Joint Committee on Transport and Communications debate -
Wednesday, 5 Nov 2014

National Postcode System: Freight Transport Association Ireland

Chairman

We will move on to No. 8 on the agenda, which is a discussion with Freight Transport Association Ireland. The purpose of this meeting is to engage with Freight Transport Association, FTA, Ireland with regard to the new national postcode system, Eircode, which was developed and will be operated by Capita Business Support Services Limited. On behalf of the committee, I welcome Mr. Neil McDonnell and his colleagues, Mr. Tom Carr of Palletxpress, Mr. Andy Smith of UPS and Mr. Niall Cotton of BOC Ireland. I draw their attention to the fact that, by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I also wish to advise the witnesses that any submission or opening statement they have submitted to the committee will be published on its website after the meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. McDonnell to make his opening remarks.

Mr. Neil McDonnell

I thank the Chairman and members of the joint committee for agreeing to meet us. Postcodes are a difficult technical issue, which we will try to keep as simple as possible. Ireland needs a postcode but not any code. A postcode is a key part of a country's soft infrastructure and is an indicator of a nation's social imagination and ingenuity. A national postcode lasts for a long time and the postcode that Ireland introduces next year will outlive everyone in this room. Eircode is an excellent address database for direct mail, for utilities, for the Revenue and for local property tax but it is a bad postcode. Eircode will assign a unique identifier to every address in the country but two adjacent properties will have different randomly-assigned Eircodes. The joint committee's briefing notes provided by FTA Ireland give some of the places that will not have a postcode and I will read into the report some of the types of places that will not have an allocated Eircode. These include workshops, farm buildings, windmills, piers, jetties, fields, large fixed assets, lay-bys, points of interest, lanes, archaeological sites, roads, natural features, intersections, accident black spots, pylons, parks, motorways, antennae, wells, graveyards, pumping stations, viewing points, manholes or utility access points, car parks, beaches, level crossings, transformers, bridges, forests, bogs, lakes, playing pitches, cycle tracks, picnic areas, public toilets or places along walkways such as the Wild Atlantic Way. None of these can have an Eircode unless they also have an allocated postal address.

In our opinion, Eircode departs substantially from the requirements for a postcode set out by members' predecessors in the last Dáil, which we have set out in annexe 2 of our submission, as well as in the postcode tender, the requirements of which are set out in annexe 3. In annexes 4 and 5, we compare Eircode with modern Irish and international alternatives, as well as with the United Kingdom postcode, which is almost 60 years old this year. We give a simple example of the address of our sister trade association in Belfast in annexe 5. Unlike any of these codes, an Eircode does not recognise when two addresses are adjacent to each other. We have picked three local addresses in Kildare Street to show this issue to members in annexe 4.

Eircode will impose a significant cost on small to medium-sized enterprises, SMEs, in Ireland for no tangible benefit.

The companies here today span the freight, parcel and energy sectors. Delivery to Irish homes and businesses is their day job. They know what they are talking about and they estimate that savings in the order of tens of millions of euro annually can be passed to the public via an efficient postcode system. As a national postcode, however, Eircode lacks vision, imagination, ambition and, most of all, practicality. Ireland needs a modern, open, location-based postcode with a useable structure and sequence. We here today ask the communications committee to use its influence with the Minister for Communications, Energy and Natural Resources, Deputy Alex White, to forestall Eircode's introduction as a national postcode before it is too late.

Chairman

I thank Mr. O'Donnell for that direct and strong presentation.

Deputy Michael Colreavy

I share many of the concerns Mr. McDonnell has outlined and many of the concerns outlined in the report. I have asked questions about Eircode and I have not got convincing answers from the Department. The first question I asked was about the purpose of introducing this system. Normally, when one is doing any sort of a technical specification, one first undertakes a functional specification and identifies the problem one is trying to resolve. Other than getting vague statements such as "It would be the most up-to-date postcode system in the world," I cannot get an answer to that simple question: what problem is this postcode system attempting to solve? I see no evidence of any independent trial of this structure. Normally such a fundamental piece of infrastructure would be tested in a small pilot area before it is implemented nationally.

