax machine costs while that period signified the advent of the Internet (Wolak 1996). Postal demand would decrease as well as the associated cost for these services. Subsequently, various studies on this topic were conducted.

For example, Matúšková and Madleňáková (2017) considered the impact of decreasing postal volumes on the cost structures of the providers of universal postal services. Falch and Henten (2018) show that in Denmark, the use of letters has declined to levels lower than when the postal service was introduced in Denmark in the 17th century. The main contributing factor is that government communication is almost exclusively done electronically.

Dragendorf et al. (2019) indicate that in 2019, the mail revenue share still accounted for 40% of postal revenues globally. However, the global volume ratio of letters (mail) to parcels declined from 13:1 in 2005 to 4:1 in 2015 and is expected to reach 1:1 by 2025. The concomitant growth in e-commerce will create definite opportunities for postal service providers and capturing a component of these parcel volumes will be crucial for the postal service providers to protect the unique benefits of their mail–parcel operations. Locally consolidated monthly domestic mail volumes comprising of standard mail, non-standard mail, registered mail, Fastmail and parcels, are given for the last three financial years 2019/20, 2020/21 and 2021/22 (SAPO 2022:37). For 2019/20, the volumes were around 5 million items throughout the year declining to 3 million. The volumes for the next 2 years are very similar, hovering around 3 million items throughout the 2 years. In the 2021/22 annual report, it is stated that letter volumes are decreasing further while parcel volumes are increasing.

Crew and Kleindorfer (eds. 2008), Crew and Brennan (eds. 2016) and Parcu, Brennan and Glass (eds. 2022) capture presentations from conferences devoted to the postal sector with a focus on regulatory matters and postal economies. Strategies in the changing digital world are also covered and the importance of increasing and improving postal delivery services emphasised (Jaag, Moyano & Trinkner 2016) as well as eliminating inefficiencies (Cigno, Klingenberg & Pearsall 2016). In this regard, it becomes important to determine what the performance of the current postal delivery service is and how it can be improved. Further changes within the postal services concern the liberalisation of these services. The European Union (EU) opened postal markets to competition in most of its member countries from the beginning of 2011 (eds. Crew & Brennan 2016). Liberalisation goes as far back as the start of the 21st century (eds. Crew & Kleindorfer 2006). If the performance of the postal service provider is not up to standard, competitors will step into the postal market. These are issues that SAPO needs to take note of in their planning for the future. The performance of SAPO’s postal delivery service will be a critical determining factor in how its future plays out.

With increasing global connectivity, e-commerce gives customers access to markets all over the world. Goods can be purchased from anywhere across the globe. This has, inter alia, created many opportunities for small entrepreneurs also in South Africa. For small e-commerce businesses in South Africa, SAPO provides the most affordable way to get their goods to international clients (Retief 2023). Purchasing goods is only one aspect of the process of acquiring the goods in a postal service context; however, getting the items delivered implies properly functioning supply chains.

There is a perception in South Africa that postal services, and specifically postal delivery, are at an unacceptable level (Jagbeer 2022). This holds for both domestic and international purchased goods. The focus and objective of this article is to present and, by using a quantitative analysis approach, to evaluate the mail delivery performance of SAPO which includes aspects such as logistics, supply chain management (SCM), last mile delivery, etc. Thus, firstly, SAPO’s performance will be compared to similar postal services globally as well as African postal services. Secondly, using locally collected data, a qualitative assessment is performed to measure the performance of SAPO. The focus will be on priority post delivery times, comparing it against the average delivery times of all post types in African countries and the locally set standards. The question, therefore, is whether there is evidence that confirms the perception of an unacceptable postal delivery service.

An outline of the rest of the article is as follows: the section ‘Literature review’ contains a literature review of the following aspects: general postal outlook, main postal developments, postal service performance and logistics and quantitative approaches to address postal challenges. The ‘Research methods and design’ is briefly outlined next. The section ‘South African Postal Services’ gives a brief view on postal services in South Africa. This is followed by the section ‘International postal performance’. An international comparison of the local postal service is given in ‘South African Post Office postal service performance: An international comparison’. The next section is dedicated to an analysis of the postal service in South Africa over the last few years as it relates to international and local registered post. This is then compared to the performance targets for postal delivery in South Africa. Lastly the conclusions are presented.

