The postal sector is facing a reckoning. While the global economy has surged by 75% since 2006, postal revenues have seen minimal growth – just 4% over the same period. The result, as the Universal Postal Union’s (UPU) State of the Postal Sector 2025 report makes clear, is an unprecedented 71% “performance gap” that threatens the sustainability of postal operators around the world.
“The main reason,” explains José Anson, the UPU’s Lead Economist, “is that in most countries, postal operators simply haven’t had the right business model. For most of the world, the gap is a sign that either the business model or the regulatory framework hasn’t enabled posts to adapt. As a result, there has been an increasing decoupling between economic growth and postal growth.”The third edition of the UPU’s State of the Postal Sector report is both a warning and a blueprint. It urges postal operators to embrace broad diversification and international collaboration to rebuild scale and efficiency in a sector fragmented by e-commerce disruption and pandemic-era logistics upheaval.
From fragmentation to integration
When Covid-19 grounded planes and disrupted trade routes, e-commerce platforms scrambled to build their own alternative logistics solutions. In the process, they bypassed many traditional postal corridors. In 2019, around 30 to 50 main routes carried most cross-border postal traffic. Today, more than 150 fragmented pathways crisscross the global network, each thinner, slower, and more expensive to operate, the report notes.
“This fragmentation is really hindering international postal and logistics development,” says Anson. “Unless we build a new kind of multilateralism and enable different network players to collaborate more than ever, it’s going to be very difficult to overcome this challenge.”
According to the report, just 12 mega-corridors now move 28% of global postal weight, while over 5,000 “microlanes” struggle with volumes too small to sustain direct routing. Each additional hand-off adds cost and delay, eroding the economies of scale that should underpin affordable cross-border delivery.
A distributed postal grid
To rebuild those lost economies of scale, the UPU is championing what it calls a “distributed postal grid” – a coordinated network of regional postal transport hubs connected through standardized corridors.
“This distributed postal grid is an answer to the fragmentation problem,” Anson continues. “The concept is to create two or three hubs per region that can help less developed postal operators benefit from globalization and participate effectively in cross-border e-commerce.”
The grid model would see regional “locomotive” hubs in each trading basin – East and Southeast Asia, the Gulf and Western Asia, Africa, Europe and the Americas – acting as engines of consolidation, compliance and scale. Smaller or developing posts could route their international traffic through these hubs, achieving lower costs and better reliability without having to duplicate infrastructure.
Anson points to the United Arab Emirates’ Waslah Post as a real-world example of this new model. “At the 28th Universal Postal Congress, 7X announced the creation of Waslah – a shipment management platform. This is exactly the kind of model we had in mind when we spoke about distributed postal grids. It’s about stronger collaboration between advanced and developing networks, pooling resources so everyone benefits from global connectivity.”
Why diversification matters
If the distributed postal grid offers a global solution to postal fragmentation, diversification provides the domestic pathway to resilience and growth. In the report’s analysis of postal revenue trends, a surprising pattern emerged, according to Anson: posts that diversified widely, not only into parcels and financial services but across a full ecosystem of complementary services, were able to maintain growth more closely aligned with national GDP. “This was one of the most surprising findings from the report,” admits Anson.
France’s La Poste Group is a standout example, according to Anson. “They’ve been quite successful,” he says, “in building a wide diversification strategy – an ecosystem of services. And this has proven to be good for them in keeping alignment with economic growth.”
The report’s data supports this idea: a 10% reduction in dependence on letter post – achieved through new, customer-focused services – narrowed the postal-GDP gap by 9% between 2006 and 2023. “Furthermore, posts which kept their post office networks, or adapted them to new formats, were also more resilient in aligning postal revenue with economic growth,” Anson adds.
Ecosystemic diversification
Yet, Anson warns, diversification is not simply about “putting eggs in different baskets.” Many postal operators have created siloed business units for parcels, logistics, banking and digital services. The next step, he argues, is “ecosystemic diversification” – connecting these services so that each reinforces the others.
“The diversification of the future,” he says, “is that all business segments must clearly interact with each other. AI can help a lot here – facilitating how different segments work together to provide a unified experience for the consumer. It’s not about separate units anymore; it’s about connected, bundled services that meet people’s needs in an integrated way.”
Lessons from the rising stars
The report also includes the annual Integrated Index for Postal Development (2IPD), which uses postal big data and official statistics to compare four indices of postal reliability, reach, relevance and resilience across 180 countries. This year, Swiss Post led the global ranking for the 9th consecutive year.
The 2025 assessment also revealed a 60+ point gap between the highest-performing region (industrialized countries at 94.4) and the lowest (Latin America and Caribbean at 32.3), with most developing regions scoring well below the global median of 50.8.
However, standout performers in developing and emerging regions (Brazil, Estonia, Mauritius, Oman, Thailand) and “rising stars” with the greatest overall year-on-year improvement in postal development scores (Sri Lanka, Ukraine, Uruguay) showed that targeted modernization efforts can propel postal operators to excellence.
“Ukraine is a master class in resilience,” says Anson. “Despite armed conflict in the country, the post has managed to keep export pipelines open for thousands of microenterprises and even doubled its relevance score. It shows that postal progress is above all a matter of mindset.”
Ukraine’s example illustrates how targeted modernization – expanding services, building new corridors and using data-sharing agreements – can turn adversity into innovation. A similar story is emerging in Sri Lanka, which modernized its postal systems amid an economic crisis.
“These posts show that the postal service can play a vital role in the economic and social resilience of a country,” Anson explains. “Maybe in the future, the Universal Service Obligation (USO) could evolve into a Universal Resilience Obligation (URO) – a recognition of how postal networks strengthen national resilience.”
Closing the gap
The State of the Postal Sector 2025 report ends with a call to action to operators, regulators, governments and the international community. It calls on posts to diversify broadly, maintain their networks, and invest in digital and data capabilities. It calls on regulators to modernize frameworks, reward innovation, and recognize the postal network’s social and economic value and governments to adjust postal sector policies accordingly. And it asks the international community to support multilateral solutions and fund the investments that close development gaps.
Anson concludes: “Ultimately, the future of the postal sector depends on how well we cooperate. Go international, diversify intelligently and connect the dots. That’s how we close the development gap.”
This article first appeared in Union Postale Autumn 2025.