I am also concerned about the cost and the over-reliance on management consultants to deliver what should be a fairly straightforward piece of infrastructure. I am concerned that we may have another Irish Water on our hands. I very much share Mr. O'Donnell's concerns. Even at this late stage, it behoves us as a committee to ask very serious questions.

Chairman

This is why we have the witnesses before us today. Officials from the Department will be coming before us in a few weeks and we want a strong articulation of the issues today that we can put directly to the Department's representatives when they come in. The members will have an opportunity to do that on behalf of the witnesses we hear from today.

Deputy Michael Colreavy

The only question I have for the witnesses is whether any attempt was made to involve them, as representatives of people who will be significantly impacted by whatever postcode structure is used, in setting out the preliminary requirements of this system, the functionality that would be required, or how it might help or hinder the businesses they represent. Were they involved at any stage in those discussions, in the preliminary design of this system?

Mr. Tom Carr

I am from Palletxpress. We are a pallet distribution network. There are four or five similar networks in the country. We probably represent up to 100 or 120 hauliers around the country. I do not think any of them were approached at any stage for an input, either from a functional or technical perspective or on a day-to-day working basis. We have only met here this morning - some of us have never met before although we are from a similar industry - but the bottom line for us is that we have all, without even giving it consideration, concluded that there is no use in this for us whatsoever. We simply would not use this system if it were imposed on us. We would have to get another system to cater for our business. I understand that the boxes have been ticked for a number of industries around the country but it is certainly not ticking the box for the transport and logistics industry. It is not as if we can even come and debate the issue here - it is simply of no use to our industry.

Deputy Michael Colreavy

Does Mr. Carr's company use location software? Is there a standard set of software that would be used for tracking the lorries and directing them to different addresses?

Mr. Tom Carr

Yes, there would be GPS systems to track and trace vehicles. I can only speak for my part of the industry, but many of us use barcoding and scanning. We have waited a number of years for this postcode system to come in because we were identifying a new software application that we could use but now it is of no use to us as we have waited over the past two or three years. There is none out there that we can implement into a software system that gives us a ready-made, identifiable and sequential way of making deliveries of various products.

Deputy Michael Colreavy

Mr. Carr does not see any way that a product can be made that could interface with the proposed Eircode system?

Mr. Tom Carr

The biggest aspect of the Eircode system is the lack of sequential numbering. That is the bottom line. Mr. McDonnell may contradict me on this, but if it were changed in the morning to be a sequential system, we would have much more use for it, or the changes that would have to be made would be minimal.

Chairman

Is Mr. Carr saying that it can be fixed? What would be the consequences? If it were a sequential system, it would solve the problem. Is that the case?

Mr. Neil McDonnell

The code as it is now structured does not recognise the concept of adjacency. In the back of the information pack we have put three local addresses: the Royal College of Surgeons next door, Leinster House, and Buswell's Hotel. Any of the other coding systems will logically place those in a sequence that a man in a hi-vis vest, a man in a van or a woman behind a computer screen allocating these to customers will understand. Eircode randomly assigns these. We are conscious that the providers of this code will say that some other middleware provider will come along with a system, to answer the Chairman's question. We argue that simply introduces another layer of cost and complexity, which makes Eircode in its bare iteration as one looks at it on a piece of paper of no use to people like this who deliver parcels, industrial gases, energy, or pallets to one's address.

Mr. Tom Carr

I understand it is easy for us to talk about it. Just to explain, if we get in 2,000 pallets tonight and we have 200 trucks around the country delivering those, we cannot put a run on each truck to say "X1, X2, X3, X4". If we took Eircode as it is and we followed a system, we could have a truck going to Westport, his next delivery could be in Ballina, and his next one could be back to Westport again. As there is no sequencing in the system, there is no natural run to put on a truck or a van. Does that explain the situation? It is of no use to us; there is no logic to its numbering system.

Chairman

Is there any downside to putting in a sequential system?