This literature review is divided into four sections namely the general postal outlook, new postal developments, postal service performance and logistics issues or challenges in the postal environment. All of these have relevance to mail delivery performance.

This study intends to determine the performance of the postal service in South Africa based on quantitative data. Internationally, the UPU has published the performance of some 170 postal operators (also referred to as designated operators [DOs]) for each of the 6 years, from 2016 to 2021. The performance is given as an Integrated Index for Postal Development (2IPD), determined by means of a methodology developed by the UPU. Using this index, postal operators are ranked from high to low. From this, it is possible to determine how well the postal operators, in the various countries, perform and their performance can be compared to each other. The performance data of SAPO was then compared to locally gathered tracking data of registered postal items, also called priority mail. From the latter, one can determine the delivery, or transition, times recorded of postal items from their origin to their destination. A quantitative evaluation and analysis, using these two sets of data, namely the UPU data and the locally gathered data, was performed to get a sense of the performance of SAPO from a logistical perspective. In the ’South African Postal Services’ section a high-level view of SAPO and the extent of its postal delivery task is presented.

In South Africa, the first signs of a postal service goes back some 500 years, 07 July 1501 to be precise, when the captain of a Portuguese ship placed a letter in the ancient ‘Post Office Tree’ in Mossel Bay (Rosenthal & Blum 1969). The captain reported damage and loss of some of his fleet during a storm off the southern Cape coast. The first post office in South Africa was opened formally on 02 March 1792 by the acting governor of the Cape, Johan Isaac Rhenius (SAPO 2021). This was the start of what became the SAPO, a state-owned entity. On 01 October 1991, the then Department of Posts and Telecommunications was split into three separate entities, namely TELKOM, SAPO and a smaller government entity (Williams 2021). Since then, SAPO has operated in its current form.

One of the two main mandates of SAPO (2020) as it relates to postal services is:

South African Postal Services is thus the mandated service provider of the services outlined in the Postal Act 44 of 1958 and Postal Services Act 124 of 1998. Along with these services, SAPO also offers courier and freight, financial services, electronic bill payments and a variety of government services. A full list of services and products offered by SAPO for the domestic and the international markets is provided on the SAPO website.²

The Postal Service Directive (PSD) of the EU defines postal services as ‘services involving the clearance, sorting, transport and distribution of postal items’ (ERGP 2020). Postal services enable any person to send a letter, packet or parcel to any addressee, in the same country or abroad, and assume it is handled, sorted and transported according to regularity, speed and security. Each of these ‘postal operations’ represent the postal delivery supply chain, as depicted in Figure 1 (Bruno et al. 2021). Mail, or post, must be cleared or collected from various points, it needs to be sorted and as SAPO uses a hub-and-spoke approach, the mail is transported to a mail sorting centre, then the sorted mail is transported to the distribution points from where it is ultimately delivered to the recipients. In the latter case, this happens by putting the postal item into a post box or a postman delivering it to a physical address.

The South African Post Office has an extensive network of points of presence across the entire country, see Figure 2 (Jagbeer 2023a). These comprise of traditional post offices as well as postal retail agencies. As part of SAPO’s USO,³ remote rural areas should have access to the postal services. South Africa is a large country and as can be seen from Figure 2, there is a concentration of postal outlets within the metropolitan areas while in less populated rural areas, the outlets are widely scattered with long distances between them and the potential users of these services. The South African Post Office divides the country for operational purposes into six regions, namely the Western, Central, Northern, Gauteng, KwaZulu-Natal and Eastern regions.

