Postal Modernization in Moldova: Advice and Recommendations for Transformation and Alignment with International Best Practices

The pandemic has resulted in increases in poverty rates, unemployment, and malnutrition, with almost half of the world's 3.3 billion global workforce at risk of losing their livelihoods in 2020. The global economy contracted by 3.5 percent in 2020, with the downturn more prominent in the poorest parts of the world. Despite the challenges posed by the pandemic, the volume of world merchandise trade fell by only 5.3 percent in 2020, and is expected to increase by 8 percent in 2021. This optimistic outlook for world merchandise trade is undoubtedly tied to cross-border electronic commerce, which has grown significantly due to the rapid adoption of smartphones and tablets, and continuous expansion of internet access. As of January 2021, there were 4.66 billion internet users worldwide, with 92.6 percent accessing the internet via mobile devices. The pandemic has also caused significant disruptions to global supply chains, exposing major vulnerabilities in how these supply chains are managed. Prior to the pandemic, supply chain efficiency was achieved through economies of scale, just-in-time production, and reduced warehousing. However, the pandemic has caused backlogs in distribution networks, reduced production outputs, cargo container shortages, and air cargo capacity reductions. Air cargo alone accounts for 35 percent of the value of global trade, and this has destabilized the global supply chain. Moldova's postal operator, Poșta Moldovei, and the Moldova Customs Service (MCS) are facing similar challenges in terms of meeting the increased volumes of international postal processing. The growth in international trade and electronic commerce has placed unprecedented pressures on both organizations, with MCS wishing to move to a risk-based approach to postal inspections but currently performing manual inspections on close to 100 percent of parcels. Both organizations agree on the need for a modernized parcel sorting centre but have yet to reach consensus on how best to implement such a transformation project. The global postal industry is facing challenges associated with reduced letter volumes and significant growth in postal products containing goods. Although letter-post volumes have declined over the past ten years, they continue to represent a large portion of overall postal revenue, estimated to be 40 percent globally. Letter-post is also changing due to increased volumes of electronic commerce, with an estimated 80 percent of mail items weighing under 2 kilograms and being processed in the letter-post stream. Attention is needed to ensure this service can keep pace and sustain the growth. The international parcel market has experienced rapid growth due to reduced trade barriers and globalization, resulting in increased demand for international parcel products. Postal and customs organizations need to modernize and innovate to meet the requirements of this changing market landscape. This is not without limits, as postal organizations will need to consider how best to fit measures into emerging customs regulatory requirements. Cross-border electronic commerce is expected to continue on the current growth trend, estimated at 10 percent per annum. Moldova's letter-post volume has experienced significant growth over the past four years, with an average growth rate of approximately 45 percent per year. This growth is consistent with trends recently published by the Universal Postal Union (UPU). The average growth of letter-post products has been exponential, with the product representing 99.1 percent of the total international products received in 2019. This growth has placed a strain on Moldova's postal operator, Poșta Moldovei, and the Moldova Customs Service (MCS), highlighting the need for modernization and innovation in the postal industry.