Post office merger suggested

Closing the Bodden Town Post Office and absorbing it into the post office in Savannah could result in “possible cost reductions,” according to the Ernst & Young Review of Public Services provided last week at government’s request.  

Another cost reduction could come from decreasing the number of Cayman Brac sub-post offices, “given the small numbers of post boxes they provide.” 

A suggested action plan is to begin a consultation process on both of these ideas within the next one to five months. 

Commercialize postal services 

The report recommends that the postal service be commercialized and then, “We recommend that in the longer term the Cayman Islands Postal Service is sold.” 

Key issues identified in the report include the decline in typical “snail mail” communication, the slow introduction of technology, and heavily subsidized local postal rates. 

“Additionally, management have indicated that there exists a historic practice that the Postal Service be one of [government’s] social employers for the functionally illiterate, computer phobic and otherwise unemployable,” the report states. 

Too many sites 

An infrastructure issue is “too many site locations and buildings that were not designed for computerization in mail processing which also impacts the ability to implement technology.” 

Also identified as a key issue is labor: “A long-serving workforce that is comfortable with manual processing and conversely resistant to the introduction of computerization, automation and technology in mail handling despite management’s efforts.” 

The report notes that traditional government-operated postal services around the world are changing to new private-sector-based operating models. “The CI Postal Service could be commercialized and its performance improved significantly,” the report states in an option overview, later noting that commercial initiatives should lead to a greater service offering to customers. 

Post offices in other countries have expanded services by providing a wide array of counter services such as deposit account, bill payment, insurance, licensing and permits. “This counter service initiative will require an additional skill set, experience and infrastructure that would best be obtained through a joint venture,” the report notes. 

Cayman’s post offices do accept bill payments. The postal service website states that payment is accepted for electricity, telecommunications, garbage and Water Authority bills.  

The service, which has 16 post offices with a total of 84 employees, is responsible for fulfilling government’s obligations under the Universal Postal Union Convention. It provides domestic and international letter mail and parcel service across all three islands. It is able to generate sufficient revenue to cover only 75 percent of its operating costs and has relied on a Cabinet subsidy of more than $1 million each of the last two years, according to data provided to the consultants.  

Culture change 

Cost reductions and revenue expanding initiatives will require a culture change with the postal service, the report states. 

“In terms of exiting the service provision, identifying a suitable and willing operator may be difficult. The operations in their existing form do not yield a profit and rely heavily on Government subsidies and support in order to function. A such, a joint venture would be the most appropriate initial structure,” the report states. 

Second phase 

The second phase of the commercialization process would start after the first five months and would involve the addition of commercial services at post offices, based on those services that have been successful in other jurisdictions and those that lend themselves to success in the Cayman market. 

The final phase of the “commercialize and exit” plan would be to invite the private sector to make a proposal for postal operations. If this is not fully achievable, further rationalization and cost reduction activities will need to be examined and undertaken – such as additional closures.