Figure 3 shows one of these regions comprising of the Western Cape and Northern Cape provinces (Jagbeer 2023a). As can be seen clearly, the Western Cape, which is more populated, has more postal outlets which are concentrated around the high-density populated areas while the Northern Cape, a large geographical area with a low and widely scattered population has much fewer postal outlets sprinkled across the province. Servicing this area implies long distances, high costs and possibly weekly or bi-weekly deliveries with higher delivery times.

The operations footprint of SAPO as reported in the 2021/22 annual report is shown in Figure 4. This Figure shows the six regions, mentioned earlier, SAPO use for operational purposes. In Table 1, the numbers from the footprint are compared to the 2020 and 2021 numbers.

The formal SAPO definition of some of the operational entities are (Jagbeer 2023a):

What is very noticeable from Table 1 is the reduction of both retail outlets and retail agencies as well as the fleet size. Over a period of 1 year, 134 post offices were closed. In addition, the fleet size was reduced from 1238 vehicles to just 366 vehicles, a reduction of almost 75% (SAPO 2021, 2022). Both have a negative impact on mail delivery across the postal network. As of January 2023, the number of post offices have reduced further to 1132 active post offices with the total active points of presence country-wide being 1882 (Jagbeer 2023b).

Financial difficulties and challenges have faced SAPO since the 2012/13 financial year when SAPO recorded its first net loss, R 206 million (SAPO 2013), and every subsequent financial year up to 2021/22, when the net loss was reported to be R 2181 million (SAPO 2022).⁴ One of the reasons for the poor financial performance has been the reduction in mail volumes (see e.g. SAPO 2015), a worldwide phenomenon, necessitating continuous cost cutting and this has been the main reason for the closure of post offices and the reduction of the vehicle fleet (SAPO 2021, 2022). According to Areff (2023), SAPO is planning to retrench 6000 workers, and at the stage of reporting, no final decision on a date has been made. The impact of this reduction in personnel will further exacerbate the challenges faced by SAPO around mail service delivery.

The UPU, established in 1874, is an international body with its headquarters in Berne, Switzerland, making it the second-oldest international organisation worldwide (UPU 2023). With its current 172 member countries, the UPU provides a universal network of cooperation, ensuring common rules for international mail exchanges and assisting growth within the sector.

To compare postal development between the different member countries, UPU published the 2IPD for the first time in 2016 (UPU 2017). This index has now been published for five subsequent years and the 2IPD for 2021 provides the most comprehensive view of current postal development across the globe (UPU 2022). In the 2022 report, the 2IPD methodology and its value are defined as follows: it enables the creation of a composite index that comprises critical factors for successful postal development – irrespective of the structural differences in postal policies and economic models between countries. In essence, the 2IPD is very similar to the Logistics Performance Index (LPI) that the World Bank published over the period 2004–2018 (Arvis et al. 2018). The LPI focuses on trade logistics performance for countries in the world, not all countries, while the 2IPD is aimed at the global state of postal development.

The data used to calculate the 2IPD is a combination of UPU postal ‘big data’, official statistics and initial surveys. The big data included 3 billion tracking records in 2016 and increased substantially every year. The data integrity needs to be thoroughly checked to ensure the data are complete, accurate, consistent and that it is maintained in a secure manner (Bigelow 2022). The UPU relies on member countries to provide large portions of the data annually (UPU 2017). The Union is largely responsible for ensuring the data integrity which includes aspects such as data correctness, validating the data, does the data make sense, is the digital data uncorrupted, etc. (Bigelow 2022). Having performed this process, the ‘big data’ analysis (Sathi 2012; Waller & Fawcett 2013) can commence. Over the years, the 2IDP has been refined and it is better understood. Clearly, countries are not similar, and the same holds for postal development in the different UPU member countries. Furthermore, postal development is difficult to measure and presents many challenges. The UPU identified seven challenges, or difficulties, in determining the 2IDP and concludes that it will never be an exact calculation. Nevertheless, it remains most useful and is required for data-driven decision-making and policy formulation (UPU 2022).

