Australia Post to launch “two-speed” mail delivery service, as letter service “bleeds money”

Australian businesses will be able to choose the speed of their mail delivery from June.

The introduction of a “two-speed” mail service by Australia Post, which will roll-out to Australian consumers in 2015, follows reports the mail provider was considering a move to a user-pay model.

Australia Post said in a statement today Australian businesses will still have the option of their mail being delivered five days a week, but will be able to choose to pay for a cheaper, less-frequent service.

The system will be modelled on the first and second class stamp systems used in New Zealand, the UK and the US.

The mail provider also announced it will begin delivering parcels on Saturdays, extend its next-day Express Post let and satchel delivery service to Saturdays from the end of the year, and open its Australia Post corporate offices on Saturdays.

“The extension of weekend trading is a direct response to customer demand,” said Australia Post chief executive Ahmed Fahour.

“Our customers have told us that they would like to see more services from us and this is the next step in growing our offering to meet those expectations,” he said.

The announcements follow comments made by Fahour on Friday about the extent of the mail provider’s losses as a result of declining mail volumes.

In a speech to the American Chamber of Commerce, Fahour said letter volumes in Australia peaked in 2008 and have been falling by around 5% each year since, with the rate of decline accelerating to 8% over the past two years.

“The unfortunate reality is that our regulated letters business is now bleeding money—as the community shifts away from letters and towards digital forms of communication,” said Fahour. “We lost $218 million in providing the letters service last financial year.”

“Our projections show that with letter volume declines now accelerating to between 8 and 11% per annum, our letter services, under current momentum, will lose $350 million this year and could grow to over $1 billion in losses,” said Fahour in today’s statement.

“Without change and reform to letter services, we do not have the ability to absorb this loss and could, for the first time since corporatisation, become a cost to the government and ultimately the taxpayer,” he said.

Ian Kerr, spokesperson for the Post Office Agents Association, told SmartCompany it is difficult to comment on the practicalities of the proposals as the association was yet to receive a detailed briefing on the changes. 

“We want to see more customers coming through the door of Australia Post outlets [so] we will be very interested to see some details,” says Kerr. 

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