Mr. Andy Smith

From the small parcel side of the industry, flexibility is one of the key parts of our business. Our volumes on a daily basis can fluctuate significantly. We are talking fluctuations, depending on the time of year, of between 15,000 and 25,000 parcels a day. It is very important to have the flexibility to increase or reduce the number of vehicles we put on the road each day from a cost-efficiency point of view. It also has an impact on the environment.

That also has an impact on the environment in terms of putting excess vehicles on roads. A sequence postcode enables us to have a logical system to flex the volume between vehicles. In effect, we cannot use the proposed Eircode system. As a business, we would ignore the Eircode system and continue to operate as we do. It is a real missed opportunity for us.

Mr. Neil McDonnell

That point relates to the two businesses that would deliver to premises, either business or private in the case of Palletxpress and UPS. It was important to bring a company such as BOC Industrial Gases before the committee to demonstrate that one of the other key failings of the system is that it is only a solution for letter boxes. If one is going to places that do not have a letter box, this is not a solution at all - good, bad or indifferent, Eircode is useless. A lot of the type of business that BOC and Niall Cotton are involved in relates to farm outbuildings, warehouses and workshops that do not have a postal address. If they do not have a postal address now, they will not have an Eircode when the system comes in.

We also wish to raise issues relating to tourism and the road network. From those points of view, Eircode is useless because it only assigns a postcode to a postal address and nothing else.

Deputy Seán Kenny

I have listened with interest to the views of the witnesses and I am trying to understand the difficulties they say will present. To take a practical example, most of us buy stuff over the Internet nowadays. Next year, if I buy a new laptop I will go online to find one. I will order it and put in my address and new Eircode. UPC or another such company will deliver the parcel to my house a couple of days later. Mr. Smith has said the postcode will not be any assistance to his company. I presume each freight company has its own IT system or delivery system. Mr. Smith has said deliveries are organised by street, address or business and they are done in a certain order according to existing postcodes. He said the new Eircode system will not assist him and that he will still have to use the street address of the house or business in order to make the physical delivery.

Mr. Andy Smith

That is exactly the point.

Mr. Tom Carr

If 100 people place an order for a laptop and they come into our system, we do not know whether we can sequence delivery. For example, order No. 1 could be Deputy Kenny and order No. 15 could be the Deputy’s next door neighbour but we would not know that from use of the Eircode. We could go to No. 99 first and then back to the Deputy’s next door neighbour, who is in No. 15.

Deputy Seán Kenny

Will the existing addresses that include street name and house numbers still be available? Will deliveries be organised according to such information?

Mr. Tom Carr

Yes, and we will continue to do so.

Deputy Seán Kenny

Is Mr. Carr saying the Eircode system is of no benefit?

Mr. Tom Carr

Yes. We are not here to make the point that we are not going to use it; it is simply of no use to us. That is the point. It is not even a consideration that we would say we would look at it and we could use it if certain adjustments are made. It is not even a cost factor. We are all happy enough to pay for what we get, but Eircode is of no use to us.

Deputy Seán Kenny

In order to make it useful to transport companies, would they have to incorporate it into their own IT delivery systems?

Mr. Tom Carr

Yes.

Deputy Seán Kenny

Have the companies been told they would need to get some middle man or agent to do that for them?

Mr. Tom Carr

That is correct.

Mr. Andy Smith

An additional point is that IT can also be a bit of a red herring because if one uses the United Kingdom for example – I referred earlier to the fluctuations on a daily basis – the individual loaders of vehicles have to make a decision each day based on volume. They must decide to group deliveries in areas, for example, Dublin or Kildare, or whatever location they operate in. In the United Kingdom, based on the sequence, they can make very logical decisions, such as if a certain vehicle has reached capacity then a subsector postcode could be moved to a neighbouring vehicle so there is not excess mileage and we do not have to add an additional route or have vehicles operating below capacity. The proposed system does not allow us to narrow down the data. It is not just a question of IT, it relates to the decision making capacity of individual drivers and they do not derive any benefit from Eircode in terms of decision making.

