LCQ14: Future development of Hongkong Post
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Question:
Hongkong Post (HKP) has recorded continuous losses in recent years, with a loss of $821 million in 2024-2025, which is the highest loss since the establishment of the Post Office Trading Fund in 1995, while the mail volume handled decreased by an annual average rate of about 7 per cent from 2019-2020 to 2024-2025, representing a cumulative drop of 44 per cent. On the other hand, the popularity of electronic communication has led to a declining demand for traditional postal services, posing challenges to postal administrations around the world. It has been reported that quite a number of countries/cities have promoted the commercialisation or privatisation reform of postal administrations to enhance competitiveness and tap new revenue sources. In this connection, will the Government inform this Council:
(1) whether it will study promoting the HKP's further commercialisation or its operation under a market-oriented model, including introducing strategic partners, expanding cross-border e-commerce logistics and supply chain management services; if so, of the details; if not, the reasons for that;
(2) whether it has studied the use of artificial intelligence, big data, blockchain, digital asset technologies, etc. to enhance the HKP's services, and explored the development of new business models such as postal financial services, so as to enhance the HKP's long-term competitiveness and financial sustainability; if so, of the details; if not, the reasons for that;
(3) whether it has studied the experiences of postal administrations in places including Germany, Japan and Singapore in promoting commercialisation or privatisation reforms, so as to comprehensively assess whether the HKP's current operating model can meet the needs of market development; if so, of the details; if not, the reasons for that; and
(4) whether it has conducted a comprehensive assessment of the financial sustainability of the HKP in the next five to ten years, including whether the HKP will still be capable of achieving self-financing in the face of a continuous decline in the volume of traditional mail handled; if so, of the details; if not, the reasons for that?
Reply:
President,
Hongkong Post (HKP) is required to fulfil its obligation to provide universal postal services (namely ordinary and registered mail, and parcel services). Making profit is not the objective of providing public postal services. In the early 1990s, recognising that certain services of the HKP (such as Speedpost) could be provided on a commercial basis, the HKP has been operating as a Trading Fund since 1995 to generate profits to cross-subsidise the necessary expenditure of universal postal services. This allows for the flexible deployment of resources and the provision of appropriate services to the public and businesses in response to changes in the operating environment. Now that the demand for traditional postal services continues to decline given the increasing popularity of electronic communication, the HKP, in face of operational challenges, has been actively striving for transformation in recent years to increase its income through expansion of electronic commerce (e-commerce) mail business and other businesses, with a view to subsidising the necessary expenditure of universal postal services with profitable businesses.
In response to the question raised by the Prof Hon Priscilla Leung Mei-fun, the reply is as follows:
(1) & (2) The global economic environment has undergone rapid changes in recent years, and the escalation of geopolitical situation has impacted the postal and logistics sector, giving rise to structural changes in global postal services. Furthermore, with the influx of commercial logistics operators into the market under the rapid development of the e-commerce industry, the competition in the logistic sector has been increasingly fierce. Given the multiple impacts of the various factors mentioned above, the overall postal business has shrunk. In the face of these operational challenges, the HKP has all along been leveraging the edges of its delivery network and postal channel to actively expand its cross-border e-commerce logistics business, with a view to achieving differential development with private logistics operators and complementing one another's strengths. In this regard, the HKP has been strengthening co-operation with online shopping platforms and private logistics operators, including:
(i) For local e-commerce mail, the HKP offers diversified collection and delivery services, including the provision of local service EC-GET at affordable price, enabling businesses to post e-commerce and other mail items conveniently via online platforms. At the same time, the HKP has been striving to expand its collection network by co-operating with 540 convenience stores, in addition to post offices in various districts, 169 self-service collection facilities (i.e. iPostal Stations) and 27 self-service posting facilities (i.e. iPostal Kiosks), providing over 820 collection points in total; and
(ii) For non-local e-commerce mail, the HKP is optimising its global postal network through collaboration with China Post and other postal administrations. At the same time, the HKP is leveraging Hong Kong's position as an international logistics hub to provide inbound and outbound cross-border e-commerce mail services, as well as special lane services to specific destinations.
In terms of technology application, the HKP will actively explore how to suitably apply technologies such as artificial intelligence and big data to optimise processes, for example by further integrating delivery beats and transport routes, and considering the feasibility of providing digital services, with a view to enhancing the quality of postal services and improving operational efficiency. The HKP is aware that some postal administrations also provide financial and commercial services, such as banking and insurance, in addition to their postal businesses. When assessing the feasibility of the HKP operating such financial business or other businesses, practical factors must be carefully considered, including whether the HKP possesses sufficient expertise and experience to operate these highly regulated, mature and highly competitive financial and insurance services, and whether it has the capacity to generate profits from them.
(3) & (4) In the light of the fluctuations in mail volumes, rising costs, competition from other commercial logistics providers and drastic changes to the external environment following the pandemic, the HKP is facing unprecedented operational challenges. Although the HKP has been actively seeking to increase revenue and reduce costs, it is difficult for the Post Office Trading Fund (POTF) to achieve breakeven. The Government of the current term has been closely monitoring the HKP's financial situation and has taken a pragmatic approach in adjusting its business and positioning. This includes, following careful assessment and comprehensive consideration, the announcement in October 2025 to terminate the redevelopment plan of the Air Mail Centre (AMC) and instead introduce a more cost-effective replacement proposal, which is expected to achieve a saving of expenditure close to 90 per cent (around $4,100 million) as compared with the commitment of $4,611.3 million approved by the Finance Committee (FC) of the Legislative Council in 2021.
Nevertheless, the cash reserves of the POTF can only cover the HKP's operating expenses for less than one year. As a necessary short-term financial solution, the Government will shortly submit a proposal to the FC to appropriate $4,600 million to the POTF to carry out the refurbishment works at the AMC and to support the operation of the HKP for three years (i.e. from 2027-28 to 2029-30), ensuring that the HKP can continue to provide public postal services to the public. At the same time, the Commerce and Economic Development Bureau and the HKP will work with relevant policy bureaux to conduct a comprehensive review of the HKP's operating model. This will include examining the most appropriate means for the Government to provide public postal services in the light of changing demand for postal services, exploring whether services can be delivered through more cost-effective and innovative models, and assessing whether adjustments to services are necessary, such as mail delivery pattern and frequency, whether technology can be utilised to optimise the current counter services provided at post offices, and public-private partnerships, and so on. Based on the latest mail volume projection and demand for postal services, we will put forward pragmatic and concrete proposals on the future direction of the HKP at the earliest opportunity.
The HKP will continue to step up efforts in implementing a series of revenue-generating and cost-saving measures, with a view to providing postal services in a more cost-effective manner and ensuring the prudent use of public resources. These measures include reviewing mail delivery pattern, rationalising the post office network and applying technology to enhance efficiency. The HKP will also develop its e-commerce mail business more proactively, seeking to subsidise the necessary expenditure of universal postal services as far as possible through profitable services.
Amid structural changes in the global postal business, we note that postal administrations in various places are facing similar challenges and have adjusted their operating models accordingly. We will draw on the operational models of postal administrations in various places, including the provision of public postal services by a government department, public-private partnerships, commercialisation and privatisation, while taking into account Hong Kong's socio-economic environment, the evolving needs of public postal services and the views of various stakeholders. We will conduct an in-depth analysis of the pros and cons and feasibility of each operational model, with a view to recommending a concrete and feasible solution as soon as possible.
Ends/Wednesday, June 17, 2026
Issued at HKT 15:30
Issued at HKT 15:30
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