Using a quantitative approach, that incorporates the masses of data, the index is computed. The following four vital postal development components are used to determine the 2IPD index, and each is defined as follows (UPU 2022):

Reliability therefore measures operational efficiency, reach captures the level of internationalisation, relevance evaluates the competitiveness in all key segments as well as the potential to generate higher postal volumes while resilience assesses the ability to withstand external shocks through adjusting and adapting business models. All four components thus epitomise what the postal sector is facing worldwide because of digitalisation as well as the growth in e-commerce. Mail delivery, both nationally and internationally, relies heavily on and is achieved through ‘postal logistics’ and thus supply chain management functions or processes. The strength, efficiency and effectiveness of postal supply chains impact all four factors either negatively or positively.

The result of the analysis by the UPU is the 2IPD index which is a benchmark performance score (0–100). The index is then used as a standard against which the performance of all DOs in the various member countries is measured. An extensive outline of the methodology used to calculate the 2IPD index is provided in Appendix 2 of the UPU (2019:24–29). Section 1 of this Appendix gives a general outline of the methodology used. Each one of the four components used to determine the 2IPD is then described and the methodology to determine the specific score for that component is given. The variables and sub-variables for each are presented as well as the final formula for each component. The latter is determined as a vector and each component of the vector represents the value for a different country. Finally, a country index is computed as the sum of the four component scores and then rescaling it according to a formula given in Section 1 of Appendix 2 of UPU (2019).

As indicated in the section ‘International postal performance’, the 2IPD index is aimed at presenting the global state of postal development in all the member DOs of the UPU. The best developed, or performing, DO is given an index of 100 and all the other DOs index scores are scaled accordingly. These indexes can now be used to compare the development, or performance, of individual DOs (countries) with each other. In this way, DOs can be grouped together to show the best performing designated postal operators, those not performing as well and the ones performing the worst or where the postal development is the worst. Using these, high-level decisions around global postal development can be made, strategies can be developed and action plans put in place. In addition, individual DOs or countries, can monitor their own performance and act based on these 2IPD performance indicators. Logistics and supply chain management play a critical role in the performance of postal service delivery. Proper analysis of the data and comparisons with similar data can provide valuable insights directly related to postal service delivery performance.

Utilising the UPU data, Figure 5 shows how the SAPO ranking, and the associated index scores, has varied over the 6 years from 2016 to 2021 with Figure 6 capturing the four key components for SAPO. In 2016, SAPO ranked 66th out of 170 country DOs; however, it is important to note that its index was less than half that of the highest rank DO namely Switzerland (Swiss Post) with an index of 100 (UPU 2017). Switzerland has consistently been ranked the highest over the 6 years. After the relatively high ranking of 66th, SAPO dropped to 88th and since then its position has slowly improved in comparison to other DOs. In 2021, the ranking of SAPO, 72, falls just in the top half of all DOs; however, its score of 38.7, and thus performance, is well below 50 indicating low postal development and performance (UPU 2022). More than two-thirds of the country DOs had an index score below 50 in 2016 (UPU 2017). In 2021, 124 country DOs out of 172 had index scores below 50 (UPU 2022). Overall, therefore, most global postal operators are not performing well.

In 2021, the UPU decided to group countries together into 10 postal development levels according to their respective 2IPD scores. With an index score of 38.7 in 2021, SAPO is ranked 1st in postal development level 4. Countries with scores below 38.9, and classified into levels 1–4, are considered countries with low to lower-middle postal development performances (UPU 2022).

The reliability score of SAPO has trebled from a very low base in 2018 of 10.57 to 35.7 in 2021, see Figure 6. Worldwide, the reliability pattern differs widely. With a median⁵ score of 28.4, it remains low (UPU 2022). In Africa, this median score is 6.7, the lowest of all regions, indicating SAPO is performing much better than most countries in Africa. Many postal services (DOs), in response to the increase in online shopping and in particular parcel volumes, invested in additional capacity to increase reliability. Industrial countries (IC) have a median reliability score of 88.5 while Eastern Europe and the 11 Commonwealth Independent States (CIS) have a median score of 76.8.

