If you order something from Ukraine right now, be it a T-shirt or a vintage Christmas ornament, chances are it will arrive on time and in good shape. Not only is the country's mail service still operating, even as it grapples with an invasion by Russia, but the role of the post office has also changed. The mail has become a lifeline for Ukrainians who rely on it to receive pension payments, medicine, or to run online businesses as domestic jobs get disrupted. So how exactly is the Ukrainian mail system working right now? What operational and logistical changes has it had to make to keep going, and what does the service's future look like? In this episode, we speak with Igor Smelyansky, the CEO of Ukrposhta, about delivering the mail during a time of war. This transcript has been lightly edited for clarity.
Key insights from the pod:
How packages get from Ukraine to the US — 3:46
Delivering cash and medicines within Ukraine — 5:45
Labor availability and delivering the mail — 7:46
Using Starlink to support the mail delivery — 10:00
Efficiency gains discovered through new wartime processes - 09:30
Postal service and circulation of Ukrainian currency —11:22
Financing for Ukrposhta - 14:55
Building a relationship with the military - 19:25
E-commerce in Ukraine - 22:10
Ukraine’s wartime stamps - 23:55
Challenges of delivering mail by rail - 26:25
Postal pricing mechanisms - 29:17
Procurement decisions — 32:33
---
Tracy Alloway (00:10):
Hello and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway.
Joe Weisenthal (00:14):
And I'm Joe Weisenthal.
Tracy (00:16):
Joe, do you ever order stuff online? I don't mean just like Amazon day-to-day stuff. I mean, do you go out looking for interesting things to buy online?
Joe (00:26):
Every once in a while, I’ll get the itch. You know what I bought yesterday?
Tracy (00:28):
What? A guitar?
Joe (00:29):
No. I have bought guitars online. Too many. A hat from the nineties, from the Bureau of Reclamation, celebrating the 50th anniversary of the building of the Hoover Dam and I'm going to wear it.
Tracy (00:45):
Wait, I want one. It's a baseball cap?
Joe (00:46):
Yeah, it's really cool. I'll show it to you after this. It's really cool. I'm going to wear it at our next concert. I think it's really cool looking.
Tracy (00:51):
I am very jealous.
Joe (00:51):
Yeah, it's a good one.
Tracy (00:53):
Alright, well I buy stuff all the time. My husband does a similar thing and buys lots of vintage — not baseball hats — but rugby shirts.
Joe (01:01):
Oh, that's cool.
Tracy (01:02):
And the other day he ordered a rugby shirt off of eBay and it showed up a few weeks later. And to both of our surprise, it had come from Ukraine. And specifically a place called Zaporizhia.
Joe (01:15):
And it was not a Ukrainian jersey or something like that. It just happened to be sent from Ukraine?
Tracy (01:19):
It happened to be sent from Ukraine. I can't remember exactly which jersey it was, but I was kind of surprised because it was in this perfect little box. It took a while to get to the US but not an inordinate amount of time. And it piqued my interest and it got me thinking how in the world is Ukraine still shipping things in the middle of a military conflict?
Joe (01:42):
Yeah, I mean it's pretty striking. We talked one time about pallets in the context of the war and this idea that logistics is the key to keeping everything going and good disciplined logistics, etc. But the idea that you could quickly get a pristine package from eBay to the US in the middle of an ongoing conflict is extraordinary. And [it] raises questions about, how do you keep day-to-day operations of a crucial delivery infrastructure such as postal service, whether shipping internationally or just shipping domestically, going under such extreme conditions.
Tracy (02:16):
And also, how does the role of the postal service actually change during wartime? I imagine shipping rugbies to my husband in the US is probably not an essential service at the moment, but Ukraine is using the postal service to send medicines and aids and cash and things like that.
So, we should talk about this. And I am very pleased to say we do in fact have the perfect guest. We're going to be speaking with Igor Smelyansky. He's the CEO of the Ukrainian National Postal Operator, Ukrposhta. And before heading Ukraine's Postal Service, he also worked at KPMG and Boston Consulting Group. So really a perfect Odd Lots guest, a supply chain expert with a side interest in finance. That's how I'm putting it.
Joe (03:00):
Let's do it.
Tracy (03:01):
Alright, Igor, thank you so much for coming on Odd Lots.
Igor Smelyansky (03:04):
Thank you for inviting me.
