In late 2024, Escher, a leading global post and courier software and services provider, released its 2024 Future of Posts report, providing a deep insight into the key trends shaping the postal industry, based on feedback from 179 respondents representing 78 postal operators worldwide.
The Universal Postal Union (UPU) caught up with Escher CEO, Brody Buhler, to examine why the report, which is in its eighth year, is important to the postal sector, and to look at its key findings, including current industry trends, challenges and investment priorities, and what the outlook for 2025 is.“The Future of Posts report stands as a cornerstone resource for the global postal industry, delivering critical insights that illuminate the path forward for postal operators worldwide,” said Buhler. “It captures the evolving strategies, operational priorities, and investment focuses shaping the sector’s future and dissects the forces driving growth at the most successful posts while exposing the formidable challenges, such as declining letter volumes, cross-border complexities, and the relentless pressure to modernize.”
2024 performance
The report revealed that in 2024 the postal sector showed signs of recovery, but profitability remained a key concern. 38% of postal operators reported positive revenue growth in 2024 – a notable improvement compared to 27% in 2023. Meanwhile, 32% of businesses reported that revenue remained relatively flat, and 30% experienced negative revenue performance in 2024. The latter was a marked improvement from 40% in 2023.
In terms of profitability, 43% of operators noted a decline in 2024, while 28% experienced improved profitability, slightly better than the 20% in 2023 but lower than the 40% peak in 2022. 29% reported that profitability remained flat.
“The Future of Posts research suggests that while the market is recovering, profitability pressures persist, particularly due to the declining letter volumes,” Buhler said. “The transformations towards parcel-first businesses are arduous and will take time, especially given the decline in letter volumes.”
Most surprising insights
Buhler highlighted several surprising insights from the 2024 report, including declines in parcel volume growth, the impact of macroeconomic factors, e-commerce returns demand and the popularity of smart lockers decreasing.
“Contrary to previous years, the report noted a reversal of parcel growth to declining volumes at many posts. While e-commerce parcels remained a central focus, the shift from high growth to flat or moderate declines was unexpected. The 2024 report, however, saw a resurgence in the acceleration of delivery network expansion strategies, with 36% of respondents indicating that they were pushing forward with expansion, representing a significant increase from the 9% reported in 2023, suggesting renewed confidence,” explained Buhler.
In terms of macroeconomic factors, Buhler pointed to the unexpected renaissance in offline shopping, which caught many posts off guard in 2024 and cost them market share. “Another surprising insight was that the popularity of smart lockers dropped sharply, with only 49% of respondents prioritizing them, down from 70% in 2023 and 62% in 2022,” explained Buhler. “This decline might indicate a strategic re-evaluation of their effectiveness or a pivot towards more traditional retail outlets as the primary customer touchpoints.”
Buhler also highlighted how e-commerce returns are emerging as a significant investment area for posts, with the report indicating that while only 13% of postal operators have noticed returns as an impact, over a third of posts recognize the importance the returns process plays in customer experience. “Retailers must deal with returns efficiently and cost-effectively, so meeting these reverse logistics needs is a potentially lucrative growth area for posts,” said Buhler.
And while the decline in letter mail volume isn’t surprising, its impact has become more acute, Buhler noted. “In 2023, 76% of posts noted the reduction in letter mail volumes as the most significant impact on their business, up from 53% the previous year. The 2024 report indicated that 99% of postal operators noted this as a major impact, which was surprising because of the scale of the impact,” he said.
Investment priorities
According to the 2024 Future of Posts report, postal operators’ current investment priorities vary based on factors like geographic location and profitability. However, several key areas consistently emerge as top priorities, Buhler noted. These include digital transformation, last mile delivery, domestic and cross-border e-commerce, parcel track and trace, financial services, automation, data analytics, network optimization, returns and environmental sustainability.
Looking specifically at the e-commerce sector, Buhler explained: “Almost a third of posts consider domestic e-commerce an investment priority, while half identify cross-border e-commerce as an important investment priority.
“Many posts are also focused on investing in parcel tracking, automation and route optimisation. And they are using data analytics to improve operational efficiencies, customer experience, and optimize last-mile delivery, while rethinking their retail network expansion strategies,” he added.
However, there are many challenges that posts must tackle to capitalize on the e-commerce sector. “While e-commerce drives parcel volumes, it also brings challenges with managing capacity, cross-border shipments and returns,” explained Buhler. “For cross-border e-commerce growth, real-time tax and duty estimation, transit times, and data accuracy are significant obstacles. Many posts are focused on developing Delivery Duties Paid (DDP) capabilities and gathering required Advanced Electronic Data (AED) to comply with new regulations.
Postal diversification
Aside from e-commerce the 2024 Future of Posts report also highlighted other sectors that posts are exploring to boost income. “Many postal organisations are prioritising financial services, for example, with 40% planning to invest in them,” Buhler said. “This is a significant increase from just 9% in the previous year. Financial services allow postal operators to tap into new revenue streams and deepen customer engagement.
“Posts are also rethinking and expanding their retail networks to create different experiences in their retail branches,” he continued. “There has been a significant increase in posts accelerating their retail network expansion strategies, jumping from just 5% in 2023 to 14% in 2024. Posts are also focused on upgrading their counters and making them more digital.”
2025 outlook
Based on the Future of Posts research, the outlook for the postal sector in 2025 is a continuation of the trends that have been observed up until now, Buhler noted. These trends include e-commerce dominance with a greater emphasis on parcel volume management; financial services expansion to help diversify revenue streams; digital transformation, such as upgrading counters to make them more digital; smoother cross border e-commerce deliveries; strong commitments to sustainability, including waste reduction; an increased emphasis on reverse logistics; and improving the customer experience.
“One possible outlier for change in the postal sector is artificial intelligence (AI),” added Buhler. “As a nascent technology to the postal sector, AI has had a limited impact to this point. However, with the continued investment in AI technologies and refined use cases, AI could potentially have a significant impact on multiple areas across multiple postal networks.”
To remain relevant and sustainable in the year ahead, Buhler advises that posts focus on several key areas: “These include adapting to the e-commerce landscape, expanding into financial services, embracing digital transformation, optimizing parcel volume management, streamlining cross-border e-commerce, prioritizing customer experience, strategically approaching reverse logistics, and emphasising sustainability,” he said.
“Additionally, posts need to address the challenges of declining letter mail volumes, profitability pressures, and rising operational costs to ensure long-term sustainability. Tackling Universal Service Obligation (USO) is a logical starting place to start with this endeavour,” he concluded.
This article first appeared in Union Postale Spring 2025.