Posta bets on public transport to revive dwindling fortunes

The ailing Postal Corporation of Kenya (Posta) is betting on public service transport as it seeks out a path to profitability in a market that is less interested in sending letters.

The agency is already piloting a two-bus passenger service, Posta Liner, between Nairobi and Busia. The vehicles are also expected to carry letters and parcels, in a model that sets it up for head-to-head competition with a number of established private courier firms.

The pilot phase is being funded by the Universal Postal Union (UPU).

However, the government remains cautious about the endeavour, insisting that Posta’s future lies at the nexus of e-commerce and logistics, and not in the passenger-transport business.

“UPU felt that this was a pilot they could fund. It is an experiment but I wouldn’t take it to be the future. Posta’s future is going to be on logistics and e-commerce,” said Information, Communications and Technology secretary Joe Mucheru.

Posta’s business has taken a beating with the advent of new technology. An investigation by the Business Daily recently noted that the number of unregistered letters sent between 2003 and 2015 dropped 34 per cent. Kenyans have also been less eager to send money orders and inland parcels.

Mr Mucheru said that at its worst Posta was losing Sh150 million a month. This has recently fallen to Sh30 million and the government hopes that the corporation will soon be able to break even.

On its journey to a better financial position, Posta has been driven by aggressive diversification of its products over the last few years.

There has been an incorporation of technology into its services such as the recent linking of letter boxes to mobile phone numbers through the m-post service.

There have also been proposals for Posta to expand into the mobile money business. In early 2016, the corporation launched a registered encrypted mailing service. Individuals subscribe through Posta’s online portal at a cost of Sh350 per month, which allows them to send 25 emails.

Firms that have less than 100 employees will get 100 emails for Sh500 per user.

Apart from the current experiment in passenger transport, the corporation’s other main bet for the logistics business is Posta Cargo.

Posta Cargo was established two years ago within the Courier Services unit, taking advantage of a clearing and forwarding licence that the corporation had only utilised to bring stamps and customer parcels into the country.

Posta Cargo’s first customer was the Ministry of Sport and Culture.

In 2014, the new unit organised the logistics for the export of exhibitions for a festival hosted by the Smithsonian society in the United States.

The new clearing and forwarding business targeted Posta’s existing customer base, going after some of the corporation’s larger clientele.

“Some of the strategies we had were to go a little lower than the market,” said Elizabeth Mwaura, Posta’s general manager for courier services.

Although she did not provide statistics, Ms Mwaura said that the Posta Cargo business was growing gradually.

The courier business is also riding on the growth of e-commerce in Kenya. Recently, during the Black Friday sale offered by online platforms such as Jumia and Kilimall, Posta experienced a boom in parcels sent.

The firm also said that the company had managed to get five secondary schools to sign up for a new courier service, Travel Lite, which transports student luggage across the country.

With these innovations there is a need to further review Posta’s business model. Mr Mucheru said that the government was carrying out an audit of Posta’s 3,000 employees and to rationalise it in line with the new business ventures.

READ: From snail mail, Posta gains speed with digital delivery means

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