What's the future for state-owned postal services?

Summary

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Business Daily (BBC World Service)

Episode: What's the future for state-owned postal services?

Date: December 10, 2025
Host: Russell Padmore

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Episode Overview

This episode of Business Daily examines the uncertain future of state-owned postal services worldwide amid mounting losses, shrinking demand for traditional letters, and fierce competition from private logistics companies. The episode explores how different countries are responding—with some considering privatization, others doubling down on modernization, and all facing growing pressure to adapt through automation, artificial intelligence, and expanded services. The discussion includes voices from postal executives, economists, technology journalists, and logistics industry experts.

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Key Discussion Points & Insights

1. The Decline and Transformation of Postal Services

• Billions of letters and parcels are mailed globally each year, but state postal services face rising deficits and competition from private firms (01:09).
• Traditional mail is declining: In Denmark, letter post volume has dropped by 90% since 2000, and some countries are ending letter deliveries altogether (06:25).
• Postal services are diversifying, shifting focus to logistics, parcels (especially driven by e-commerce), and financial services (03:17).

2. Modernization and Competition

• Case Study: Ireland (An Post)

  • CEO David McRedmond discusses how they're transforming from a letter business to a logistics and services company (03:17).
  • The trusted postal brand and local knowledge are competitive advantages against global firms (03:52).
  • Parcel volume is growing rapidly, outpacing expectations (03:17).
  • Electric vehicles and potential drone/robot delivery are part of modernization efforts (05:16-05:50).
  • AI is being leveraged for route optimization and predictive delivery (06:02).

• Case Study: United States

  • The USPS faces massive losses ($9.5 billion in 2024) and shrinking volumes (07:35).
  • Discussion about privatization versus state ownership: Pressure to privatize is growing due to chronic deficits (07:58).
  • Political and regulatory constraints severely limit modernization and flexibility compared to private competitors (09:12, 09:53).
  • "Delivering to 163 million addresses six days a week...is a remarkable logistical feat...that's also its greatest burden." — Peter S.E. Earle, 01:35/08:33.

• Case Study: India

  • Despite consistent losses, privatization is considered highly unlikely due to the vital social service and rural reach of India Post (13:14, 13:57).
  • 99% of its annual budget goes towards salaries and pensions. Its vast physical network is a key asset (13:57-14:45).
  • India Post is expanding into financial services and partnerships, especially in rural areas, while staying under state control.

3. Role of Technology: Automation, Drones, Robotics, and AI

• Postal modernization includes experiments with drones for remote/last-mile delivery (02:07, 15:28, 17:09).
• AI and robotics are integral to industry transformation, particularly for route planning, sorting, and predictive delivery (05:50; 17:50).
• National services face hurdles in tech investment, unlike giants like Amazon which have vast R&D resources (16:46).

4. Broader Economic and Social Considerations

• Debates on privatization hinge on social obligations, affordability, and rural access, versus investor reluctance to acquire loss-making entities (04:33, 13:57).
• In some countries, the public service function and trust in national post outweigh the push to privatization (14:45).
• Global competition means national posts need major investment to compete internationally, which is challenging for state-run organizations (18:22).

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Notable Quotes & Memorable Moments

• “Delivering to 163 million addresses six days a week...is a remarkable logistical feat. You know, that's also its greatest burden.”
  — Peter S.E. Earle (01:35/08:33)

• "Letters are less than half of our business now. We have financial services and other services. Parcel delivery, e-commerce begins to take over."
  — David McRedmond, An Post CEO (03:17)

• “There is a heavy social service obligation. It's priced way below cost to make it affordable as a service to society.”
  — Deepak Lalwani, India economist (13:14)

• “The postal brand is trusted... you need local knowledge, you need people on the ground. That gives us an advantage.”
  — David McRedmond (03:52)

• "AI can really help us cut through... How do you find more efficient routes to deliver? We should, for example, be able to predict who is in before we deliver without actually knowing."
  — David McRedmond (06:02)

• "For national Postal Service to be able to have a kind of R&D department at that level is probably a bit pie in the sky thinking."
  — Elaine Burke, For Tech's Sake podcast (16:46)

• “In my 30 years of specializing on Indian investments, I have never seen it on the list of privatization. Quite frankly, you need investors to buy the company, and investors would not be interested in a loss-making public service.”
  — Deepak Lalwani (13:57)

• “People tend to want things faster. There's been a sense of this kind of Amazonification of people's expectations... that's something that can be a challenge to keep up with.”
  — Elaine Burke (16:10)

