Australia Post warns that letter delivery is declining as costs and digital communications rise

Australian households get just three letters every two weeks, meaning drastic changes, such as prices doubling and fewer deliveries, are likely if Australia Post is to avoid huge losses.

The company said the “unstoppable decline” in letter sending meant it was getting more expensive to deliver fewer and fewer letters every year.

Australia Post said it had had “significant structural headwinds” for years, losing a record $189.7 million to its letter business from July to December.

A surge in parcel business during the Covid pandemic masked the underlying challenges of such losses as accounts and bank statements increasingly moved online.

While the cost of a basic stamp increased from $1.10 to $1.20 on Jan. 3, this will only partially offset the significant losses caused by a 5.7 percent drop in the number of letters sent.

Australia Post CEO Paul Graham said the company’s Post26 strategy is the plan to address these issues.

“Every year Australia Post costs more to deliver fewer letters,” he said.

‘We know that letters are experiencing an unstoppable decline, largely due to digital communication, but the cost of letters is rising due to the increasing number of delivery points we serve every day.’

Graham said Australian households will be sending less than one letter a week by the end of the decade.

It also revealed that Australia Post paid $28 million in bonuses to executives last financial year – $4.4 million more than the profit made in the second half of 2022.

That second-half profit of $23.6 million was lower than a surplus of $199.8 million a year earlier, a massive drop of 88.2 percent.

As that period includes Christmas – traditionally a busy time for postal services – it is expected to report an overall loss by fiscal year end on June 30.

Australia Post said the ‘unstoppable decline’ in letter deliveries means it costs more each year to deliver fewer letters. Pictured is a postman on a motorcycle in Brisbane

Letter writing (photo) has become a lost art as digital communication takes precedence

Mr Graham said changes were needed to help Australia Post.

“Frequency (of letter delivery) is one thing we need to address, the average household now receives just one and a half letters a week,” he told the Australian Financial Review.

During the pandemic, emergency measures meant mail was only delivered every other day and 2,000 postal workers became parcel deliverers, but that came to an end when Covid restrictions eased.

Mr Graham said the feedback from customers is that they don’t see the value in delivering mail five days a week.

“Ninety-eight percent of all mail is business mail, your bank statement, your interest letter, your electricity bill, they are moving quickly to digital solutions,” he said.

He said Australia Post is discussing letter delivery frequency and the price of stamps with the government, postal union and other stakeholders.

Stamp prices in Australia are well below the average in comparable countries, meaning the price could more than double from the current base price of $1.20.

Such a change would require the support of the federal parliament and the approval of the competition regulator.