Overall decrease of mail traffic abated to 2% for the year, helped by slowing impact of e-substitution in the banking and insurance sectors. Local mail recovered from a decline of 7.7% to 2.2% while international mail suffered a slight decrease of 1.2%. While managing to keep total revenue at HK$4,721 million despite the dwindling volume, operating expenditure rose by 1.5% to HK$4,585 million, yielding a profit of HK$136 million.
The pace and gravity of changes in the marketplace call for much more than sheer determination and commitment to reduce cost or rationalise priorities. Indeed, feedback received from our staff and customers suggests that the incremental benefits of such measures are rapidly diminishing. The lackluster financial outturn recorded in recent years also imparts a strong message that there is no time to lose in dealing with the situation.
Let us focus initially on local mail. Constrained by legacies and universal service obligations, the number of staff and outlets could not be trimmed down in tandem with traffic volume. Even for a small city like Hong Kong, the delivery network sometimes has to be expanded in step with social and economic developments. The solution therefore hinges on finding better use for spare capacity. On this score, we have entered into partnership with a leading local group purchase portal by offering our dispatch-cum-collection model that leverages on a territory-wide platform, reputable brand name and reliable performance. Opportunities abound for the introduction of other features should this initiative prove viable since a trusted intermediary is becoming essential for all e-commerce activities.
On international mail, volume is robust but margins continue to be squeezed by rising freight charges and terminal dues. The problem rests partially with a tendency to add product layers without examining their collateral impact, causing misalignment between resource allocation and profitability. Apart from installing new software tools to monitor and manage the payload, we have formulated a detailed plan to enhance the staffing, equipment and space provision at the Air Mail Centre both in the short-term before the period of peak workload and in the long-term through process automation. Furthermore, an attempt will be made to examine our existing products for scope of consolidation, keeping an open mind on opportunities for joint ventures with the private sector.
Another area worthy of attention is optimisation of retail assets. During the year, we have launched a pilot project aimed at revamping the design layout and mix of facilities at our branch offices with the emphasis being placed on meeting customer needs and driving business innovation. For instance, digital video display panels could serve a dual function of conveying notices relevant to the postal service as well as other important public announcements or educational contents. Subject to the outcome, similar renovation works will be carried out at other selected outlets.
The above holistic approach encapsulates our collective wisdom on how to adapt to a volatile competitive landscape, and it would be a fulfilling experience to see it through to fruition. However, by the time this report is ready for publication, I should already have taken up a new position in the Hong Kong Special Administrative Region Government. My gratitude goes to those colleagues who toiled with me over the last two years on thoughts and ideas that challenge the traditional wisdom and question established practices. Finally, I must thank all our clients and associates for according me support and understanding throughout the tenure of my office.
Clement CHEUNG
Postmaster General and
General Manager of the Post Office Trading Fund
Please click here to download The Postmaster General's Statement [PDF, 2 pages of 603KB]