By McPherse Thompson, Assistant Financial News EditorWITH THE island's 670 post offices and postal agencies chalking up an annual operating deficit of $300 million, newly-appointed chairman of the Postal Corporation of Jamaica, Lance Hylton, is seeking to woo commercial operators to enter into joint venture operations with the state-owned entity.
In fact, one of his visions is to downsize the block and steel structures in which the offices now operate, while transforming the land and buildings in which they are located to commercial use.
That is the linchpin on which Mr. Hylton, an attorney-at-law, expects to modernise the island's post offices and return them to profitability, a daunting yet ambitious task mandated by Minister of Commerce, Science and Technology, Phillip Paulwell, who appointed him to the position, effective March, this year.
Mr. Hylton has acknowledged that the post of chairman of the Postal Corporation has been his greatest challenge so far - not only because of the huge operating deficit but its importance to national life - despite serving the public sector in various capacities both here and abroad since he was called to the Bar in 1987.
His task has not been made easier by the fact that most of the island's post offices make less than $100,000 a year, but cost upwards of $300,000 to maintain. In fact, of the 26 post offices in the Corporate Area of Kingston and St. Andrew, only five are profitable, with the main Central Sorting Office and the General Post Office taking the lead.
But Mr. Hylton has already put in place mechanisms to change the perception that it will be business as usual. He has served notice that some of the 350 post offices and 320 postal agencies across the island will have to be closed, that staff will otherwise lose their jobs in a rationalisation exercise, and that there will be a revision in the cost of products such as stamps as well as a more aggressive marketing campaign to get customers to buy into the services being offered.
And if everything goes as Mr. Hylton has planned, post offices of the future will not be towering structures or landmarks, but much smaller, albeit convenient rooms from which the same services can be delivered in an even more efficient manner.
In an interview with the Financial Gleaner at his downtown Kingston office earlier this week, Mr. Hylton, a partner in the firm Myers Fletcher and Gordon since 1994, outlined some of the plans of the new board to revamp the post offices and return them to profitability, as well as the challenges they face in doing so.
MAJOR CHALLENGES
One of the major challenges, he said, was that "much like other public sector entities", the Postal Corporation was facing grave financial problems. "We need $1.1 billion a year to run a reasonable service," but the Government has only allocated $785 million - about $90 million more than the $695 the post office contributed to the Consolidated Fund last year.
Although the Postal Corporation has been lobbying for more money, he said, the Government has sought to convince them additional funds would not be available. And while the World Bank is willing to lend money to the state-owned entity, it will require a Government guarantee to borrow.
Furthermore, there is every indication the post office will continue to operate at a deficit unless it moves quickly to correct its money losing situation. The latest figures show that more than 80 per cent of the post office budget goes towards paying staff and mail transportation contractors, with only a small portion left over for operating expenses.
INCREASE REVENUES, CUT COSTS
However, Mr. Hylton said there were many opportunities for the Postal Corporation to increase its revenues and cut costs. "The whole area of commercial services will not, by itself, solve the problems because of the huge deficit, but we are moving aggressively to maximise revenues by offering additional services and improving those we now have," he said. In addition, although post offices currently offer 14 commercial services including bill payment, lottery, money transfer, priority mail and Internet kiosks, they have not been very successful, a situation the chairman said the board would be examining with a view to correcting.
As part of its revenue drive, Mr. Hylton said, within the last year the post office has also been facilitating payments under the Government's Programme of Advancement Through Health and Education (PATH), and within another week or two, they will enter into an arrangement for the sale of electronic telephone cards islandwide.
Another challenge is in marketing/advertising the services offered by post offices because "we have no money to do that," he said. For instance, the post office offers a priority mail service under which, for $100, customers can have a letter delivered to one post office with guaranteed delivery to a designated recipient post office within 24 hours anywhere in the island, but not many people are aware of a such a service.
To correct the deficiency in marketing, the Postal Corporation has employed a new commercial services manager and a marketing manager to "enhance our image and ensure our success as a serious commercial business operation," he said.