Deputy Noel Harrington

I thank the witnesses for their presentation. Would it be fair to say that Eircode is based on the GeoDirectory system, a unique identifier for every address in the country? The UK companies say the GeoDirectory part of it is based on a random number and that is causing them the biggest trouble. Are there not benefits in the GeoDirectory system that identifies an individual address over a clustered address in terms of accuracy of delivery, leaving aside the sequential aspect of it? One still has random numbers but because one has a unique identifier to an address, in addition to either a name, a business name, street name or house number, one has an individual code identifying a precise individual address for deliveries. I refer to post, including commercial deliveries or parcels delivered by courier or other method. Irrespective of the random nature of the numbering, that should be a positive development. If the numbers were not random, would it give rise to data protection issues on the basis that one could identify who lives next door and so on? Significant issues arise for the address owner. Among the people who supported a GeoDirectory-based code are the emergency services, for example. Given the advantages of an individual address, how does one deal with potential data protection issues? Is that the crux of the problem?

Mr. Neil McDonnell

Not at all. A unique identifier presents data protection issues that do not arise with a less granular structure. We do not believe there are fundamental data protection issues with a unique identifier. In the previous Dáil, a similar committee dealt with the issue robustly. Eircode is an An Post GeoDirectory solution. GeoDirectory has been bought out as part of the process by Capita plc, a UK company which is buying the database from An Post. Effectively, all that is happening is that a unique, random seven character string is being added to postal and business addresses in the geodirectory. That is the nub of the issue. If the geodirectory was a good solution for getting parcels, freight or energy to one’s premises, the delivery companies would be using it now. Although geodirectory gives a longitude and latitude, that is insufficient data to route because if we go back to simple maths, a longitude and latitude gives a point and what these people want to buy are lines.

I hope that makes sense. They need to join the dots. A random selection of dots around the country is no good to them from a routing point of view. This is a GeoDirectory mark 2 solution and the GeoDirectory has been with us for decades. It is not a solution now and therefore it will not be a solution if it is presented as a random post code.

Senator Sean D. Barrett

I welcome our visitors and thank them for the publication, which is most useful. I have a couple of perspectives. The university constituencies operate on both sides of the Border and I find it is far easier for me to send a message to a constituent in Clones than it is in Newtownbutler. It is only eight or nine miles away but one must remember all the details. There is, therefore, a cost involved in this. I cannot see, as a user of the post office, that there is any benefit, as I gather that the technology can recognise addresses anyway. It can read that it is Clones. Adding seven numbers on to Clones to send a letter under this system accomplishes nothing.

Is it true that even in the UK after 30 years there is only about 80% use of postcodes but the machines recognise the rest of the mail and it goes through with no delays? When I read that Ireland is the last country in Europe to do this, it might actually be quite sensible not to implement an unnecessary technology that is about 150 years old, going back to the first postcodes in London.

Taking up Deputy Colreavy's point, how much money is involved in this, and is it another Irish Water? The witnesses are major customers and we have heard their points and read their document. Is there any chance of stopping it from a public expenditure point of view? We did ask the former Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, to debate it in the Seanad before he went ahead with it because there was a substantial number of people in the post office who were also against this. Their volumes are declining very rapidly, so if the existing system cannot handle a declining volume of mail and it has the technology to recognise where Clones is, what is the point of this exercise? We are indebted to the witnesses as public-minded citizens coming in to tell us their views on this, but is there any remaining point in proceeding with this project?

The final issue is that there are civil liberties types who are concerned about this as well. That is another hornets' nest that we do not want to disturb. Is €20 million about to be spent on a project that is not going anywhere?

Mr. Tom Carr

From our point of view, we asked the same question: is it too late to stop this? The second question is whether it is another Irish Water. It is a good system for the emergency services because they can pinpoint a location, but they are not pinpointing a location on a sequential basis as it is once-off locations that they are pinpointing. In terms of an Irish Water, absolutely it is an Irish Water for the transport and logistics industry. In hindsight we will look back and we will ask how we got that wrong as well.

The Senator is right to point out that we are the last to introduce a postal code system. We should be the best. We are recognised in this country for being technical and digital leaders and now we have an opportunity to implement something that represents that, yet we are not going to do it. I do not know whether it is too late to do something about this. That is the big question we have.