The global median score for reach is a low 20.5, indicating major challenges in international connectivity between postal service providers (UPU 2022). The low score applies to SAPO as well with a constant declining reach score over the 6 years, although the 2021 score is double that of the global median. The Africa region median score was 4.5 in 2021, SAPO’s reach score was almost 10 times higher. The major hurdles affecting international postal reach are changes in international terminal charges (dues), changes in customs regulations and regimes, and shifts in cross-border e-commerce models from business to business (B2B) to business to business to consumer (B2B2C) (UPU 2022).

The relative success of postal business models and activities is represented by relevance. The SAPO graph for this key dimension, Figure 6, is almost a constant over the entire 6-year period apart from 2018 where it was higher (initiatives by the then CEO?). For relevance, there are huge differences among all the 172 participants in the UPU analysis (UPU 2022) with the overall median relevance score being very low at 3.03. Except for the IC countries, all other countries have low values. This is an indication that most countries struggle within the fast and dynamic changing ‘postal’ environment with wrong or inappropriate business models and thus not being successful. Even though the SAPO score in 2021 is low, 2.7, it compares reasonable with the African median score of 0.3 (UPU 2022).

The resilience score for SAPO has remained around the mid-sixties over the 6-year period indicating that SAPO is able to adjust and adapt reasonably well to changes in its environment. South African Post Office’s resilience score of 65.7 in 2021 is in fact higher than the global median score of 53.9 (UPU 2022). This relatively high global median resilience score is an indication that most countries’ postal service providers can absorb shocks to the postal system well.

Within Africa, SAPO is not the best ranked DO as can be seen from Table 2 where the top five ranked countries are shown for 2016 and 2021. South African Post Office was ranked 5^th in 2016 and 2021 as well as the four intervening years. The index scores of all the African countries shown in Table 2 have decreased from 2016 to 2021. This is an indication that postal services in Africa are falling behind as far as development is concerned against those in almost all the other continents. The median 2IPD score for Africa is 16.3 while the score for the Latin America and Caribbean region is slightly lower at 16.1. The global median score is 30.0 (UPU 2017, 2022).

In summary, based on the UPU calculations, SAPO falls in the lower half of all the global DOs as far as postal development performance is concerned. It is, however, not the best-performing DO in Africa. As for the four key components of the 2IPD, the one concern is that the reach of SAPO is consistently decreasing, thus affecting the international postal service of SAPO.

This analysis focuses on postal services and specifically how customers experience postal services within South Africa. The collection and delivery of mail from points of origin to destinations (e.g. post boxes) includes and incorporates all the elements of classical supply chain management – see the section ’South African Postal Service’. Ultimately, the highest priority for customers is a reliable and predictable service with ‘on-time’ delivery of postal items. Unfortunately, the postal service in South Africa is currently not consistent or reliable, and very slow. A few actual qualitative examples are presented here.

Jagbeer (2022) in a survey of SAPO clients relates the following comments of two different types of clients in response to questions on reliable delivery, lost or stolen goods and parcel delivery to customers as opposed to collecting parcels. It captures what is reported regularly in newspapers, the media and other forums – complaints about a lack of a proper service, and even a total lack of service by the South African Post Office. A business customer:

A private customer stated:

Viljoen (2018), an avid stamp collector, in a letter to a newspaper, stated the ‘South African Postal Services came to a standstill long ago’! In the letter, he reminiscences about the efficient postal service when he was a student in Stellenbosch, Western Cape during the 1950s. He would mail a letter to his parents in Graaff Reinet, Eastern Cape on Sunday night, and they will get it on Wednesday. His mother would send a response on the same day and by Friday, he would have her return letter.

In contrast, in 2018, he would send a registered item to Graaff Reinet, registered otherwise it gets lost, and 6 weeks later, it still has not arrived at its destination. He wrote the letter when postal workers were threatening to strike and to bring the post office to a ‘standstill’. Very sarcastically, he indicates that they have already achieved this long ago!