Tracy (03:06):
So first of all, thank you for getting packages to me. I appreciate it. My husband appreciates it. I have since ordered things that came from Kiev as well — knowingly ordered stuff from Kiev, and those also came in pristine condition. Can you describe maybe just the challenges that the postal service is facing at the moment? How much have things changed now versus, you know, pre-2022?
Igor (03:31):
I mean, obviously it had changed a lot. As an example, we used to have five flights per week to New York, which would allow us to quickly deliver parcels to the US. And by the way, parcels to the US is about 50% of our export volumes.
Tracy (03:45):
Wow.
Igor (03:46):
Over 1.3 million Ukrainian SKUs are sold on Amazon, eBay, and Etsy. So it's actually thousands of small business jobs, people that do things for the dogs, fashion, Ukrainian fashion has very popular things for the houses. And we understood that if you stop delivering, these people will lose their jobs. And you can imagine during the war you cannot get jobs easily.
And so we had to face in one day that there are no more flights. There are no flights from Ukraine. At the same time, if you don't deliver on time on eBay or Amazon or Etsy, your rating as a seller drops, which is why we had to do what we could to make sure things are delivered. And we moved [to] new logistical routes.
So during the war, hopefully not that many people know it, but during the war you have a curfew, which means you cannot drive at night. And usually the mail is delivered overnight. So we recall that 25 years ago, we moved the mail via train. So I met with a friend of mine who's the head of Ukrainian Railways, and in five days we resume moving mail by railway. So we are moving, for example, from Kyiv to Lviv, and from there we take the truck and it goes to Warsaw or Frankfurt or London. And from there it flies to New York and then it's delivered to you.
Right now, we strive to deliver to any points in the US within two weeks maximum, which means we have [a] 24-hour turnaround in Ukraine about two, three days on the road, and then it gets on the plane. It's challenging, but we're making things happen. So for example, via railway, we already moved over 20 million parcels.
Joe (05:33):
Talk to us about the domestic needs. I think you mentioned it's not just a postal service, but a pharmacy as well. Talk to us about the main internal priorities of delivering the mail.
Igor (05:45):
Sure. I mean, Ukraine is the largest country in Europe. And [it’s not only] the largest; there are 27,000 cities and villages in Ukraine. And many of those [are] very small up to a hundred people, or 500 people. As you can imagine, during the war, given refugees, they did not get any larger.
What it means is in those villages, there are no pharmacies, there are no banks. Actually, banks only remain in 4% of cities and villages in Ukraine. And you have to make sure these people do get stuff.
Plus, when you talk about the occupied areas, Russians destroyed the entire infrastructure, which means when Ukraine de-occupies these villages, for about five to six weeks you don't have mobile connection, you don't have electricity. But we have to work because you cannot leave people in the vacuum. Not to mention they would operate in Russian rubles, and you want to bring them back to Ukraine. So you have to bring them Ukrainian currency.
And we are the first company they see. We usually come two, three days after de-occupation. We just give time to deminers, to demine the fields so we can relatively safely operate and we restructured our operations so we can work with or without power and electricity, thanks to Starlink from Elon Musk and about 1,500 generators we now have built a system which can work whenever, under any condition.
So we had to change our processes to make sure we deliver pensions in cash, because obviously if there is no electricity, your ATM doesn't work or your post terminal doesn't work, but people still need to live. I mean, they have little bazaars, they work, so we basically create the ecosystem of life around those small villages. And we keep it going.
Tracy (07:31):
What's the labor situation like at the moment? I mean, you mentioned demining. It sounds like this is a risky job. Here in the US we have a postal worker shortage, even without having to worry about military conflict.
Igor (07:46):
I mean, it's a severe shortage. You can imagine first of all, you have to separate male and female workers, and you can imagine there are many male population in the army. Second, we have lots of refugees. We understand it's a big problem. So, for example, now to attract personnel, we have to make sure that our offices are equipped for people with disabilities so we can get them to work.
We're trying the best we can to implement automatic sorting lines. Our goal for this year, I know it sounds weird during the war, but we want to be 100% digital. Even when there is no digital, meaning we build a system where in the morning our mail carriers will download through Starlink and generators the data, work during the day and then upload the data at night, which means, again, we are not dependent on the infrastructure if Russians, you know, shut down the electricity or mobile or anything.
