Australia Post will reduce letter deliveries to every second day as the company grapples with declining mail volumes and increasing competition in its parcels business. This change, part of a broader strategy to adapt to evolving consumer habits, aims to balance the booming parcels sector against the significant losses incurred by the traditional letter-sending service.
In the year ending June 30, Australia Post recorded a record $8.01 billion in revenue from packages and services. However, losses from letter services narrowed to $63.2 million, an improvement from the $230 million loss reported the previous year. This reduction was attributed to measures including the shift to every-second-day letter delivery, which decreased mail volumes by nearly 15% to 1.42 billion items, and an increase in the stamp price to $1.70. The new delivery frequency alone reportedly saved the company $188.3 million over the 12-month period.
Despite these adjustments, Australia Post has no immediate plans to cease letter delivery entirely, a move seen in countries like Denmark. Chief executive Paul Graham stated that the company will continue delivering letters as long as there is demand, adjusting delivery frequency to reflect the decline in mail volumes. Future plans include delivering mail once every three days and eventually once per week, though specific timelines remain unclear.
Overall pre-tax profit for Australia Post reached $31.8 million, an increase from $18.8 million in the prior year. This figure would have been a loss of $107.6 million if not for $140 million in returns from property divestments. The company is facing pressure in its parcels business from integrated e-commerce platforms and new competitors offering low-cost services.
To bolster its competitive position, Australia Post is investing heavily in its network, including the construction of 14 new parcel facilities over the past year, with 10 located in regional and remote areas. The company maintains a network of 4118 retail outlets across Australia, with a commitment to keeping over 4000 open, including 2500 in regional or remote locations. Further property sales are planned, with proceeds to be reinvested into the business strategy.
In response to volatile fuel prices and to future-proof its operations, Australia Post is also investing $40.5 million to accelerate the electrification of its fleet. Operating costs saw an increase of nearly 4% due to growth in wages, licensee commissions, contractor rates, and parcel volume-related expenses. Graham emphasized that the company has a clear plan to ensure its sustainability and is actively executing it.