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Timeline of Important Segments

| Timestamp | Segment | |-----------|----------------------------------------------------------| | 01:09 | Episode introduction: scale and challenges of post | | 01:35 | Peter S.E. Earle on USPS burdens and achievements | | 02:07 | Modernization and drones in Ireland | | 03:17 | David McRedmond (An Post) on business transformation | | 05:16 | Drones, electric vehicles, robots in post | | 06:02 | AI and the future of delivery | | 06:25 | Impacts of digital transition in Denmark & US | | 07:58 | USPS losses and debate on privatization | | 08:33 | Economist Earle on administration’s privatization push | | 09:53 | Earle on regulatory barriers to modernization | | 13:14 | Deepak Lalwani on India Post and social obligations | | 14:45 | India Post’s rural advantage and diversification | | 15:28 | Swiss drone tests and tech-driven delivery abroad | | 16:10 | Elaine Burke on rising customer expectations | | 16:46 | The tech investment gap: state posts vs. Amazon | | 17:09 | Drones for last mile, challenges (noise complaints) | | 17:50 | AI for route and workflow optimization | | 18:22 | Global competition and network scale challenges |

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Conclusion

This episode underscores that the future of state-owned postal services will be shaped by their ability to modernize, leverage technology, and adapt business models to meet consumer demand and competition from private firms. Social obligations and the broad national networks of these services remain vital to their identity and, in some cases, to their survival under government control. However, embracing automation and AI, expanding services, and finding new revenue streams are now essential to staving off decline—or irrelevance—in the era of digital communication and global logistics giants.

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Transcript

[Russell Padmore]

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[Russell Padmore]

Hello, welcome to Business Daily from the BBC World Service. I'm Russell Padmore. Today, billions of letters and parcels are posted around the world every year. But state owned mail services are facing tough competition from private package delivery firms. Traditional post companies are accumulating huge losses, tempting some governments like the United States to consider privatizing the service.

[Peter S.E. Earle]

You know, delivering to 163 million addresses six days a week is despite the losing fortunes of postal service. It's a remarkable logistical feat. You know, that's also its greatest burden.

[Russell Padmore]

Loss making postal services need financial subsidies to stay in business, although they're a vital part of a nation's economy. We'll hear why India has ruled out privatization.

[Chip Kleinxel]

There is a heavy social service obligation. It's priced way below cost to make it affordable as a service to society.

[Russell Padmore]

National post services are modernizing their operations to cope with competition, which could mean letters and parcels delivered by drones in the near future.

[Elaine Burke]

To bring drones into the mix, the idea is that they will eliminate the challenges of getting through traffic if you're on limited time frame.

[Russell Padmore]

The challenge to ensure the survival of the world's postal services all coming up on today's Business Daily.

It's a rainy day here in the north west of Ireland. The kind of weather that post men and women delivering mail are used to. I'm in Letterkenny, outside the regional distribution centre of On Post, Ireland's state owned mail service. The Irish have had a postal service since 1638 and it's always faced the challenge of delivering to cities like Dublin and Cork, as well as rural areas like where I am now, County Donegal. Enpost competes with global package companies and it has modernized its operations to cope with E commerce as well as people writing fewer letters. As I've been hearing from David McRedman, the chief executive of Enpost, postal companies.

[David McRedmond]

Are very rapidly changing to be logistics companies. One or two posts don't do letters anymore. Letters are less than half of our business. Now we have financial services and other services. Parcel delivery E commerce begins to take over. We were expecting the parcels would grow by about 8% per annum. They're growing at least double that rate over 16% per annum.

[Russell Padmore]

So does that mean you're competing quite effectively with the private package carriers, the delivery companies, which many of them, of course, have a global footprint.

[David McRedmond]

Yes, doing very well. The postal brand is trusted. Secondly, Ireland is a widely distributed population and that means that you need local knowledge, you need people on the ground. That gives us an advantage. The people who work in on post and often who work in postal around the world are professional. They're seen as pillars of their community.

[Russell Padmore]

Quite a few countries have looked at privatizing their postal services on post in Ireland stays under government or state control for the moment. But can you foresee the pressure to privatise postal services outside of Ireland as well as maybe inside of Ireland, growing?

[David McRedmond]

When you're a monopoly business, it's good to be under state ownership and to have all the controls and to make sure that you're delivering the public service. As we move into a world which is very commercial, commercial credit terms dealing with global commercial private companies, there's a logic to say that private ownership is perhaps more appropriate. But the point at which postal services stop having a uso, a universal Service obligation, then you have to question whether state ownership adds anything.

[Russell Padmore]

It may seem like science fiction, but does the future mean robots walking the streets, delivering mail, and maybe deliver your packages by drones as well?

[David McRedmond]

Drones could be used to deliver to the islands, for example, and we've tested that and we'll do more testing in future. I'm sure there will be some robotic delivery, but actually, you know, there's a lot of advantage to the physical delivery in a van with a post person who knows the addresses and knows the house. The major change that we've seen is moving, for example, to electric vehicles. Those vehicles last six years compared to a diesel vehicle, the last four. But yes, of course, there'll be drones and there'll be robots.

