Jersey Post hit by challenges in 50th year

Wednesday 02 October 2019

As Jersey Post celebrates its 50th birthday, concerns have surfaced over how the service will continue delivering and secure staff jobs in future after ending last year £267,000 in the red amid a potential industry crisis that threatened to see international rates rise 500%.

Throughout this month, the island’s postal service will be celebrating the half-century milestone with balloons, cakes, a set of commemorative stamps, and ‘Postie’s Pride’ beer – but the company’s latest set of accounts reveals a less positive picture.

In its 2018 annual report, Jersey Post Chairman Alan Merry described a “disappointing” drop in gross profits to £9.07m.

Once all other outgoings, including taxes, were factored in, however, Jersey Post was left with a £267,000 shortfall.

Pictured: A snippet from Jersey Post's annual report.

It came in a year that saw just £50,000 returned as a dividend to the States as shareholder – a drop from £691,000 in 2017 – and staff bonuses, including at the senior levels, slashed from £605,873 to £362,811.

Amid these challenges, the company’s annual report warned that some of the over 300-strong workforce may find their jobs at risk.

“Our preferred approach is to take our colleagues with us, trying to guarantee them a job though not being able to guarantee that it is the same job that they have been used to. So, whilst this is a challenging time for the business, it is equally a challenging time for the staff,” it read.

The key problem is that the number of letters being sent is in freefall – this ‘core’ market fell by 8% alone in 2018, Mr Merry said – while the parcel market is not making up for the drop quickly enough.

Despite embarking on a new relationship with Amazon to boost the latter, Mr Merry explained that Jersey Post had “planned for greater volumes from Amazon than materialised”.

Pictured: Jersey Post said a partnership with Amazon had not led to as large a rise in parcel volumes as expected.

In the background, the threat of Brexit looms on the horizon – something that could hit logistics income from a number of “key clients”, and see some Jersey businesses with European markets move their business to the UK or Europe.

Disruption at UK ports could be a major issue, as “100% of our European business goes that way.”

But, as well as ‘real’ Brexit, the report said there was another ‘postal Brexit’ threatening to upset the sector.

“…The United States Postal Service… has announced it is leaving the Universal Postal Union, a sub-body of the United Nations with 192 country members that has governed the postal world since 1874,” the report explained.

“The cause of its action is that USPS loses over a billion dollars every year due to regulatory and legal impositions, inefficiencies and a massive healthcare bill, and wants to increase what other postal authorities pay it to deliver their mail in the USA. Other postal authorities, mainly those that are inefficient, have jumped on the bandwagon. The preferred option by this group would allow countries to declare their own rates.”

Pictured: Brexit will pose a significant challenge for Jersey Post.

This, in turn, could have seen international rates soar by more than 500% - something that “would have a significant impact on the cost to Jersey residents and businesses sending packets and parcels around the world" - but fortunately the crisis was averted last week when a last-minute deal was struck.

But amid these challenges, the service, whose history stretches back to 1969, says it’s not complacent about the risks.

For one, it’s moved its business model away from being letter-focused to become “a parcels business that also delivers letters”.

Jersey Post is also investing in its digital services, as well as developing its international business.

“We have added to our international network with strategic investments in two further logistics businesses, one serving the Australian market with the other serving South America. Whilst there have been the expected challenges with managing a developing international network of eight companies, these business are now being pulled together into an integrated unit that has the potential to drive significant benefit for Jersey Post into the future. International now represents 34% of our revenues and this has grown from 7% in 2015."

A number of measures have also been put in place to mitigate against Brexit, such as trialling delivery routes through Saint Malo.

Pictured: The report said Jersey Post would trial delivery routes through Saint Malo in a bid to avoid Brexit disruption.

The service hopes it will be able to benefit from closer work with the government – for which it is the “preferred logistics and digital provider” – including the launch and delivery of services through the post office network.

The report also notes several strides in sustainability, such as through the use of greener transport options.

“From a business viewpoint, investing in sustainability is a no-brainer. Not only does this contribute positive action for our environment, it is also cost-effective. For us, a low carbon footprint is a reflection of efficient fleet management, as carbon emissions go hand in hand with fuel consumption, miles travelled and fleet size.”

This week, Jersey Post announced that it would be driving £1.2m this year and £1m in 2020 into modernisation, equipment, vehicles and IT improvement, as well as plans to hire an additional 10 new permanent postal workers.

Managing Diector for Postal and Logistics Niall McClure said it was part of a bid to ensure Jersey can continue to “deliver a first-class and ultra-modern postal service for islanders” over the next 50 years.

Jersey Post is also maintaining its international outlook, with plans to bring over 150 attendees from 52 European postal administrations to the island as it hosts the Plenary Assembly of PostEurop – a member-driven association representing European postal operators – at the Radisson next week.

“We are thrilled to be able to celebrate our 50th anniversary with the community that we serve, but also to have the chance to provide a celebration and thank you event for our staff, where we will welcome past and present employees,” Chief Executive Tim Brown commented.

“Jersey Post has changed dramatically since 1969, and it’s important that we share our history and the events that have helped to shape the organisation, and the services, that we know today. Here’s to the next 50 years!”