So we are doing our best to increase efficiency to maintain life as normal life for people as possible. While you can imagine there is no rush of new stores opening in Ukraine right now, there [is] no rush of new banks and pharmacies. So the e-commerce becomes this tool to maintain a sense of normalcy even on the front lines. So, for example, we have lots of soldiers that would order something on Amazon or on Alibaba — power bank or the socks or whatever they need, and we'll deliver. So, you know, the e-commerce becomes the tool to keep you connected to the world, even when the world is in a difficult situation.
Joe (09:30):
I'm actually curious, you mentioned Starlink. I don't know that much about it, but I'm curious, are there efficiency gains or infrastructure gains that you've discovered with the use of Starlink satellite internet, such that when there's a proper rebuilding phase, that there are things that will never have to be rebuilt in their original form because I guess there's, as they say, some sort of leapfrogging or efficiency that you've discovered out of this period of duress?
Tracy (09:59):
Good question.
Igor (10:00):
No, absolutely. I mean, we don't want to discuss Elon and his views, but the Starlink has been really a savior to us. You won't be able to run internet cables in those areas, right? I mean, it just will be millions of dollars. Probably it'll run through the field, which you need to demine and then Russians can bomb it again and it can go off etc.
So via Starlink, you’re flexible enough — well, when you combine Starlink and the generator — when you combine the two, you're basically no longer dependent on the central infrastructure. And you can provide civil light services right away. Not five months after the occupation. Not three months after Russians destroy the buildings. Like today for example, it was in our case, so we rebuilt it, we put up the Starlink, generator and they get back to work. So, it's like the theory of broken windows. You cannot have that. You should have the services and the Starlink allows you to have that connection to the world.
Tracy (11:01):
So I take the point about Starlink and also switching from driving the mail to going by rail, but there must be areas that you just cannot get mail to at the moment. I mean, the occupied areas, for instance. How widespread are those, I guess, pockets of non-service?
Igor (11:22):
I mean roughly 20% of Ukrainian territory is occupied by Russians. We try to be creative. If you talk strictly about the law, there is a Geneva convention. So if Russia occupies [a] certain area, they're responsible for [the] wellbeing of people there. Obviously, knowing Russia, the word ‘responsible’ is exaggeration.
So for example, in Kherson, when Kherson was occupied by Russians, we wanted to keep Ukrainian pensions going because we wanted people [to] feel they're part of Ukraine. So what we've done is, for example, we knew we could not get cash to the occupied area. What we did, for example, we agreed with small shops like, you know, bakery shop or gas stations or barber shops, that they would give us cash and we would pay the bills on Ukrainian territories and we would use that cash to pay grandma and grandpa their pensions so they would come back again to the store. And this way we kept [the] hryvnia operation, Ukrainian currency going even under Russian occupation. They did not understand how the hryvnia got to the occupied area. But when you're creative enough you can make things happen.
Joe (12:48):
How do you protect cash? I mean, obviously in the US we have the Brinks trucks and there's a whole separate infrastructure for cash management that's separate from the normal postal service and their guards on the trucks and all that. Has cash delivery always been an important role that the postal services has played in Ukraine? And how do you think about protecting those packages versus sort of more normal mail?
Igor (13:11):
No, absolutely. They’ve always been important. Why? Because in small villages, if you don't have banking infrastructure, the cash is the king in reality because if, for example, if you have a bank card but nowhere to use it, you're not going to use it. So you're going to stay in cash.
We always had, I mean, we have lots of of people with guns to protect it. When we talk about the areas close to the front lines, we get help from the army that basically drive our trucks to make sure they're protected and make sure we delivered. So we have the whole entire system of controls, of monitoring of our armed guards to help us deliver cash. I mean, that's the reason I've set the goal to build a 100% digital infrastructure in every single village so we can reduce the cash.
So, for example right now in the village, you cannot use the bank card. We are now trying to get the banking license and certain basic devices that we’re building that [people will be able to use banking and e-commerce infrastructure in every single village, basically it's like ecosystems. So right now we pay pensions in cash, you get your retirement payments in cash, and then you pay us for utility bills, you pay us for the food, you pay us for the medicine. So we can convert all of it into non-cash format. Will it happen right away? No. But slowly, once we build this digital infrastructure, we can.
