Editorial: NZ Post must not alienate its customers

Photo / Bay of Plenty Times

The way in which New Zealand Post is casting around for options that will keep its mail delivery service profitable should surprise nobody.

The state-owned enterprise's foundation has been undermined by what it terms "electronic substitution" - emails, Skype and suchlike - and it has spent much of the past couple of decades diversifying its business to maintain its relevance and viability.

What is surprising about the contents of a letter from the NZ Post board to the Government is the extreme nature of one of the options under consideration. That would see mail delivered every second day.

If enacted, this would be the equivalent of NZ Post shooting itself in the foot. In effect, the organisation would be conceding that postal delivery has become something of an irrelevance.

Advocates of such a move would say that is already largely the case. Over the past year or two, letter volumes have been declining by about 6 to 7 per cent annually, an unprecedented rate far in excess of the 1 per cent or so drop of previous years.

That trend is almost certain to continue as more consumers embrace online communications and bill payments. But delivering mail every second day would surely serve only to accelerate the rate of decline.

Providing a second-rate service is a certain way of alienating potential customers. NZ Post would, as is now said only half in jest, become a banking business (Kiwibank) with a postal service in tow.

The running up of what would amount to a white flag would also fly in the face of NZ Post's optimistic sounds about the mail service over the past few years.

Three years ago, John Allen, then the chief executive, said: "While we are facing challenges, we continue to believe that part of the business has a strong future."

A five-year, $85 million investment in new mail-processing facilities offered affirmation of that view. There has also been evidence of an ongoing relevance, thanks to the boom in internet shopping through the likes of Trade Me, which has led to an increase in the average weight of mailed items at the same time as volumes are falling.

Under Mr Allen, NZ Post looked at the likes of ending Sunday collections from street post boxes and rationalising the number of boxes.

The new proposals are more thoroughgoing and include, aside from deliveries every second day, the cancellation of Saturday deliveries, increased prices, developing the two-tier mail system where premium letters cost more and are delivered more quickly, and combining courier and mail delivery services.

Of these, the ending of Saturday deliveries appeals as a reasonable first step towards cutting costs that would have little impact.

Australia and Britain long ago abandoned weekend deliveries, and the United States is about to do the same. It is remarkable that it has remained part of NZ Post's contract with the Government for so long.

Indeed, it says much about the organisation's service ethos. But relatively little mail is delivered on Saturdays, and the service would hardly be missed, even by old people, who rely more on mail than other groups.

The NZ Post chairman, Jim Bolger, says the public "must expect change, there will be change". That is realistic. A postie delivering to every house in every street six days a week will surely soon be consigned to history.

But certain sectors of society, not least those who live in rural areas and have yet to be enveloped fully by the communications revolution, still place great store in mail delivery.

It would be rash to introduce radical change just yet. NZ Post's aim must be to build a sustainable postal business. Anything that would serve to drive customers away should be resisted by the Government.