What Comes After Letters: How National Postal Operators Adapt to a Parcel-First Era

The immense pressure on post offices continued in 2025. Letter volumes kept falling further, parcel demand kept rising. And postal operators are still expected to meet the universal service obligation, serve everyone, and fund their own transition into a parcel-first world.

Recent reporting shows how uneven this equation can be: 

• Swiss Post reported parcel volumes up 3.5% year-on-year (first nine months), but also said rising parcel volumes still can’t offset declines in letters and counter transactions—hence continued streamlining and evolution.
• PostNL reported mail volume down 5.0% alongside parcel volumes up 1.0% in Q3 2025.‍
• An Post described parcels as a cornerstone of the business, with eCommerce parcel revenue up 12.6% in 2024, while letter revenue fell 7.6%.

Cross-border grows, delivery infrastructure splinters

According to the Universal Postal Union’s State of the Postal Sector 2025, cross-border e-commerce volumes are high, yet the infrastructure carrying them has fragmented into “parallel systems,” driving up complexity and cost.

This matters for national postal operators because it changes the competitive landscape. National postal operators are now competing on network access, customer convenience, and reach (PUDOs, lockers, and partners), often against competitors who do not need to meet the same universal service obligations.

And this pressure has become sharper over the last couple of years. 

Once built around a steady stream of letter traffic, stamps, and forms, postal service providers need to shift focus and re-purpose their existing infrastructure for returns, parcels, and customer journeys that don’t always fit into the typical opening hours. 

While this repurposing of the existing infrastructure was almost seen as nicety five or so years ago, it’s now a survival strategy. Postal operators are branching out into financial services, public services, and other adjacent offerings, because a broader service mix is what helps keep network density viable.

Then there’s regulation. Universal service still matters, especially for older and less mobile customers. But many obligations were designed for a different era, optimised for letter delivery speed and a branch-first model. Today, the pressure is to modernize around reliability, accessibility, and affordability.

This brings us to a fork in the road: postal operators do need to modernize. But in doing so, they need to avoid two traps:

• modernising too aggressively that parts of the customer-base feel abandoned, or
• modernising too cautiously that costs stay locked into a shrinking letter-era footprint.

Closing down branches is not the answer

One common instinct has been to reduce the footprint by closing down the post office branches. 

However, the UPU report found that network consolidation (fewer post offices serving more people) correlates with worse postal performance and “carries growth penalties,” widening the gap between “leaders” and “laggards.” 

Simply put, the thinning of the network can erode the very advantage that postal service providers still have, and that's the dense national access.

This is also why regulations still tie many operators to a minimum physical presence. In Germany, postal reform updated letter delivery targets (more flexibility on speed) but still requires maintaining 12,000 post offices/outlets nationwide.

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What comes after letters: post offices as hubs 

The real question isn’t whether postal operators should be “traditional” or “modern.” It’s whether the access layer is designed for the parcel era or trapped in a letter-era workflow.

In practice, the network needs a clear division of labour. Human service can stay reserved for what actually needs humans: trust, identity, complexity, and care, from exceptions and escalations to services built for elderly and less mobile customers. 

Everything else can be moved toward self-service, because the highest-volume parcel moments (collect, drop, return) shouldn’t be held hostage by opening hours. 

And where ownership adds cost without adding value, for example, owned underutilized delivery points, partner access can extend reach — provided service quality stays consistent.

So what happens is that postal operators move from “branches plus add-ons” to a single system that allows postal operators to focus on what matters: coverage where demand is, reliable convenience for all customers, utilisation that justifies the network footprint, and cost-to-serve that stays under control.

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Out-of-home delivery: a strategic solution

OOH delivery refers to a logistics model where parcels are delivered to a location outside of the recipient's home address. This approach diverges from traditional doorstep delivery, offering alternative, secure locations for recipients to pick up their parcels at their convenience. 