Tracy (14:33):
That reminds me — a project like that, it sounds like it costs money. So how is that being financed? And then more broadly, how is Ukrposhta financed? Because here in the US there is a perpetual ongoing discussion over the financial health of the US Postal Service and whether it should be treated like a private enterprise or a public service. I'm curious how it's done in Ukraine.
Igor (14:55):
Well, I mean, coming from the US, I'm a big proponent of a non-socialist way of working. So the more independent you are from the government, the more successful you are. So in Ukraine we are [a] joint stock company where we are not financed by the government, we’re actually paying dividends to the government.
So anything we do, even during the war, we have to finance ourselves. One of the reasons we went to the parliament and we had asked to reduce regulation. So for example, in Ukraine, only first class mail is now regulated. So only the first class letters are regulated by the government, meaning the tariffs and the newspapers. Everything else is a market base, which means we set the tariffs, which we believe cover our cost-plus profit. And that's how we finance operation. So our goal is to reduce [the] number of state related revenues to less than 10%.
Joe (15:47):
You know, I was reading something, not in preparation for this episode specifically, but I was reading a little bit recently about US postal history and the importance of the US Post Office in US industrial development. And you know, a post office, postal service, obviously has a distinct, unique perspective on the sort of geography and territory of a population. And you probably have some of the best visibility on where people are at any given moment and the name of every road, the name of every address. How valuable is the information that must be contained within your organization into the broader, I guess, war effort right now of the government, even if it is sort of formally disconnected, the sort of ability of the government to essentially have the insight that only a postal service can have about where people are at any given moment.
Igor (16:40):
I mean, in the modern world, obviously there are different ways of getting that information. Probably the most reliable is the mobile operators, because via Signal you can exactly say how many people are in the area in any particular point, and even track down how they move. Obviously, we are probably the next best choice because we physically see people, we know how many are there, we know their age.
So compared to the mobile operators where they just track the signal, we actually know that, for example, people here are older or people here [are] on the retirement, or here it's a younger population. Because, you know, for example, you have 500 and 500 people in two villages, but one can have older people in retirement and the other can have people of the younger age, for example, it's a farming village. So we have a better understanding of the economy of a particular area or how fast people are coming back.
We see, for example, in how they pay utility bills because, for example, you can pay utility bills online even when you left Ukraine, right? You can be right now in New York as a refugee and paying your electricity bill online, which means if you just track down the payments, you won't be able to see whether the person is actually in the village like in Kharkiv or in Zaporizhzhia or there in New York. We know when we take the payments, we know exactly how many people are there because when we bring utility bills, we know they're received or not.
Tracy (18:06):
I mean, it does sound like you are working closely with the Ukrainian military. So you mentioned the demining operations, armed escorts in some cases. I imagine that wasn't the case pre-2022. Could you maybe talk about how you built up that relationship with the military? What were those conversations actually like and how do you start formalizing a structure of cooperation or information sharing?
Igor (18:35):
I think that's where Ukraine is stronger than Russia. Russia is all about vertical rules and all about, you know, rules written. There is one tsar and then you go all the way down. So the reason Ukraine was overcoming Russia at the beginning, [is] because we are flexible. For example, our military commanders have a right to make decisions. Russians don't. I even had to negotiate with Russians, it's impossible. They don't make any decisions on the ground. Every time they have to check with Moscow.
So, Ukrposhta was working from day one throughout the war. The only day we did not work was February 24th, because I stopped all the operations because I could not understand what I can do to secure lives of people. Every single day thereafter, we continued to work, never stopped.
And my day starts, we designed a procedure where my day starts, we check with the military where it's safe or not safe today to deliver. We unfortunately lost a few lives because we thought it was safe and the military thought was safe, but Russians extended too fast the first days of the war, and we lost a few people because they attacked.
So it's a standard procedure where we check with them how's the situation on the ground today? Where do they think it's okay to go? And where we should, for example, cease operations. I just, an hour ago, I got a note from the military in Kharkiv region, that we should not go near certain areas today because it'll be dangerous. And that's how we work. In, you know, chats, in messengers, in communication where you have to quickly make a decision.
The more difficult part was, you know, it’s a war. So where do you delegate and where [do] you make decisions like in the army? So I had to find the balance between decisions that I make and I'm physically able to make. Because in terms of the US, we have like 24 states. So I had to make decisions on each and every one of them. And where do they delegate? So I built a system where I have head of regions and they’re allowed to make certain decisions, certain decisions they have to agree with me in different messengers, you know, Signal, Telegram, etc. And we make it quickly and then we go. So we are trying to be as informal as possible and as efficient as possible.
