Australia Post has lost money for the first time since 2015, with the blame largely resting on its letter delivery service.
In the year to June 30, Australia Post recorded an overall before-tax loss of $200 million, but its letter delivery business alone lost $384 million, a 50 per cent increase on the previous year.
In a submission to a government consultation on modernising the postal service, it described the letter delivery service as “no longer sustainable”.
Australia Post remains wholly owned by the government and the delivery of letters every business day to 98 per cent of delivery points is one of its key community service obligations.
But as letter usage has declined, the service has become increasingly expensive to run in relation to the money it makes, and Australia Post is lobbying the government to allow it to deliver letters less frequently.
Australia Post said the average Australian household receives 2.2 addressed letters each week, down from 8.5 a week in 2008, with the number expected to almost halve over the next five years.
“It is expected that letter volumes will continue to decline, and delivery points will continue to grow in line with new housing developments, further increasing letters losses in future years,” Australia Post said.
The decline in letters is a global phenomenon and Australia Post is looking to different solutions tried internationally.
For example, NZ Post has delivered letters every second business day since 2016, while letter delivery in Norway, Sweden and Denmark has moved to three days per week.
Australia Post said overall its community service obligations cost $442 million to deliver in the year to June 30, up 27 per cent from the previous year.
These obligations include maintaining at least 4,000 retail post office outlets across the country, of which at least 2,500 are required to be in rural and remote areas.
This is another drag on the business, with rationalisations in metro areas potentially on the cards.
“Further losses are expected unless Australia Post can secure the necessary support required to modernise its business,” it said, releasing its results.
The government consultation into modernising the postal service earlier this year found that “changes to letter delivery arrangements, particularly frequency, have broad support”.
It found there is also “some support to optimise the retail network in metropolitan areas”.
