Russia’s post office: can’t keep up

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Ecommerce is booming in Russia as more people hook up to the internet. But a corresponding surge in parcel volumes is straining the the old fashioned postal services to the limit and last week cost the head of the Russian post office his job.

The Russian ministry of telecommunications fired Alexander Kiselyov, the chief executive of state owned Pochta Rossii on Friday amid a furore over a breakdown in parcel deliveries. Kiselyov, who has headed the post office since 2009, will be replaced by Dmitry Strashnov, the former head of mobile telephone operator Tele2 Russia, Ria Novosti reported.

Kiselyov has been fighting to save his job in recent weeks as a 500 ton backlog of foreign parcels swamped Moscow airports, forcing the authorities to refuse incoming deliveries from overseas.

He says the Russian customs services – known for nitpicking surveillance practices – were partly responsible for the chaos. But Pochta Rossii and Kiselyov have taken the flack as angry Russians petitioned online for improvements to the postal service.

Kiselyov has been trying to bring the postal service into the 21st century to meet the demands of the modern digital world. Most of the Russian post is still sorted manually by Pochta Rossii’s 370,000-strong army of workers, Kiselyov told Forbes magazine’s Russian edition in an interview last year. Staff are under paid and work according to the Soviet principle – “We pretend to work and you pretend to pay us,” he said.

Adding to the problems of the antiquated service is a surge in parcel deliveries from abroad that reached 21.6m in 2012, double the level of two years ago. More than three quarters of the incoming packages contain merchandise dispatched by international online retailers.

A Rbs100bn ($3.2bn) plan devised by Kiselyov to modernise Pochta Rossii met resistance from various government agencies. It will be up to his successor to find ways to finance reform.

In the meantime postal delays will act as a brake on ecommerce in Russia. “After price, speed of delivery is the biggest consideration for Russian online shoppers,” says Maria Nazamutdinova, spokeswoman for Ozon.ru, Russia’s leading online retailer.

Ozon.ru has reduced exposure to Pochta Rossii by establishing its own logistics and distribution subsidiary, O’Courier, which handles more than 90 per cent of its parcel deliveries. “Pochta Rossiya is bigger than us,” says Nazamutdinova. “They do a very good job for us, delivering orders to small villages we cannot get to ourselves.”

For now, Russia’s $9bn ecommerce market is mainly focused in the Moscow and Saint Petersburg regions, which are relatively easy to access. AT Kearney, an international market consultancy, forecasts that online sales will grow to $16bn by 2016 as more Russians get access to the internet.

However, “to sustain growth Russia needs to address its poor logistics infrastructure and consumer lack of confidence in delivery,” the consultancy said in its 2012 global ecommerce index.

[Sidley]

Takes a couple of days for stuff I've sold to reach Russia and over a month to get to Moscow. I ALWAYS send Int'l Signed For or it doesn't get there.