Israel Post Unequipped for Surge in Online Shopping

Report says services slow and inefficient, but that customs service is also to blame.

Amitai Ziv
Amitai Ziv
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Israel Post: Will the government let it go bankrupt?
Israel Post: Will the government let it go bankrupt?Credit: Moran Maayan
Amitai Ziv
Amitai Ziv

Israelis have discovered the joy of ordering products from overseas websites like Amazon and Alibaba, but Israel Post, the national postal service, still hasn’t found a way to ensure their packages are delivered quickly and without damage.

As a result, the state comptroller said in a stinging report released yesterday, Israeli consumers aren’t fully enjoying the lower prices the government has promised by easing duties on personal imports over the last few years.

“The government created a policy of easing personal imports and encouraging them in order to reduce the cost of living. However, this policy is being undermined while the postal corporation fails to improve its operating system,” the comptroller’s report said.

A survey by PayPal estimated that online sales grew by 19% in 2015 to 9.3 billion shekels ($2.4 billion), while mobile purchases jumped 41% to $1.8 billion. About 73% of Israeli internet users polled by PayPal said they had made at least one online purchase in the last year, the third highest among countries it surveyed.

But the comptroller’s report said Israel Post failed to equip itself for the surge in packages arriving from overseas. A survey it conducted in August-December 2015 found that the postal service didn’t adequately monitor packages going through the system and that its central logistics center in Tel Aviv isn’t big enough to handle the growing volume of packages.

The comptroller took special notice of Israel Post’s EMS service for what it says is its fast delivery of international packages. In fact, EMS operates inefficiently, needlessly moving packages through its system, causing delays and increasing the likelihood they will be damaged. Recipients often don’t get notices that their delivery has arrived and when they do, the packages are often damaged to the point that their contents are unusable.

“Even though the postal company has been aware for years about service problems in international deliveries, especially with the big changes that have occurred in the sector, it didn’t properly prepare for them so that it would be ready to improve service in line with the growing volume created by international e-commerce,” the report said.

The comptroller said the problem isn’t exclusively Israel Post’s, pointing a finger at the Communications Ministry and the Government Corporations Authority for ineffective overnight. It also placed part of the blame on the customs authority.

Customs officials inspect incoming packages by hand, taking only a small sampling of goods arriving from overseas. The system is not only slow but misses a lot of imports that should be subject to duties. As a result, the report estimated, the government loses about 200 million shekels ($76.5 million) in customs revenues every years.

Israel Post faulted the comptroller’s study for being out of date because it was done as a major restructuring was getting underway.

“In the last year since the current CEO [Danny Goldstein] took office, e-commerce has been designated as a strategic target and many tools have been developed to improve service,” it said. The postal service cited the opening of 300 delivery points at local post offices, extended opening hours, expanded help-line services and an app for reserving a place on line at branches.

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