NZ Post competitor able to go for its business mail jugular

3 November 2013

New Zealand Post competitor able to go for its business mail jugular in a new twist on privatisation

Freightways subsidiary DX Mail is targeting New Zealand Post's business mail senders with a promise of next day, across town, 5 day a week delivery. Last month New Zealand Post abandoned its own next day delivery service and last week announced scaling down its standard mail delivery to 3 days a week from mid 2015.

Business mail is the life blood of New Zealand Post's postal operations. New Zealand Post's announcements have provided DX Mail with the opportunity to go for New Zealand Post's bulk business mail, revenue stream jugular. Along with its 5 day a week delivery service DX Mail is also planning to extend its delivery network to every town and city in the country.

Private sector mail companies are able to undercut New Zealand Post's prices and service because the Government has not compelled the private sector competitors under the Postal Services Act 1998 to meet the same social obligation as New Zealand Post’s mandatory provision of a nationwide service. As more of New Zealand Post's mail business is selectively taken over by private mail companies the processing and delivery of a substantial proportion of mail is effectively being privatised.

A further business disadvantage for New Zealand Post is the requirement of the Government's Deed of Understanding with New Zealand Post for the company to effectively subsidise private sector competitors. New Zealand Post is required to enter into contracts to deliver mail items collected by the private companies which the private companies have chosen not to deliver themselves. DX Mail has full access to New Zealand Post's nationwide delivery service for areas that DX Mail does not directly service itself.

While New Zealand Post is talking loudly about scaling down its core mail processing and delivery business, DX Mail is quietly getting on with the business of the mail business.

The taxpayer may well be left with a skeleton New Zealand Post mail service to fulfil the Government's Universal Postal Union obligations to provide a nationwide delivery service, while increasing amounts of its most profitable bulk business 'life blood' mail is bled away by private mail companies.

Unless an incoming Government amends the Postal Services Act the processing and delivery of business mail will have largely been privatised and there will not be much left of New Zealand Post's mail operations left to sell.

ENDS

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