More post offices in Sydney, Melbourne to shut amid $182m cost of snail mail
By Jessica Yun
Australia Post’s chief executive has signalled more post offices in Sydney and Melbourne will close in the coming years as he focuses on speedier parcel delivery and attempts to stem losses from its letters business amid a decline in snail mail and foot traffic.
Cyber Monday, Black Friday and Christmas sales led to a record number of nearly 100 million parcels delivered across Australia in the six months to December, driving a 42.4 per cent lift in Australia Post’s interim net profit to $33.6 million. Revenue from the parcels and services business lifted 1.3 per cent to $3.9 billion, but its ailing letters business recorded losses of $182.1 million.
Australia Post CEO Paul Graham said to expect more full-year losses in future years.Credit: Eamon Gallagher
Chief executive Paul Graham said the retail store footprint of 4271 would be “slightly smaller” by the end of the financial year, pointing to a high concentration of post offices in certain metropolitan areas such as Melbourne’s Brunswick and Sydney’s Darlinghurst, where there are more than 70 post offices within a 7.5-kilometre radius.
“They’re the two [cities] that have significant overlap, built up over many, many decades,” Graham said.
“We appreciate people get quite attached to their local post office and quite emotional when that change occurs, but that change is occurring because people are simply not visiting the post office as much as they used to.
“They’re not doing transactions over the counter, they’ve gone online, and obviously, they’re looking at different ways of accessing those services.”
As of this year, Australia Post ceased daily letter delivery and delivers ordinary mail and unaddressed letters every second day in some metro areas. Parcels, express, and priority mail are still delivered every business day.
Residents are now receiving two letters a week on average, with the parcel service describing the decline as “unstoppable”. Over the past 12 months alone, letter volumes have declined by 11.9 per cent. Over-the-counter transactions slid 4.1 per cent over the half.
“It is all about parcels, that is really what the focus is, and how we use our postal network as an extension of our parcel business,” said Graham.
The government-owned enterprise also achieved $140.8 million in cost savings and will be looking for more ways to cut costs, which are hovering around $9 billion.
”We have been very disciplined in managing our costs in a high inflationary environment; we’re focusing on simplifying our operations and making the changes needed to build a sustainable business,” Graham said.
Paul Graham joined Australia Post in September 2021.
The postal service is in the midst of executing its modernisation strategy, dubbed Post26, aimed at simplifying its services, making it financially viable and strengthening its digital experience. It has also been pushing for the government to make a number of reforms to be financially sustainable.
On April 3, the basic postage rate will increase from $1.20 to $1.50, subject to finalising regulatory processes, to help mitigate letter-delivery losses and the rising cost of delivery.
Australia Post is in a stronger position now than it was 12 months ago, Graham said.
The postal service axed about 400 jobs last year in a bid to streamline head office operations.
In August, Australia Post launched a next-day delivery service in metro areas for a select group of retailers to compete with speedy delivery times from online marketplaces such as Amazon.
Graham joined the postal service as its new chief in September 2021 following the resignation of former CEO Christine Holgate. He previously spent five years as Woolworths’ chief supply chain officer.
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