Joe (20:50):
Going back to some of the external aspects and how we started this conversation. And you mentioned that — did you say 50% of Ukrainian exports are to the US? And, you know, there's so much conversation about commodities exports, particularly wheat and so forth. But in terms of actual value, half of it is sort of various sales of goods to the US?
Igor (21:12):
No, it's the postal exports, so to speak. It's e-commerce mainly, if you know Etsy it has to be only handmade, it cannot be mass produced. So it's handmade things, not sure whether [rugby] shirt was handmade….
Tracy (21:30):
It wasn't. But I am aware on Etsy, there's amazing handmade fabrics and embroidery that come from Ukraine. Dog clothes. I'm not saying I'm buying dog clothes from my corgi but I know they are there...
Joe (21:44):
But I also noticed that on your website, there's a whole section right on the front page ‘start a successful international business,’ and it has guides and videos like ‘how to set up a business and sell on Etsy, how to set up a business and use Shopify.’ So right there, have these long been things or is this something that you helped accelerate and implement? Or has this been long part of one of the services that the post office focuses on?
Igor (22:10):
No, I mean, it's actually the project we are very proud of. We actually got an award as the best sustainable postal operator in the world. Imagine people in the smallest village, sometimes they do wedding dresses for $5,000 and sell it in [the] UK or in the US. You can imagine it's a huge part of the local economy.
Or right now, many of our military guys in the trenches, they dream after the victory to set up their own business. So they’re watching those videos in the trenches and they think about their business that they will open once they're back. So, you know, it's a huge part of the success.
And we plan to extend this project, especially, for example, for people with disabilities. You can imagine Ukraine losing a lot of people, people losing limbs in the war, but they can work from home. They can set up shop, they can do this embroidery at home, they can send a courier to pick it up, and they sell it on Etsy so they don't feel like they have to get social subsidies. They feel like a part of the society. So, you know, it's very important. That's why we understand how important it is for us to deliver quickly.
We kind of hope, I mean, it’s been two years [that I’ve been] trying to launch a postal train to Europe. So for example, I can get down the time to deliver to the US down to seven days. So I'll get, for example, overnight from Kyiv to Warsaw. And from Warsaw the plane will fly to New York and you will have the shirts not on in fourteen days, but in seven. That's sort of our goal and we're trying to strive [towards] it, but it's been a part of our work for a long time. Some of it has been helped by the war, because you probably heard about our famous stamps...
Tracy (23:47):
I was about to ask, speaking of new businesses, you also sort of have one in the form of these new edition stamps.
Igor (23:55):
Yep. And we actually got the prize from eBay as a Rising Star because we maintained delivery standards global worldwide. We sold millions of stamps. We had a joke, I met with the postmaster general in the US and he joked that we’re probably the only postal service that makes money on stamps...
Tracy (24:12):
Wait, talk to us about the design of the stamps. Describe maybe the most famous one.
Igor (24:18):
Well, the most famous obviously is ‘ Russian warship. Go eff yourself.’ You know, we’re breaking any possible rule there is in philately. So we are doing the stamps. Usually, the postal service has a two year plan to issue stamps. And we don't, we just issue them. So for example, when Ukraine bombed the Russian Crimea Bridge, we issued stamps in one hour, which then [caused] Russian TV to believe we knew about the operation and prepared the stamp in advance. I mean, obviously we did. And there are some other stamps like the Russian Moscow ships, so we issued stamps and then the ships were sunk three days after. But it helps…
Tracy (24:55)
The stamp did it…
Igor (24:56)
Yeah, we precede some of the events, let's put it this way, same with Crimea bridge . We have a few more surprises with F16s and other things. But, you know, it's a huge morale boost and it's a good part of the revenue for us. It's an image of Ukraine. We are the only postal service that has our own stores on Amazon and eBay. So you can check, there's only one. It's just for our postal operator. And we have global salespeople come from all over the world to our stores buying the stamps and we ship them. And given the ratings we have, we deliver it within very short periods of time.
Tracy (25:47):
Joe, I have to say, I think the Russian warship go eff yourself stamp, that must be the only stamp in the world that has a depiction of a middle finger, I think. I could be wrong but...
