New Zealand Post recently presented at our National Conference in Hawera on how declining mail volumes and increasing fixed costs are affecting their ability to sustain their current business model.
They have made a commitment to closely engage with Rural Women New Zealand to ensure the rural community is kept informed, with the aim of ensuring there is a viable, sustainable network for the future.
Below is an update from New Zealand Post on the current situation.
• In the past decade the volume of mail carried by New Zealand Post has fallen by 20%. That drop in volume is continuing, with nearly 40 million fewer mail items posted in the past year alone. We estimate that mail volumes will halve by 2018.
• The costs of maintaining a postal delivery network have increased in the past decade with a 20% growth in the number of addresses New Zealand Post is required to deliver to at least five or six days per week.
Those two trends – declining volumes and increasing fixed costs - will continue as people increasingly choose to share information and documents electronically through using email, TXT, Twitter, Facebook, and Skype, to name a few. The planned rollout of high-speed broadband will further advance these trends, as a growing number of people take advantage of the convenience of digital messaging channels.
New Zealand Post has various initiatives underway to ensure a sustainable postal services network in the future. These include redesigning our mail processing and delivery networks, developing digital options through which our customers can choose how they receive their items, and we’re planning for a network that is flexible so we can quickly adapt to meet the rapidly changing needs of people.
We’re designing and planning this work now to make sure we do what’s right for customers and the business from two to three years and beyond. However, we believe the lead–in times to achieve the change are years rather than months.
To help achieve these necessary changes we are seeking amendments to the Deed of Understanding with the Crown, which hasn’t had any substantial updates since 1998. We expect the Government to call for public submissions on a discussion document on the Deed this year.
As part of amending the Deed, we are seeking flexibility around delivery frequency and the shape of the postal outlet network. We know we have to adapt the delivery network to match the way people are using physical mail, and the current six-day delivery to more than 95 percent of delivery points simply won’t work in the years to come without both significant and frequent price increases – or seeking a subsidy from the Government. Neither option would be sustainable and would merely stave off the inevitable for a short period.
We need to be ready to adjust delivery frequency which we know has a significant lead-in time. We need the flexibility in our agreement with the Government now, so we can change in the future. Waiting and doing nothing means we would lack the ability to provide certainty around price and service.
The 1998 Deed also requires New Zealand Post to maintain a retail network of at least 880 postal outlets, of which 240 must include ‘agency services’. While valid at the time, the reality these days is that there is a multitude of other ways to access ‘agency services’ outside of a ‘shop’ environment with technology enabling a wide range of retail outlets to provide agency services. It might also be appropriate to examine the presumption (in the 1998 Deed) that New Zealand Post should be tied to the provision of agency services – which are increasingly able to be met efficiently using digital means and through the private sector. New Zealand Post wants to provide services through a wider range of points of presence rather than be locked into a set number of ‘bricks and mortar’ locations.
An important point to note here – and one which will become an issue as the media is bound to speculate on possible scenarios – we’re not talking about sudden or impulsive changes. We’re looking to ensure sustainability for the next decade and this year needs to see our “first steps” in establishing the policy framework so we can make necessary steps in the future. There will be no ‘sudden moves’ and we are committed to keeping you informed.
If you have any questions or feedback please contact either Noeline Holt, RWNZ EO or John Tulloch, NZ Post External Communications Manager, 04 496 4924 (landline); 027 429 9249 (mobile) or email@example.com