[Russell Padmore]

Artificial intelligence is going to reshape so many industries. What's going to happen to postal services? Thanks to AI, we know what every.

[David McRedmond]

House is ordering every day, where they are, all of that information. We are super rich in information and AI can really help us cut through that. How do you find more efficient routes to deliver? We should, for example, be able to predict who is in before we deliver without actually knowing. AI is brilliant at that type of predictive tooling.

[Russell Padmore]

David McRedmond, chief executive of Enpost, Ireland's National Post Service Traditional letter and parcel delivery firms have had to adapt to the digital age. We're sending fewer letters and sending emails instead. Consumers order goods online and that's forced the industry to adapt. The numbers are stark. In Denmark, for example, there's been a 90% decline in the number of letters sent since 2000. And the country's state postal service, Post Nord, will end all letter deliveries by the end of this year. The United States Postal Service traces its roots back to the 1700s, and in common with many around the world, it's struggling to cope with competition from global package delivery firms like DHL and FedEx. But USPS is still a valued service. Even on late night talk programs like the Daily show on America's Comedy Central.

[David McRedmond]

Channel, the price of a stamp is going up 5 cents, which doesn't seem like a lot because look, I know it's not cool to say nice things about big government, but the post office, everybody, it's still pretty good deal.

[Russell Padmore]

The USPS reported a net loss of $9.5 billion in 2024, and it's deep in the red this year. The troubling signs have been obvious for about 20 years. In 2006, the U.S. postal Service handled more than 200 billion letters and packages. Last year it processed 112 billion items, a drop of almost.

America's postal service is $15 billion in debt. US President Donald Trump has admitted the way forward could be to privatize it. Well, there is talk about the postal.

[Chip Kleinxel]

Service being taken private.

[Russell Padmore]

You do know that.

[Chip Kleinxel]

Not the worst idea I've ever heard.

[Russell Padmore]

It really isn't. You know, it's a lot different today.

[Peter S.E. Earle]

With Amazon and UPS and FedEx and all the things that you didn't have.

[Russell Padmore]

Peter S.E. earle is the director of economics at the American Institute for Economic Research. He's been telling me why White House is considering a sale of the country's post service.

[Peter S.E. Earle]

The view of the administration, and this is consistent with a lot of its philosophies about many different areas of the economy, is that Private industry could do it better. And in addition to that, you know, it would take a losing enterprise out of the hands of the government, no longer burdening taxpayers. You know, delivering to 163 million addresses six days a week is despite the losing fortunes of Postal Service. It's a remarkable logistical feat. You know, that's also its greatest burden.

[Russell Padmore]

If postal services are actually opened up to national competition in the U.S. wouldn't that undermine the business of the U.S. postal Service?

[Peter S.E. Earle]

I'm sure it would. The Postal Service is simultaneously a business and a political institution. You know, UPS or Amazon's delivery service, all that can make changes overnight. Decisions on pricing and service levels and closures for the Postal Service all require congressional approval, which invites lobbying. It takes weeks or even months. And that's why we find post offices with very little traffic remaining open. So, you know, no private carrier would operate with that kind of overhead.

[Russell Padmore]

Why not just modernize the existing service, make it more streamlined and overhaul it to operate in the modern digital era and still keep it under state control?

[Peter S.E. Earle]

Though many of the private firms out there, they've invested heavily in automation, a lot of them are already using AI based logistics. The Postal Service is sort of hamstrung in its ability to technologically innovate by regulations and pretty rigid labor agreements. So about 75% of the expenses of the USPS go to wages and benefits, which is vastly higher than any of the private couriers and deliverers pay. The kind of innovation that competitors take for granted. There's tracking, there's route optimization, flexible delivery windows. The U.S. postal Service is way behind the curve. Political oversight makes modernization, you know, very, very slow to occur.

[Russell Padmore]

Do you actually foresee a future where the US Postal Service gets privatized?

[Peter S.E. Earle]

I don't think that that's likely. I mean, it is true that the Postal Service is now at a crossroads, but just doing nothing eventually will not be viable because you know, it will only lead to deeper losses.

[Russell Padmore]

Peter C. Earl from the American Institute for Economic Research. You're listening to Business Daily from the BBC World Service.

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[Russell Padmore]

I'm Russell Padmore Examining the future of state run postal services India Post, a.

[Chip Kleinxel]

More than 160 years old organization, has its feet firm on the ground. The organization is swiftly adapting itself to the latest trends in communication technologies.

[Russell Padmore]

A promotion for India Post, which has more post offices than any other in the world, unlike many other national mail services, continues to lose money every year. Deepak Lalwani is the chairman of Lalcap, a company that advises on investing in India. He doesn't believe the government would sell India Post.