Igor (25:59):
Well, we made it to the Daily Show, so it probably was the only stamp that made [it] there.
Joe (26:04):
Let's talk more about the mail by rail. And you mentioned in the beginning that there used to be several flights direct to New York each week, and now there are none. And so, you have to go by rail. What happens at the border? What are the challenges? Just sort of the nuts and bolts, so to speak, of establishing that link between Ukraine and Frankfurt?
Igor (26:25):
I mean, obviously the main challenge is that, you know, the border was made for the trucks and the huge part of the Ukrainian exports and imports was done by the sea because Ukraine is a sea country, right? We have [the] Black Sea, [it] was done by air and once that was canceled by the war, imagine the entire flow, including the military aid and military supplies had to go through the small window of [a] few roads to Europe, which by the way, obviously everyone was concerned that Russians will bomb, and the railway.
So you’re left with two choices and you had to squeeze the entire volume through those few roads to Poland, to Romania, to Slovakia, etc. So that challenge remains, it will remain going forward. I do hope that we win soon. And imagine during the reconstruction, the flow will increase several times, but the roads won't, which is why we're trying to do the best can to move certain flows to railway, because railway is more efficient. You don't have to stay in line on the border and you can basically run on schedule.
So the reason we've been so successful [is] because we connected our postal cars, not to the cargo trains, but to passenger trains. And passenger trains, you can imagine, run on schedule. So it allows us a strict predictability as to when your parcel will arrive, when we have to unload it and deliver it to you.
Tracy (27:53):
What's been the most creative solution that you've deployed during this time period? Like, is there a particular workaround or decision that you're especially proud of?
Igor (28:06):
Two things. So one is the system that we built with the Starlinks and the generators. And the second is the combined logistical chain: train, car, plane, to make sure that we deliver across the globe. I think that was the key. We used it at the beginning of the war to bring back to Ukraine humanitarian aid.
So for example, during the first week of the war, we chartered our own plane in Poland and we brought all those parcels to New York and obviously we did not have that big of a flow on the way back. So we loaded that plane with humanitarian assistance, with medical supplies, some of the military supplies. So we don't fly empty and we use the most efficient way of transporting it.
Joe (28:50):
You mentioned that other than first class mail and newspapers, your pricing is totally deregulated. Can you talk about some of the decisions that you've made around pricing? Are there certain types of goods? Is it sizes? There must be low priority things that you want to discourage people from using your capacity. Talk to us about some of the decisions you've made around pricing and how the war has changed those.
Igor (29:17):
There are a few things. Ukraine is a very competitive market. So we have FedEx and UPS, which are dominating the market. So that was our argument to the regulators. Why [do] you]want to regulate us when the market will take care of ourselves? That's the first thing.
Second, what we learnt is, if at the beginning of the war, people were thankful to us that we generally work, because when I talk to my colleagues in other postal services, they’re amazed that we generally work, and that will probably last for about a few months. But then people move from, ‘Okay, thank you for working now, I want my next day delivery.’ And, you know, the expectations grows, which means we have to deliver.
We have two sets of tariffs, which is next day and two [to] five days, to make sure we distinguish between cheap goods and I guess more immediate needs which people need fast. So that's our sort of value proposition that you can choose. Our competitors have only one tariff, so it's just expressed as next day.
So imagine how competitive the market is even during the war with striving to achieve next day delivery. Even [a] country as large as in Ukraine. So for example, for me to deliver from Uzhhorod, which is close to Poland and Hungary, to Pokrovske which is close to the frontline, we are using the truck to take it to Lviv, load it on the train, the train brings it to Dnipro at 10:00 AM, we sort it for two hours. We get it on track and then at 3:00 PM it's in Pokrovske which is the other side of Ukraine, I think a few thousand kilometers.
But again, that's what people expect and that's what we need to deliver. We just try to price it. I mean, in general, it's very cheap. So for example, it's like $1 next day delivery for up to one kilo.
Tracy (31:00):
Do you get any pushback from people in terms of price increases? Or is it generally accepted that these are exceptional times and so the price is sort of justified?
