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What Is A Postal Code?

Postal Code Overview

The Importance Of Postal Codes

Because of postal codes, the global shipping and logistics industry can ensure that packages reach their destination with reduced risks of delays, damages, or errors. With this commercial infrastructure, a business owner selling to an international audience can ship goods to buyers in the United States via ground transport in a matter of days. Meanwhile, an executive in the UAE can send a signed contract to an investor in Hong Kong via air mail in a matter of days.

Why Postal Codes Simplify Shipping

Along their journey, packages may exchange hands between national postal carriers, customs inspectors, safety officers, or law enforcement. Behind the scenes, there are countless tiny exchanges of data taking place — with the help of software and hardware technology — to make this shipping and logistics infrastructure possible.

Especially if we live in North America, Europe, East Asia, or another industrialized part of the world, it’s easy to take the modern postal system for granted. The infrastructure that exists today has been in place from long before many of us were born. To understand the significance of postal codes in our lives, try to imagine a world without them.

To recognize the function, value, and significance of the modern postal code, it’s helpful to understand how and why the invention came into existence in the first place. Let’s start with a brief history lesson.

Evolution Of The Postal Code

Global trade has always been integral to establishing connections between people around the world. It is because of the intermixing of different cultures, religions, and societies that industrialized society was able to develop. Today, these trade routes have evolved into the foundation for the world’s shipping and logistics infrastructure.

Consider the Silk Roads as an example. This network of trade formed the basis of the silk trade between China and the Far East with the Middle East and Europe. It is believed that the Silk Roads existed for more than 2,000 years, first opening up during the Han Dynasty, which ruled China from 206 B.C. to 220 A.D. 

As silk moved around the world, there was a boom in the establishment of new societies, economic hubs, cultural centers, and educational institutions. Populations and cities around the world boomed. Flash forward to the 21st Century — this same civilization has progressed into the digital age. While the historic Silk Road no longer exists, there’s been the discussion within the Chinese government to create a new one. Global trade is ever-evolving.

Within this context of historical global trade, of which Silk Road was just one route, postal codes evolved to meet the increasingly complex needs of parcel delivery and regional zoning. On a tactical level, postal codes make it easier for shipping and logistics carriers to identify, locate, and validate addresses. Postal codes also support identity verification processes, for the purpose of fraud detection for digital transactions.

Management Of Postal Codes

Postal Codes Around The World

The Universal Postal Union (UPU) was established by the Treaty of Bern of 1874, to facilitate the free exchange of global mail. Headquartered in Switzerland, there are 192 member countries. Non-member countries are eligible to join by two-thirds vote of member countries. The UPU maintains a publicly searchable database of postal codes by country.

The UPU hosts conferences, publishes research, and creates technical solutions to support global commerce. The organization also provides assistance to countries for capacity planning.

In 2015, for instance, the UPU published a paper describing its role in the design and implementation of postal codes in Trinidad and Tobago.

Geographic Information Systems (GIS) software was used to divide Districts into Communities and then split each Community into Zones using streets as boundary lines. The 6-digit postal code was created by combining 3 sets of 2 digit identifiers in the order of District, Community, and then Zone.

During the COVID-19 pandemic, the UPU has been involved with response initiatives with respect to data privacy and public education. 

Postal Codes In North America

North America has one of the most well-defined postal code systems in the world. In the United States, the United States Postal Service (USPS) oversees ZIP codes. In Canada, postal codes are under the jurisdiction of Canada Post.

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ZIP Codes

The United States government implemented the zoning improvement plan (ZIP) code in 1963. The program was originally established to make it easier to transport mail across the continent. It came into existence following the post-World War population booms and helped to move mail delivery away from railroads to trucks and airplanes. By 1967, 65% of all U.S. mail relied on ZIP codes. 

As decades passed, ZIP codes gained additional utility for data verification, particularly for insurance companies and banks looking to set rates on financial products and issue lines of credit.

Robert A. Moon is credited with the invention of the ZIP code in the United States. He was a career postal service employee who passed away in 2001.

United States ZIP codes are five numerical digits long. ZIP+ 4 codes, also known as add-on or plus-four codes, include four additional digits that identify a geographic segment within a ZIP code delivery area. ZIP codes are often translated into intelligent mail barcodes for faster and easier sorting. This process enables discount postal rates for bulk mailings.

The first digit in a ZIP code represents a defined group of U.S. states. The second and third digits represent a region in that group, such as a large city.

Postal Codes in Canada

Canada created its first postal code system in 1925, in Toronto. By 1943, Toronto was divided into 14 zones, represented by just one number. This system began to expand into additional postal zones across Quebec, Ottawa, Winnipeg, and Vancouver. 

As with the United States, Canada’s postal system began to grow in tandem with a population boom in the 1950s and 1960s. A three-digit code system made it easier to automate mail sorting to enable faster delivery. In 1969, a six-digit code was announced. 

Each component of a Canadian postal code tells a story. A forward sortation area (FSA) is a geographic region in which postal codes begin with the same three characters. The first letter represents a postal district which, outside of Quebec and Ontario, maps to a province or territory. The following three digits represent a local delivery unit (LDU), which describes a grouping of addresses.

As with the United States, postal codes in Canada have taken on commercial use cases. 

Loqate helps businesses around the world verify customer addresses by combining our global datasets with best in class technology. Our easy to integrate API helps our customers verify customer data at the point of capture. Find out more about how Loqate address verification solutions can help your business.


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