Correios, Brazil’s state-owned postal company, is looking to diversify. This week, newspaper Folha de S. Paulo reported that the post office has a plan to branch out into the on-demand delivery market, competing with popular existing services such as Uber, and regional frontrunners iFood and Rappi.

Details of the project are still sparse and being debated internally—it is unclear whether the company is looking to take these competitors head-on with food deliveries, or partner with them and offer a complementary on-demand package delivery service—but it signals towards an attempt to drag Correios out of a desperate financial hole.

</span></p> <p><span style="font-weight: 400;">The company remains in severe financial trouble despite a positive result in 2017 and expectations of profit when 2018 figures are released. In 2015 and 2016, </span><a href="https://epocanegocios.globo.com/Empresa/noticia/2018/03/apos-3-anos-de-prejuizos-bilionarios-correios-perdem-folego-para-sair-da-crise.html"><span style="font-weight: 400;">Correios suffered billionaire losses</span></a><span style="font-weight: 400;"> and is grasping for long-term solutions in what is a changing market.</span></p> <p><span style="font-weight: 400;">The company is over 356 years old and has been a state-owned institution for half a century, since when it has held the monopoly over the sending of letters and telegrams. However, the volume of such deliveries has fallen dramatically in a continental country becoming more and more dependent on computers and mobile phones for correspondence. Since 2012, the number of letters and telegrams has fallen from 8.9 billion per year to an estimated 5.7 billion.</span></p> <p><span style="font-weight: 400;">The deep financial strains have taken a major toll on the quality of Correios services. In 2018, customers filed over 60,000 complaints, according to local complaint portal Reclame Aqui—up from 40,000 in the previous year. The loss in quality has made consumers skeptical that Correios&#8217; new venture will be successful. &#8220;Your meal has been retained in our distribution center,&#8221; tweeted a customer, joking about a common occurrence when sending packages. </span></p> <p><span style="font-weight: 400;">Despite its financial woes, Correios is still among Brazil&#8217;s biggest employers, with a nationwide staff of 105,836 people, including a further 109,271 young apprentices. </span><a href="https://brazilian.report/society/2018/07/17/limits-innovation-brazil/"><span style="font-weight: 400;">Plans for restructuring</span></a><span style="font-weight: 400;"> have called for 20 percent of these positions to be cut, as an attempt to make the company more financially viable amid rumors of possible privatization.</span></p> <h2>Delivery on demand</h2> <p><span style="font-weight: 400;">News of the possibility of the much-maligned Correios expanding into the food delivery sector sparked much derision on social media, with Brazilians joking that their pizza would be held for days in customs, before arriving half-eaten.</span></p> <p><span style="font-weight: 400;">However, Correios sees sense in entering the on-demand delivery market, a sector which is booming in Brazil&#8217;s big cities. Largely thanks to the labor reform of 2017 and the expansion of the gig economy, vast urban centers such as São Paulo have embraced these new </span><a href="https://brazilian.report/society/2019/02/06/healthcare-whatsapp-telemedicine/"><span style="font-weight: 400;">app-based delivery</span></a><span style="font-weight: 400;"> services with open arms. </span></p> <p><span style="font-weight: 400;">iFood, owned by Brazilian tech company Movile, is the largest on-demand delivery service in Latin America and has a network of roughly 120,000 professionals across almost 500 Brazilian cities. The company claimed it carried out an average of 14.1 million deliveries in January 2019 alone.</span></p> <p><span style="font-weight: 400;">And it&#8217;s not just food, either. Were Correios to target the market of app-based deliveries of documents, it would have to take on homegrown startup Loggi, which has become the service of choice for offices and small businesses which require a fast distribution network for administrative tasks. </span></p> <h2>Return to sender</h2> <p><span style="font-weight: 400;">Despite tentative improvements of late, Correios is a company in severe trouble. The reasons for its woes are numerous, but many pundits point towards the firm&#8217;s incompetent administration in past decades.</span></p> <p><span style="font-weight: 400;">With such a large staff distributed in offices around the country, Correios is a natural source of featherbedding, with administrative posts being customarily handed out as political currency, instead of appointing capable managers. The complex, nationwide structure of the company makes the presence of inept and inexperienced officials even more damaging.</span></p> <p><span style="font-weight: 400;">The Jair Bolsonaro government has discussed the idea of privatizing Correios, along with several other state companies. While this possibility is still on the table, the current political crisis and inactivity around the pensions system reform mean that any potential sale of Correios will have to wait for some time.

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MoneyMar 28, 2019

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BY The Brazilian Report

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