Igor (31:10):
It depends on the price. So for example, when a person pays $500 for a computer, do they really care whether the delivery is $3 or $5? No, they don't. They want it to be delivered next day. If it's a mom that, you know, mom’s exchanging clothes for the kids, they're okay to wait. Or if it's medicine. If it's medicine that you need the next day because you’re really sick, you need to deliver next day. If you have some kind of chronic illness and you get your medicine every month the same day we can plan it in advance, right?
The reason we have to be flexible is we offer the client a choice. You can pick cheap or you can pick more expensive, depending what fits your need. But people do want quality. With e-commerce it's immediate gratification. So I order today, I want to get it tomorrow. Even if it's a war.
Joe (31:59):
You know, obviously we’re having this conversation about the extraordinary challenges of delivering the mail during a war. When the war started, the entire world was still in the throes of the broader, I guess, supply chain crisis. Spring 2022, there [were] still all type of parts for every type of thing were missing and pallet scarcity and container scarcity due to Covid and everything. How did that affect you and what have you seen on that front since then in terms of parts that you need, equipment that you need and so forth just to run your operation?
Igor (32:33):
You know, I thought we prepared during Covid and we adapted. But then when the war starts, the situation becomes even worse. For example, we've been buying trucks from Belarus. Now Belarus is an enemy. How do you get the parts for the trucks? How do you get the parts for Russian trucks?
We’re now running a procurement for the new trucks. The issue is do you let [a Chinese] company participate? Do you let them participate if they stay in Russia? Do you deal with companies that stay in Russia? So, you know, you have [a] much wider range of issues that we need to handle and make a strategic decision on.
I mean, we made a strategic decision that we have to get rid of Russian-made vehicles as soon as possible. We made a strategic decision that is probably not a good idea to have trucks from China because if tomorrow they become, you know big friends with Russia, we are not going to get parts and we’re just going to be stuck.
So you have to think a few steps in advance. We’re buying some other equipment from China, which we think strategically will not be endanger our operations, but we learned that in the modern world, as you correctly pointed out, there could be various things affecting the supply chain.
Tracy (33:56):
Igor Smelyansky of Ukrposhta, thank you so much for coming on Odd Lots. That was such a fascinating conversation.
Igor (34:02):
Thank you very much for having me.
Tracy (34:16):
So Joe, I found that an absolutely fascinating conversation. Not to get really philosophical, but the theme that kind of jumped out at me, is it's sort of simultaneously globalized and also deglobalized. There's nothing more deglobalized than war and a country invading another country, it feels like.
But at the same time, hearing Igor describe the importance of e-commerce to the Ukrainian economy, the idea that there are soldiers in the trenches who are coming up with business plans for a small business on Etsy, it kind of blows your mind in some ways. And there's such a tension there between the war zone and then that globalized, you order something online, you expect it to get it the next day, kind of aspect of the economy.
Joe (35:04):
Yeah, thinking about villagers in Ukraine, going online and figuring out how to set up a Etsy shop or an Amazon shop or you Shopify makes the world feel very small and feel very familiar. And so I thought that was striking.
Also the idea of, you know, Starlink and how crucial that's been and you can sort of essentially, as he put it, seemingly in a day or two, recreate destroyed infrastructure with a combination of Starlink and generators. And you have to imagine that some of that will become the norm. I don’t know if like, the generators...
Tracy (35:42):
Probably not the generators.
Joe (35:43):
Yeah, but the idea of well, will you really rebuild an entire wired infrastructure if satellite internet works well? That's like really sort of interesting. You could see how that could reshape society or reshape infrastructure.
Tracy (35:54):
Yeah. I'm glad you asked that leapfrogging question because it sounds like that's kind of what's happening or what could happen once reconstruction actually begins. But overall, super interesting conversation. The switch from driving the mail to rail was really interesting. Just the idea of, I guess, post office workers who are having to think about stuff like mines on a day-to-day basis and communicate with the military about where it's safe to go. Pretty interesting times.
Joe (25:24)
Yes.
Tracy (25:25)
And I should just mention, Joe, if anyone is interested in learning more about Ukrposhta and how Ukraine is delivering the mail at the moment, there was a really brilliant profile of Igor by our Bloomberg colleague, Todd Shields. I think it came out in 2022. You should definitely go check that out. And a big thank you to Todd as well for helping us arrange this interview and putting us in touch with Igor in the first place.
Shall we leave it there?
Joe (36:49):
Let’s leave it there.
You can follow Igor Semlyanksy at
@smelyansky_igor
.