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Freightways says its purchase of the franchisor rights of small mail service Pete's Post will expand the business from the main cities and ramp up competition against NZ Post.
Freightways' postal service, DX Mail, said it bought the mail delivery businesses of Pete's Post in Taranaki, Manawatu, Wanganui, Hawke's Bay and Bay of Plenty for $1.3 million.
Freightways managing director Dean Bracewell said the purchase would allow the company's DX Mail service to expand from the cities to the regional centres of New Zealand and increase competitive pressure on NZ Post.
Pete's Post business complemented DX Mail which operated in all major towns and cities in New Zealand and had street-delivery services in Christchurch, Hamilton and Wellington, said Bracewell.
Freightways has forecast that the Pete's Post arm would deliver operating earnings of about $500,000 over the next 12 months.
"We are confident in sustaining and growing the earnings. DX Mail is growing positively and we see no reason for that not to continue."
DX Mail offered a premium, overnight street delivery service at comparable rates to New Zealand Post's standard letter three-day service, he said.
"The postal market is a hard market to grow in with such a dominant player but we have been able to establish a nationwide postal service and be successful," said Bracewell.
The Pete's Post brand will stay for a transition period of up to two years.
Pete's Post director Murray McBeth said it had operated two business models; the franchised self-delivery network model which Freightways bought, and a re-seller model of NZ Post products.
Pete's Post would continue using the re-seller model but was excluded from trading in the areas Freightways bought. It was formed as an alternative postal network in 1999 when the mail postal service market was deregulated.
Freightways' DX Mail began in 1971 and holds just under 5 per cent of the postal market.