[Chip Kleinxel]

There is a heavy social service obligation. It's priced way below cost to make it affordable to the common man. And therein lies the biggest importance as a service to society. India Post. The reliability and reach, especially in the rural and remote areas is very good. So for example, India Post is reliable virtually 100% versus 83% for private couriers around the world.

[Russell Padmore]

Other governments are considering privatizing the state run post office effectively. But would that ever happen in India? Is India Post safe from being sold off?

[Chip Kleinxel]

Absolutely. I don't think the government would privatise India post. In my 30 years of specializing on Indian investments, I have never seen it on the list of privatization. Quite frankly, in order to privatize it you need investors to buy the company and investors would not be interested in a loss making public service. And India Post has been running an annual deficit, a long standing annual deficit. Of the annual spend, 99% goes into salaries and pensions.

[Russell Padmore]

India Post does have more offices than any other counterpart across the world. Among the postal services, could that be a major advantage in having those customers who use the outlets. Across the country in cities and isolated villages in the r rural areas, there.

[Chip Kleinxel]

Are about 165,000 branches, but 90% of those are in the rural areas. There are more postal branches in India than all the bank branches in the country. There is that trust element which has grown and India Post has expanded into financial services partnerships with banks and telecoms and utility collections. It aims to modernize services so covering, you know, e commerce, banking, insurance, but with greater government control.

[Russell Padmore]

Indian economist Deepak Lalwani. Today, amid huge losses, governments are pressing postal services to modernize their operations.

[Elaine Burke]

The Swiss Postal Service has begun testing parcel deliveries by unmanned drones, eventually for.

[Russell Padmore]

Areas which are difficult to access.

[Elaine Burke]

Parcels are flown to the island's airport in St. Mary's by a large fixed wing drone that can carry up to 100kg of mail at a time.

[Russell Padmore]

Looking at Amazon because it's announced it will start to use drones to deliver parcels in under an hour in the uk in future, the familiar sight of a mailman or woman delivering your posts may become rare as packages and letters could be delivered by drones dispatched from a warehouse by artificial intelligence. Elaine Burke is a science and technology journalist and presenter of the For Tech's Sake podcast.

[Elaine Burke]

People tend to want things faster. There's been a sense of this kind of Amazonification of people's expectations when it comes to the delivery of goods. And that means that postal services are kind of under pressure to deliver at the same rate. And when you are not part of a multi trillion dollar industry and you are a local or national postal service, that's something that can be a challenge to keep up with.

[Russell Padmore]

Are state owned postal services copying these automated operations of the privately owned parcel delivery companies? Because obviously they're under pressure to modernize.

[Elaine Burke]

If you're talking about Amazon warehousing having robotics technology, that's also because Amazon as a technology company has research and development teams that actually work in robotics and can optimize those systems at scale for their warehousing locations. For national Postal Service to be able to have a kind of R&D department at that level is probably a bit pie in the sky thinking.

[Russell Padmore]

Is it likely these traditional postal companies are going to start using drones to deliver packages or parcels?

[Elaine Burke]

Commercial drone development, especially here in Ireland, has really taken off this idea of last mile drone delivery to bring drones into the mix. The idea is that they will eliminate the challenges of getting through traffic if you're, you know, on limited time frame. But then the other challenge there is that people in areas where they have been deployed are filing noise complaints.

[Russell Padmore]

Artificial intelligence, the so called new industrial revolution. It's going to change so many industries. Is AI going to have a huge impact on the postal services?

[Elaine Burke]

So when it comes to say, solving complex problems of which packages get set with which delivery person and optimizing delivery routes, these are the kind of things where AI can be quite helpful. Also machine vision, computer vision technologies, the ability for a machine to be able to read a label on a letter or a package. I don't think we're at the stage of the maturity of those kind of technologies that they can do everything that the staff in your local post office can currently do.

[Russell Padmore]

Elaine Burke from the For Tech Sake podcast. Governments putting pressure on postal services to modernize might think the way forward is to privatise them. But that would mean competing with global giants of the delivery industry and significant investment. Neil van der Wa is the chief air Freight Officer at Zenita in Amsterdam in the Netherlands. A global logistics advisory company. To build up an international, truly international network that requires so much investment and something that is difficult to build from scratch. I would struggle to see how a company that in its DNA is used to operating primarily locally, nationally and for its international shipments is very much dependent on its peers in other countries, how that will be able to set up an international competitive network from a rate as well as a service level perspective. Leo van der Waal so will governments continue to fund loss making mail services? Privatizing them could mean the end of daily post deliveries. Survival under state control will mean significant modernization in the future. Packages and letters could be delivered by drones controlled by artificial intelligence. It's also possible that robots could deliver your mail. I'm Russell Padmore, closing this edition of Business Daily. If you'd like to get in touch with the program, no need to send a letter, you can email us. Businessdailybc co.uk business dailybc.co.uk thanks for listening.

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