The primary forms of OOH delivery include parcel lockers and Pick-Up/Drop-Off (PUDO) points:

• Parcel lockers are secure, automated lockers in accessible public places, such as shopping centers, transport hubs, and residential complexes. They allow recipients to collect their parcels using a unique code or electronic key, often at any time of the day or night, providing a flexible option for people with busy schedules.
• PUDO points involve established retail or convenience stores that act as parcel collection and return points. These locations are part of a wider network, offering a human touch to the collection process and often additional services, such as late opening hours, parking, and assistance with heavy or bulky items.

Advantages of OOH delivery for posts 

1. Increased convenience for recipients

OOH delivery offers flexibility for recipients. They can collect their parcels at a time and place that suits them best, without waiting at home for deliveries. Convenience is especially beneficial for people with unpredictable schedules or those who cannot be at home during traditional delivery hours.

2. Reduced delivery costs

OOH delivery eliminates multiple delivery attempts when recipients are not home, saving on fuel and labor, addressing the last-mile delivery challenges at the same time. Parcel lockers and PUDO points consolidate deliveries to a single location, further optimizing route efficiency and reducing the carbon footprint.

3. Improved efficiency and scalability

OOH delivery streamlines the distribution process, making it more efficient. Parcel lockers, for example, can be accessed by delivery personnel 24/7, allowing for off-peak drop-offs and better management of delivery windows. Efficiency improves the experience for the recipient and enhances the capacity of postal services to handle higher volumes of parcels, especially during peak periods like the holiday season.

4. Use of existing infrastructure

Posts already have an extensive network of postal offices and facilities, which can serve as ideal locations for deploying OOH delivery networks. Leveraging this existing infrastructure allows postal services to minimize additional investment costs while expanding their service offerings and start implementing new solutions right away.

5. Competitive advantage for service revival

Offering OOH delivery options can differentiate postal services from competitors in the parcel delivery market. By providing innovative delivery solutions that prioritize customer convenience, postal service providers can enhance their competitive position and attract new business.

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‍How postal operators need to approach OOH

Once thought of as an add-on, in 2026, OOH is increasingly the default way for delivery, facilitating collection, returns, and customer choice outside the opening hours and limited pickup and return locations.

For postal operators, this matters because you can now scale access without scaling the staffed counters. With OOH, the traditional postal network has a chance to turn from a set of physical branches into a delivery and return system that customers can use when they actually need it.

However, OOH is more than just a number of delivery and pick-up points on the map. For it to deliver tangible value, postal operators need to assess their network and check whether the network:

• Absorbs the volume efficiently, especially during peak times and in case of returns
• Reduces pressure on the counters, without pushing complexity elsewhere
• Improves coverage and convenience, without affecting trust and accessibility.

In theory, there are clear upsides for postal operators to embrace OOH — fewer delivery attempts, more consolidated drop-off locations, and more predictable handover points.

But for OOH to work in practice, postal operators need to adapt the overall operating model. An efficient OOH isn’t simply an extension of brick-and-mortar locations, whether proprietary or partners’. 

Your traditional and OOH networks need to be seen as one — and then designed and managed well, with the customer convenience in sight, through the customer journey. Truth is — simply adding delivery points tends to create different problems, like underused resources, inconsistent customer experience, and rising operational costs. 

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Overcoming challenges in OOH Delivery

The common pain points OOH network managers face require innovative strategies and effective tools. Let's explore these challenges and consider how they can be addressed:

High investment in infrastructure and software

One of the primary challenges is the high cost associated with the infrastructure and software necessary for managing OOH delivery networks. It includes the cost of acquiring, installing, and maintaining physical assets like kiosks, lockers, and digital signage and the software needed for operation, management, and security.

Solution: To mitigate these costs, as mentioned above, network managers can explore partnerships with existing infrastructure owners or invest in modular and scalable solutions that allow for gradual expansion.

Open (carrier-agnostic) networks are a good potential solution. Unlike traditional models, where delivery networks are tied to specific carriers or retailers, an open network allows any carrier to deliver parcels to any locker or delivery point. This flexibility enhances efficiency, reduces delivery times, and minimizes failed attempts.