Mr. Neil McDonnell

The Senator is focused on the public expenditure side, given his position, and there is a transfer of the database, which is about €8 or €9 million in terms of expenditure. There is also an ongoing payment to An Post in respect of the database and there are other costs in the region of €20 million to €30 million. However, that does not factor in the cost to business if Eircode were pushed onto businesses. Much of the expenditure in the public service is on cleansing of databases. Businesses would have to cleanse databases to put in a postcode that would do nothing for them. Businesses will have two choices, effectively. They may pay money to IT specialists to cleanse databases to adopt Eircode, which will do nothing for them. The other possibility, or probability, is that they will simply ignore it and bring in proprietary solutions of their own and we will end up with many different solutions. That has happened, for instance, with the major satellite navigation providers. Garmin has adopted an Irish solution called Loc8 Code and TomTom has come up with its own solution, MapCode. A State-sponsored solution would get around this multiplicity of postcodes but unless someone gets a grip of it at State level, there is a danger of a plethora of solutions where there should be just one.

Deputy Olivia Mitchell

I thank the Chairman for allowing me to sit in on this committee as I am not a member and for giving me the opportunity to say something. Although I am not a member of the committee and I am far from an expert on this area, I have been tracking the sequence of events that led to the choosing of Eircode for a number of years. I have spoken to many people who have concerns about it. It seems that the witnesses are saying that because we are late coming to the whole idea of a postcode, we had the opportunity to make a technological leap and we are failing to do so, that basically what we are choosing is a database system that is geared mainly towards the delivery of letters, which is a dying method of communication. What the witnesses are asking for is some sort of a sequential code that is easily recognisable and that has some sort of logical pattern that can be used for their businesses.

I have watched this for a long time and it seems that perhaps a mistake was made in setting the parameters of the system that was to be chosen and that the tender documents and the whole preparation process seemed to be geared at facilitating An Post. I am not against facilitating An Post but it seems to have happened to the exclusion of everybody else. I asked a number of parliamentary questions about this and one answer stated, "In addition, the emergency services sees the introduction of post codes as facilitating the speedier deployment of their services". I am not sure how that is the case if one depends on a letter-box, since many of the emergency services go to places that do not have letter-boxes. The reply continues that An Post, which is actively involved in the design process is fully committed to using Eircode. If An Post was actually involved in the design process, it seems inevitable that we got something that suited its sorting system, and that we did not get something that had other functions and other users.

The witnesses are talking now about introducing a parallel system. As I understand it, they are saying that the Government Departments that this system suits, which send many letters, may use this system, but that it should be a private system, not publicly used, and that we should introduce some sort of parallel system. By a parallel system, they mean that the last three digits are sequenced. I follow on from Senator Barrett's questions about how much it will cost. Is there a huge cost involved in this?

An answer to another parliamentary question stated:

Concerns have been expressed by a number of logistics bodies in connection with the Eircode, most specifically in relation to the non-sequential nature of Eircode. Capita, the post code management licence-holder has met with a number of these bodies to discuss these concerns and to, inter alia, explain that a sequential post code structure is not feasible or necessary.

What is it that is different about Ireland that makes it unfeasible to have a sequential postcode structure?

Mr. Neil McDonnell

The question about the delivery of post is interesting. It is not a question for us but I would seriously question whether An Post will even use Eircode to deliver. It has two components: a routing key, which has a geographical basis not unlike the current Dublin postal districts, followed by a four-character random string. It would be very interesting to ask An Post whether it is going to use the random string to deliver mail or just sort it into the postal districts and continue to do what it is doing right now. I suspect it is the latter.

