The debate over whether Hongkong Post should chase profits or serve the public is tired. It misses the point entirely. If you look at the mounting losses—reaching a record HK$821 million in the 2024-2025 period—it’s clear the current model isn't just struggling. It’s fundamentally broken.
People often confuse Hongkong Post’s status. It remains a government department, yet it operates under a trading fund mode established in 1995. The goal back then was simple: use commercial successes like Speedpost to cross-subsidize universal mail services. It worked for a while. Today, that model is crumbling under the weight of e-substitution and intense competition from private logistics firms. In other news, read about: Why Russia's Fuel Crisis Finally Hit Moscow and What Comes Next.
The trap of the universal service obligation
The core of the issue is the universal service obligation. By law, Hongkong Post must deliver mail to every corner of the city at affordable, flat rates. This is a public necessity, not a business opportunity. When you are mandated to maintain a network of over 120 post offices regardless of volume, you have massive fixed costs that don't shrink just because people stopped sending letters.
Expecting the department to turn a profit while carrying this legacy weight is unrealistic. It’s like asking a public library to fund its operations solely through late fees. The math just doesn't add up. The government recently had to step in with a HK$4.6 billion allocation to keep the ship afloat for the next three years. That isn't a business plan. It’s a survival strategy. Investopedia has analyzed this fascinating topic in great detail.
Stop pretending it is a business
Management keeps trying to pivot to e-commerce and logistics to make up the shortfall. It sounds good in a press release. But realistically, the market is already dominated by agile, tech-driven private couriers. Can a government department, constrained by civil service hiring rules and bureaucratic processes, really out-compete companies like SF Express or DHL?
The recent move to stop offering permanent civil service contracts to new employees is a clear signal. It’s a desperate attempt to gain operational flexibility, but it ignores the deeper problem: the disconnect between the department's structure and its modern reality.
If Hongkong Post continues to chase a profit-first mindset, they’ll end up cutting services that the public actually needs. They might close rural post offices or reduce delivery frequencies to save pennies, hurting the most vulnerable residents while still failing to balance the books.
The path forward
We need to stop evaluating Hongkong Post by its bottom line. It’s a public utility, similar to the water or electricity grid. When you prioritize profit for a utility, you end up with poor service and infrastructure decay.
- Redefine success: Stop measuring success by operating profit. Start measuring it by service reliability, network accessibility, and its role as a backbone for digital logistics in Hong Kong.
- Separate the roles: There’s no reason the department can’t run its commercial logistics arms—like specialized express delivery—as a distinct entity with a profit mandate, while ring-fencing the "universal" mail service as a social service funded by the government budget.
- Invest in automation, not just headcount: The focus on labor costs is a temporary fix. True efficiency comes from automating the sorting and last-mile processes, which requires significant capital investment—the kind that trading funds struggle to justify when they are losing money.
The obsession with "self-financing" has kept postage rates artificially low for years, but it has also starved the organization of the innovation it needs to stay relevant. We are at a point where the city needs to choose: do we want a reliable public postal service, or do we want a failing business that keeps the government on the hook for billions in bailouts?
You can't have both. It is time to treat Hongkong Post like the public service it is and drop the illusion that it can be a profit machine.