Earlier this month, the Postal Corporation held discussions with Skypostal, the authorised agent of the United States Postal Service (USPS) to put in place a more sophisticated and enlarged courier service. The new venture will feature bar-coded individual items of mail which customers can track on the Internet from point to point. When that arrangement has been finalised, the post office will be able to enter into arrangements with the USPS for persons in the United States to send trackable priority mail and packages into Jamaica.
Those services, Mr. Hylton said, would be a significant source of revenue for the post office and would complement their outbound US priority mail service, which guarantees two to three days, trackable delivery of outgoing mail and packages to the United States. The post office, through a partnership with DHL, also provides an overnight service to anywhere in the United States "and we are holding discussions with prospective partners for a similar service to the rest of the world," he said.
At the same time, he said "there are a number of other areas in which the core business can and will be improved", including making Jamaica into a hub for mail to other Caribbean as well as Latin American countries, through an agreement with Global Alliance Transport Systems (GATS). The Kingston hub is expected to become operational by September.
BREAKDOWN
He acknowledged that there has been a breakdown in customer service offered by staff at post offices, but said Postmaster General Blossom O'Meally Nelson has established a system to ensure the service was strengthened. There was also a plan for direct staff training in customer management, "so that is being addressed in a conscious way," he said.
Mr. Hylton said that as part of the move to increase efficiency, the administration was taking steps to reduce the massive charges for mail and staff transportation services - $111.2 million during the last financial year - by pressing for a more competitive tendering process, which has not been achieved since 1993. "For the first time, we are vigorously resisting the lawsuits and other obstacles, which have derailed the process in the past," he said.
In addition, the Postal Corporation recently reached an agreement with staff members to introduce new shift times and provide those on late shifts with taxi fares, an initiative that will result in savings of $600,000 per month.
According to Mr. Hylton, "we are taking our mandate to achieve profitability seriously and are taking a look at our area of highest expenditure." With the latest figures showing about 80 per cent of its expenditure on staff, the chairman said there would have to be cutbacks in the number, which currently stands at 2,873. "We are working with the trade unions to ensure that the staff rationalisation process will go smoothly," he added.
The Postal Corporation is also expecting to reap huge benefits from the Jamaica Post Commercial Centre in Liguanea, St. Andrew, which is expected to be opened in September, and which will feature a state-of-the-art post office and a 48,000 square-foot commercial mall. "We will receive significant revenue from this venture and own the new post office, without having invested any funds as the entire project was financed by out joint venture partner KES Limited," the chairman said.
IMAGINATIVE CONCEPT
He explained that the new imaginative concept of such a joint venture partnering to maximise historically under-utilised post office space would be duplicated across the island.
As part of the efficiency drive, Mr. Hylton said, the Postal Corporation, in collaboration with its partner Paymaster, has already computerised 44 post office counters and expect to install another 200 by the end of this calendar year. Staff is being trained and upgraded in the use of the computers and the various commercial ventures.
Mr. Hylton has also assured that, with a study showing a shortage of about 40,000 mail boxes islandwide, the days of there being an insufficiency will come to an end.
The Liguanea office will feature more than 3,000 new private boxes and "we are moving towards installing banks of boxes at supermarkets, shopping malls and other similar centres across the island," he said, adding that they would also be enhancing the maintenance of boxes and collecting fees.
As part of the efficiency drive also, the Postal Corporation will be moving towards changing the way mail is transported across the island, with the establishment of regional hubs so that all mail does not have to go through the Central Sorting Office in Kingston.
Mr. Hylton admitted that "we have a long way to go towards eliminating the annual operating deficit of $300 million and creating a post office which looks and performs like a professional and efficiently run organisation."
However, he believes the various initiatives they have been undertaking, including strengthening the management systems, improving the delivery of financial services, increasing revenue from commercial services, the preparation of a road map to profitability, setting standards for postmen delivery services, encouraging community-based partnerships for building post offices, and continuing efforts to find commercial partners for the development of select properties, should go a far way in bringing about a much more efficient postal service.