The strike of 2 weeks in July 2018, and the go-slow the week beforehand, led to an accumulated backlog of 38 million parcels and letters which was not cleared by mid-November 2018. By then, the year-end busy period was in full swing and the backlog was still 7.8 million items (Paton 2018). Cohen (2022) reports that given the good leadership within the post office during those times, the strikes stopped, and hundreds of post office workers volunteered one weekend to clear the imported post backlog at the Johannesburg International Mailing Centre (JIMC) at OR Tambo. A clear sign of proud, willing and concerned workers that existed within the post office.

The SAPO strikes have many unintended consequences. For example, Lowman (2021) relates the demise of the SA Turf Directory, a 36-year-old printed publication. The owner was forced to go digital, unwillingly, resulting in job losses of the people who set the publication, the printers, etc.

The precarious and dire financial position of SAPO has led to the closure of over 100 post offices across the country. The Muizenberg, Western Cape, post office was closed in February 2022 with no warning or explanation by SAPO (Bell 2022). The closest neighbouring post office is the Retreat post office with the implication that many post office customers now had to travel up to an additional 7 km.

The residents of the Northern Cape province, the largest and most sparsely populated province in South Africa, are in a worse situation. Opperman (2022) after visiting the province noted that the post office of Loeriesfontein was closed with the nearest post office located in Nieuwoudtville, some 65 km away. People in these remote areas must travel large distances, mostly on bad roads, to get access to postal services. In addition, the closure of post offices impacts negatively on the main competitive advantage of the post office namely its country-wide network.

Eastern Cape residents, living in some of the most vulnerable communities in the country, find themselves in a quandary with threats of post offices closing temporarily or permanently. The post offices in this region also experience many problems and difficulties (Ellis 2022).

There are many similar comments to be found in various media outlets about the service of SAPO. What is, however, required is to have actual data with which these perceptions can be proved and quantified. Is the service really that bad and if it is, what is the extent of this? The sections ‘International registered or “priority” post’ and ‘Domestic registered or “priority” post’ present a quantitative analysis of real data and numbers. Collecting data from ordinary post is basically impossible but data can be obtained using registered post and the tracking numbers associated with each such item.

As a state entity, SAPO provides an indispensable service to many of the South African population. In this article, we have shown how technology has impacted and affected the postal component of SAPO’s operations. What SAPO has experienced is not unique as it is a global problem and challenge. South African Post Office still has a unique country-wide footprint which it needs to capitalise on an aggressive way (see Figure 2). This, together with its USOs, puts SAPO in an ideal position to serve customers across the country but then it is essential that the service is consistently reliable and predictable.

The postal development performance of SAPO as measured from an international perspective by the UPU was compared with actual quantitative data of registered, or priority, post. The UPU developed and published the 2IPD index for the first time in 2016 and since then every consecutive year. The type of analysis described here where international data are compared to locally captured data has not been detected in the literature.

From the results obtained, there seems to be a significant disconnect between the results as published by the UPU and what clients of SAPO are experiencing locally on the ground. The performance using actual tracking data indicates the service is even worse than what the UPU results show. The research question was ‘Whether there is evidence of the perceived unacceptable level of service by SAPO’. From the quantitative analysis performed in this article, there is conclusive evidence that the service is indeed more than unacceptable. Data from priority mail were used and the delivery times for these are on average far worse than the average delivery times determined by UPU for African countries over three consecutive years, and the latter are for all post types. In addition, the standards set locally by ICASA are not met at all and are almost worse by a factor of 10. Based on these findings, the data SAPO submits to UPU are either out of date or totally wrong while what SAPO reports in its annual reports is also not accurate.

South African Postal Services has degenerated technologically over a long period (Uni Global 2018) and a major effort would be required to reverse the situation. Some suggestions and recommendations for research could include the following:

Ten to fifteen years ago, SAPO was a well-functioning, profitable entity providing a reliable, predictable and professional postal service. Today it is the opposite of what it was and to build it up again, if that is possible, will necessitate enormous effort. What Spiegel (2023) noted is unfortunately true: ‘trust in government institutions is nearly impossible to regain once it is lost’.