By GREGG WYCHERLEY
The deregulation of the postal industry has produced its first major casualty - private post company National Mail has closed its mail distribution operations with the loss of 200 jobs.
The company's dark-blue mailboxes will disappear from the streets of Auckland and Wellington.
National Mail chairman Richard Flower said yesterday that the company would stop trading on December 22. "National Mail was formed to challenge New Zealand Post's entrenched position in postal services in New Zealand," he said.
"While we have succeeded in implementing computerised mail sorting and distribution using the latest technology and operating systems, we have not yet been able to convince enough major high-volume customers to shift to us, and have also faced vigorous price competition from NZ Post."
Mr Flower said the company was still trying to sell the business, or its mail operations, but talks with potential investors, here and overseas, had not produced any firm offers.
Chief executive Antony Fowler said staff would get help to find work.
The company had predicted losses until it secured major contracts, but had underestimated the difficulty of competing with NZ Post in a conservative marketplace.
In its prospectus, the company forecast a September-year loss of $5.45 million to be followed next year by a net profit of $2.2 million.
"What it really comes down to is timing - we still reckon it's a pretty good business, but there's too long a gap between now and break-even," said Mr Fowler.
The company was launched in Auckland in mid-1999 and began delivering to Wellington in August.
A share float early this year raised $12.7 million. It has about 500 shareholders. On June 13, National Mail announced a maiden net loss of $2.6 million for the six months to March 31.
NZ Post spokesman Simon Taylor said the postal industry was competitive. Low barriers to entry enabled more than 30 new players to enter the market since deregulation in April 1998.
"It's a tough, competitive market and it's been a difficult year with declining mail volumes due to poor economic growth and the increasing effects of electronic substitution."
He said NZ Post had needed to diversify into areas such as international consultancy. "Our mail volumes have been affected as well and we've had to make smarter use of our transport networks and mail processing technology."
NZ Post was required by law to allow competitors access to its distribution network, and was contracted to make deliveries for National Mail outside Auckland and Wellington.
National Mail has complained to the Commerce Commission about alleged predatory pricing by New Zealand Post.
Mr Fowler confirmed that the company had put in a complaint about New Zealand Post's pricing, which the Commerce Commission was investigating but said it was peripheral to the failure of the business.
One postal company that is thriving under deregulation, mail delivery franchise Pete's Post, said it was possible to take on New Zealand Post.
Spokesman Murray McBeth said he was surprised to hear National Mail had folded.
"They pumped close to $14 million into a business to take on New Zealand Post - with those resources you would think they had a fairly good chance."
He said Pete's Post was successful because it targeted residential and small-business customers, rather than the large clients which National Mail had been going after.
"Our model relies on a vast number of customers using a small amount of mail - if we lose one or two back to NZ Post our business is not going to be affected."
However, he was concerned the collapse of National Mail might cause potential clients to think twice before giving their business to a NZ Post competitor.
"It's disappointing them falling like that and losing all that money, it does affect our business.
He said that while NZ Post had been laying off staff in the regions, Pete's Post had been able to expand, operating franchises in 11 cities and delivering 14 million pieces of mail a year.
Last post for National Mail
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