Australia Post is getting a major overhaul – here’s how it could affect you
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Australia Post may soon see changes to its letter and parcel delivery services following a major overhaul to ensure its financial sustainability.
While there are plans to modernise the postal service – according to one expert, this could mark the ‘beginning of the end’ for mail delivery service as we know it.
The government launched a discussion paper aimed at modernising the postal service and, hopefully, making it more financially sustainable. This comes after reports that Australia Post hit a ‘crossroads’ earlier in February, expecting it to report a full-year loss for the first time since 2015 as letters continue to decline.
Earlier this year, the postal service reported a first-half loss of $189 million in its letters business. Parcel and services revenue dipped 1.6 per cent, recording a $3.8 billion loss.
At the time, Group Chief Executive Managing Director Paul Graham said that the postal service had been flagging concerns about its long-term viability, including the business it currently operates.
‘During the COVID-19 lockdowns, we benefited from a considerable boost to our parcels business, which has now abated and revealed the unsustainable nature of the status quo. We are at a crossroads, and the headwinds facing our business have never been stronger,’ he shared.
According to Mr Graham, letters were in an ‘unstoppable decline’ because of digital communications, and yet the cost of delivering them increased due to the high number of delivery points.
By the end of the decade, the average Aussie household will receive less than one letter a week.
Associate Professor Paul Alexander said there is only one way for the postal service to become profitable again: to focus on delivering parcels rather than letters.
However, parcel delivery services such as FedEx, UPS, and DHL have flooded the parcel delivery market for a while now, making it a competitive market to tap into.
Mr Alexander did note that Australia Post has an advantage.
‘Australia Post's greatest asset is that it will go where others choose not to because they can't make a profit,’ he claimed. Other services pick and choose the populated areas only for the sake of making a profit.
Meanwhile, Australia Post has to deliver everywhere because of its community service obligations, including rural and regional areas where the service is most dependent. This service obligation includes letters too.
According to reports, Australia Post is currently obliged to deliver letters to 98 per cent of Australian homes or ‘delivery points’ every weekday and 99.7 per cent at least twice a week – both rules were introduced in the 1980s and 1990s, respectively.
Communications Minister Michelle Rowland said that it’s important the postal service stays sustainable in these areas.
‘Australia Post not only serves as the post office, often it is the only banking service in town, the newsagent, or the retailer,’ she explained.
She added: ‘So the whole point of this consultation is to understand from Australians, and in particular from small businesses and people representing rural and regional Australia, what they need in a modern Australia Post.’
Discussions over how Australia Post will now operate are still ongoing, but Professor Alexander stated that there needs to be a ‘balancing act’ for things to work.
‘The question now is whether Australia Post can emerge from this crisis stronger, or if it is the beginning of the end,’ he said before adding that customers might be willing to accept a lower frequency of delivery if they get a better parcel service.
But he also stated that reducing the frequency of letter deliveries could incur extra costs, not only with the stamp prices but also in how letters are delivered.
He shared: ‘Deliveries of letters could be more like parcels where you pay per delivery, potentially, in the future, or you would go pick up your letters from the post offices.’ Professor Alexander added that changes must be made in these services, such as receiving a letter that someone probably doesn’t need every day will be reduced or stopped entirely.
‘That’s the discussion we’re having,’ he claimed.
Finance Minister Katy Gallagher weighed in on the discussion and said that the review would look at how Australia Post locations across the country would be able to operate successfully in the future.
‘The government is committed to ensuring that Australia Post continues to modernise to ensure it is financially sustainable and continues to provide employment opportunities and deliver essential services to all Australians,’ she explained.
What do you think about this, members? Do you use Australia Post often? Let us know your thoughts in the comments below!
While there are plans to modernise the postal service – according to one expert, this could mark the ‘beginning of the end’ for mail delivery service as we know it.
The government launched a discussion paper aimed at modernising the postal service and, hopefully, making it more financially sustainable. This comes after reports that Australia Post hit a ‘crossroads’ earlier in February, expecting it to report a full-year loss for the first time since 2015 as letters continue to decline.
Earlier this year, the postal service reported a first-half loss of $189 million in its letters business. Parcel and services revenue dipped 1.6 per cent, recording a $3.8 billion loss.
At the time, Group Chief Executive Managing Director Paul Graham said that the postal service had been flagging concerns about its long-term viability, including the business it currently operates.
‘During the COVID-19 lockdowns, we benefited from a considerable boost to our parcels business, which has now abated and revealed the unsustainable nature of the status quo. We are at a crossroads, and the headwinds facing our business have never been stronger,’ he shared.
Australia Post hit a ‘crossroads’ after reporting millions of losses during the first half of the year. Credit: Australia Post
According to Mr Graham, letters were in an ‘unstoppable decline’ because of digital communications, and yet the cost of delivering them increased due to the high number of delivery points.
By the end of the decade, the average Aussie household will receive less than one letter a week.
Associate Professor Paul Alexander said there is only one way for the postal service to become profitable again: to focus on delivering parcels rather than letters.
However, parcel delivery services such as FedEx, UPS, and DHL have flooded the parcel delivery market for a while now, making it a competitive market to tap into.
Mr Alexander did note that Australia Post has an advantage.
‘Australia Post's greatest asset is that it will go where others choose not to because they can't make a profit,’ he claimed. Other services pick and choose the populated areas only for the sake of making a profit.
Meanwhile, Australia Post has to deliver everywhere because of its community service obligations, including rural and regional areas where the service is most dependent. This service obligation includes letters too.
Australia Post will go up against ‘heavy hitters’ in the parcel delivery market. Credit: ecees/Unsplash
According to reports, Australia Post is currently obliged to deliver letters to 98 per cent of Australian homes or ‘delivery points’ every weekday and 99.7 per cent at least twice a week – both rules were introduced in the 1980s and 1990s, respectively.
Communications Minister Michelle Rowland said that it’s important the postal service stays sustainable in these areas.
‘Australia Post not only serves as the post office, often it is the only banking service in town, the newsagent, or the retailer,’ she explained.
She added: ‘So the whole point of this consultation is to understand from Australians, and in particular from small businesses and people representing rural and regional Australia, what they need in a modern Australia Post.’
Discussions over how Australia Post will now operate are still ongoing, but Professor Alexander stated that there needs to be a ‘balancing act’ for things to work.
‘The question now is whether Australia Post can emerge from this crisis stronger, or if it is the beginning of the end,’ he said before adding that customers might be willing to accept a lower frequency of delivery if they get a better parcel service.
But he also stated that reducing the frequency of letter deliveries could incur extra costs, not only with the stamp prices but also in how letters are delivered.
He shared: ‘Deliveries of letters could be more like parcels where you pay per delivery, potentially, in the future, or you would go pick up your letters from the post offices.’ Professor Alexander added that changes must be made in these services, such as receiving a letter that someone probably doesn’t need every day will be reduced or stopped entirely.
‘That’s the discussion we’re having,’ he claimed.
Finance Minister Katy Gallagher weighed in on the discussion and said that the review would look at how Australia Post locations across the country would be able to operate successfully in the future.
‘The government is committed to ensuring that Australia Post continues to modernise to ensure it is financially sustainable and continues to provide employment opportunities and deliver essential services to all Australians,’ she explained.
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