The message will soon sink in that the post office as we know it is going the way of the dodo

For example, in the January edition of Brief he illustrates the main story with a cartoon of a giant, about to squash underfoot a tiny, weedy man. The weedy man is meant to be Jersey Post; the giant is the huge global logistics business TNT.

If you didn’t follow these things closely, you probably wouldn’t have known that TNT, which employs the equivalent of nearly twice the population of Jersey, has applied to compete against Jersey Post, whose workforce amounts to about 400.

Certainly neither the public nor States Members have made as much fuss about it as they did when two tiny operators applied for a licence to compete against Jersey Post in the packet market. Indeed, all the public and States Members seemed to be concerned about was the future of the sub-post office in the Central Market.

But the application by TNT for a postal licence is of a different magnitude altogether. Most observers probably thought that our local post office would be able to compete against newcomers whose ambitions were quite limited. They just wanted a slice of the lucrative fulfilment or ‘pick and pack’ market. Will TNT, with revenues of billions already, be satisfied with a small proportion of this business?

HubEurope, the local firm which was one of those already given a licence to compete in the packet market, thinks not. A director told Business Brief that TNT ‘has the economies of scale to totally wipe out Jersey Post’ and that this could be ‘a real possibility’.

He went on: ‘I do not exaggerate when I say that to allow TNT a Class 1 licence to operate in Jersey will see the demise of Jersey Post, which will then threaten the Universal Service Obligation. The social impact of this will be significant, as will the mounting financial and political pressure on the States, as Jersey Post services become increasingly expensive and onerous to maintain.’

This raises the interesting question: does anyone care? The directors and employees of Jersey Post certainly care, and the Communications Workers Union said: ‘Not only do we have concerns about increasing competition per se, but we also believe that the award of a licence to such a large operator, into a market with little potential for growth, is likely to be particularly damaging to postal services in the Island.’

But does anyone else care, just so long as someone delivers the letters occasionally? Perhaps that’s all that a small but expensive island can expect from its post office. After all, if we were forced to pay the full cost of delivering a few letters down a country lane six days a week, the cost of a stamp would be astronomical.

It’s only because Jersey Post can currently cross-subsidise their services that the profits they earn from the fulfilment industry can be used to subsidise loss-making postal deliveries.

Now that the packet market has been opened up to two small companies, Jersey Post will probably earn less profit from fulfilment to pay for that Universal Service Obligation. Once TNT (and possibly DHL/Deutsche Post, who have also applied for a licence) come in and scoop up their share of fulfilment profits, there won’t be much left to subsidise the USO.

There are mechanisms to ensure that postal licence holders can be forced to help to pay for the USO, but this is a complicated area. There is also the danger that adding to the costs of an operator given a licence will dissuade them from doing any kind of business in the Island.

There is also not much point in looking to the States to pay for the USO, even though this might be the most logical outcome. It might be more efficient to split the post office into a business able to compete in the fulfilment industry, and a public service department paid for by the taxpayer.

After all, if the public (aka the electorate) believe there is a need to provide a service which cannot be covered by the revenue from that service, such as delivering Mrs Ecobichon’s birthday card, then someone has to pay the difference. If it’s a public service demanded by the public, then the public should pay.

Unfortunately, of course, suggesting such a thing is not politically correct in the current environment. Most politicians want the States to get out of what they are doing now just to save money. They certainly don’t want to add to them by subsidising the post office, which they only fairly recently got out of by ‘commercialising’ Jersey Post.

However, perhaps this all just shows that this kind of hybrid organisation, which is neither fish nor fowl, can be commercial and provide a public service at the same time. We’ve had a good try and costs at Jersey Post, for example, have been dramatically reduced to try to make the USO less costly, but there can’t be much more fat left.

Some States Members will no doubt point out the realities of life – you’ll never make enough money to provide a de-luxe version of a postal USO, no matter however many more staff you cut. So that certainly means you can’t expect deliveries on six days a week, and you probably won’t be able to get a five- or even a four-day-a-week service. Indeed the time is fast approaching when you are going to have to go and collect the mail yourself.

That’s not so far-fetched and happens elsewhere, but it’s not what we are used to. However, the message will soon sink in that the post office as we know it is going the way of the dodo.

Peter Body is editor of Business Brief magazine