On the question of cost, businesses like this are presented with a Hobson's choice of spending money to buy a database and then paying someone to interpret that database or simply to continue to do what they are doing right now. I suspect that most of them, for practical cost reasons - not merely as a money issue - will continue to do what they are doing right now because that still will get them to the end address, albeit on a less efficient basis than is possible, without paying someone extra money for so doing. These people do not interact with customers or businesses via An Post but interact directly with the public and with businesses. The issue for them is they take a van, a gas truck or a pallet to a physical address and unlike a United Kingdom postcode or zip code in America that is visible in parts, Eircode is invisible at that physical address. There is no physical sign that one is at an Eircode. Consequently, to address the Deputy's middle point on whether there is a utility for this as part of a Government database last, that is entirely up to the Members of the House. We believe there is huge utility in an address database but not as a postcode and not for people who are in the business of getting from a depot to a house or a business. This is of no use to them.

Deputy Olivia Mitchell

My last question is whether any of the witnesses met Capita. The reply to my parliamentary question states it was explained to the witnesses why it was not feasible. I wonder why it is not feasible in Ireland when it is feasible everywhere else.

Mr. Neil McDonnell

I genuinely could not answer that question. I can tell the Deputy that no one asked either the Freight Transport Association or its members. There was no consultation. There was a launch of the product but there was never a consultation as to what that product should be.

Chairman

If all members are happy, I have a couple of final questions following on from the discussion, which obviously has been very interesting. In particular, the mention of Irish Water and what happened there would suggest there may be difficulties in this area coming down the track, which perhaps members may wish to head off at the pass. Deputy Mitchell mentioned that this system appears to be suiting An Post but Mr. McDonnell is suggesting it does not even suit An Post. It was mentioned earlier that the emergency services would benefit from this system. Does it suit anybody else? What is the point the association is making here? Is there any need for a postcode at all or what one does it suggest?

Mr. Neil McDonnell

We are suggesting a geo or location-based or sequenced postcode that gives adjacency to addresses, that is, a postcode which states that address one is beside address two. How precisely that is presented is technical and is irrelevant to us but we simply need something like that. The reason we have appended four different examples to our submission is there are functioning proprietary systems available right now. We do not advocate any particular solution and do not even state it must be one that is in the back of the pack. We simply are stating there are lots of clever people who already have come up with excellent solutions to this and it cannot be beyond the imagination of the Department of Communications, Energy and Natural Resources to put in place a similarly productive useful system.

Chairman

Is it a figure from the Freight Transport Association which states this system is costing up to €80 million?

Mr. Neil McDonnell

I have seen that figure in respect of the fixed and sunk costs with regard to the database and the maintenance and cleansing of Government databases.

Chairman

But it is not the association's figure.

Mr. Neil McDonnell

No. However, were Irish businesses and SMEs obliged to adopt this, rather than putting it in terms of pounds, shillings and pence, members might think about a small business running a database that decided it was going to do this. The minimum time it will take is one or two days of someone coming in to cleanse the database. Moreover, whatever one might buy from someone on that day, it will cost more than €500 and less than €1,500 per day to work on a database in one's business. I will let members figure out what that kind of cost on business will be.

Chairman

To sum up, the association's point is that a system could be brought in that would be less costly and more effective than the one proposed.

Mr. Neil McDonnell

Absolutely. As a database solution, one is paying for the maintenance and the upkeep of a database and as this is a database of 2.2 million unique address, it must be refreshed constantly. We understand it must be done quarterly.

To answer the Senator's question, the pricing was meant to be released in September but it has not come out. The pricing for neither the Eircode address file, ECAF, which is the thin file that does not contain the longitude or latitude, nor the full Eircode address database, ECAD, which is meant to be the commercial file, is available. Consequently, we do not know what the cost to industry will be. However, as Mr. Tom Carr noted, it is not a cost issue. Even were this service offered to us at no cost, it does not have any utility in it as a postcode. It is a postal address database, not a postcode.

Chairman

We will leave it there for the present. On behalf of the joint committee, I thank Mr. Neil McDonnell, Mr. Tom Carr, Mr. Andy Smith and Mr. Niall Cotton for their attendance today and for engaging with us so openly. I am looking forward to meeting the departmental officials who, together with representatives of Capita, will appear before us in two weeks' time. The points made today will be put to them at that time. I thank the witnesses.

The joint committee adjourned at 11.05 a.m. until noon on Tuesday, 11 November 2014.