Difficulty in finding suitable locations

The right location is crucial for the success of an OOH delivery network. Ideal locations are accessible, secure, and situated where they can best serve the target audience. However, identifying these locations can be challenging due to competition, regulatory hurdles, and varying consumer preferences.

Solution: Using data analytics and market research to understand consumer behavior and preferences can help identify strategic locations. Engaging with community planners and real estate experts can also provide insights into emerging areas and potential partnership opportunities.

Inefficient and time-consuming location-scouting processes

Traditional methods of scouting locations can be slow and inefficient, often relying on manual research and negotiations. This can delay network expansion and increase costs.

Solution: Leveraging technology, such as geographic information system (GIS) tools and artificial intelligence (AI), can streamline scouting. These technologies can analyze large datasets to identify potential locations based on predefined criteria, such as foot traffic, demographic profiles, and proximity to additional services, like public transportation hubs, parking facilities, ATMs, restaurants, retail, or any other place that makes locations more accessible, convenient, and attractive to users.

Limited data to optimize network performance

Without adequate data, optimizing the performance of an OOH delivery network can be challenging. Necessary insights include understanding user behaviors, network usage patterns, and operational inefficiencies.

Solution: Implementing comprehensive data collection and analysis tools, like Mily Tech, is key. These tools can track various metrics, including usage rates and operational costs, providing actionable insights for improvement.

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Measuring postal OOH success

For OOH to pay off for postal operators, the tracking and measuring can’t stop at the network size. The signals that typically decide success or failure include:

• Utilisation rate (by point, by area, by time-of-day/weekday)
• Cost-to-serve (cost per delivered/handled parcel, not just total cost)
• Coverage quality (who is served well vs. “covered on paper”)
• Overflow and exception rates (full lockers, reroutes, reattempts, customer contacts)
• Returns flow efficiency (time in system, handling touchpoints, failure reasons)

These metrics are also what make location decisions defensible internally — especially when you’re balancing service obligations, public expectations, and commercial pressure.

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Postal transformation success: Latvia Post 

Despite the sea of challenges postal operators face, there are successful examples of their transformation across Europe.

Edgars Isaks, Head of Customer Experience and Product Development at Latvia Post, who’s been deeply involved in transforming the national post operator, underscores how traditional post offices are evolving:

“I think the post office must collaborate with the parcel locker network, because the postal offices add value to locker networks and vice versa. For example, when a parcel has to be delivered to a post office, we can send a short message to redirect the shipment to a locker. Or, when a locker is overflowing and full, you can redirect the shipment to the nearest post office.”

In his view, postal operators need to innovate their services and stay mindful of all of their customer segments. “Last year, we introduced a service primarily meant for elderly people — the postman at home. You can order something, and the postman will drive to your home and hand the parcel over to you, which is necessary for some of our customers.” 

It’s the mix of more traditional services and add-on of new ones that helps optimize the delivery network and improve the services offering, rather than breaking away from the familiar services.

“What’s interesting is the connection between the past and the present. I believe that the traditional and modern can work together, if you put them together in a smart way. For instance, we’ve built mailboxes into our parcel lockers. This way, we could reduce the number of standalone mailboxes, while customers can still send their letters, and now you have different options at one location.”

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Base network decisions on numbers

It’s not ambition that postal operators struggle with. What gives them pause, and rightly so, is the confidence in network decision, where already the imperative is to de-risk investment. 

Where to expand, what services to convert, what network points to consolidate, how to prove coverage, and how to improve utilization without increasing costs are just some of the pressing questions.

Mily Tech supports postal operators in OOH efforts by helping them:

• identify and rank locations using location intelligence and network context,
• compare scenarios (add points vs. convert branches vs. partner expansion) before committing spend
• diagnose performance across utilisation and coverage quality, across the entire network

If you’re planning, expanding, or redesigning your access network, book a demo to see how Mily Tech can support location decisions, performance management, and network planning with data you can defend.