- - - - - - - - - - - - -

Wednesday, January 30, 2013

Post post age

NZ Post is intent on slashing services, which their PR describes as "flexibility".

--The current Deed was last significantly updated in 1998, some 14 years ago, at a time which pre-dated the digital revolution. That revolution has resulted in the rapid expansion of internet-based products and services which have fundamentally changed the way people communicate, do business and shop.
The last decade has seen an unprecedented drop in mail volumes.

“We are seeking an agreement that gives us the flexibility and certainty to be able to plan for that future. Without that flexibility, standard letter mail and postal outlet services will incur significant losses.
“The public submission process over the next six weeks will further inform the decision on the final nature of the agreement with the Government.
Lots about "flexibility" nothing at all about the human consequences: they are contemplating the largest mass redundancy since the days of Rogernomics. And there's Mickey fucking Cullen at the head of it all.

Doing a back of the envelope exercise: the halving of delivery equating roughly to halving the delivery workforce means they will have to sack 3,500 staff. This comes after a series of aggressive price rises for letters.

They don't want to boast about the extent of the rip off, so I've had to compile this from their own press releases:

Medium letter standard postage price | date of change
40c | ??/??/1991
45c | 05/04/2004
50c | 01/05/2007
60c | 01/10/2010
70c | 01/07/2012

At worse the % inflation change from 1991 to 2012Q4 would mean 40c would be now 64c and at best from the last time it was 40c in 2004Q2 means it would be 50c. The price has out-stripped inflation over the last 20 years and over the last few years has rocketed away (from 09/2010 @50c to 07/2012 @70c the rise represents a 40% price rise whilst inflation over the period was only 5.4%.  These rises are driving customers away, making a bad situation worse. The strong signals NZPost is sending to customers in this market is to stop using the mail service! Is it really any surpise if they do? Anyone else been hit with a 40% rise in a product cost over the last two years and not found an alternative? The problem is for many regular mail items there is no viable alternative to delivery via post and so the pricing exercise is a form of monopoly exploitation.

The corporate strategy follows a typically textbook response of steeply ratcheting up the price of core products (where the demand is relatively inelastic) and reducing the core costs of product (labour costs) by cutting the quality of the product.  The result, as in most industries where they act defensively and institute austerity instead of a growth concept, is an accelerated slide downhill. You pay more, but get much less. Basically you're being ripped off. And I note that the other leg of the big 'ole textbook of corporate austerity survival is the firesale of assets - and the press releases would indicate they are rapidly divesting themselves of their overseas and domestic positions. They are circling the wagons.

NZ Post is justifying it all in terms of mitigating reduced mail volume - a reduction which they squarely blame on electronic communications. Certainly, undeniably this is the main reason, but it has been exacerbated and sent into a terminal spin by the relentless price rises, driving their bread and butter business away. They have lost confidence in themselves. Allowing the arse to drop out of the mail system would be a management - and ultimately - a governance failure.

UPDATE 31/01/2013:
Forgot to mention the third leg of the defensive monopoly's corporate playbook: government and regulatory activism and litigation against competitors based on the regulations. This is what the renegotiation of the Deed with the government is all about. Whinging about the other postal services is a precursor to litigating them into a stasis. Think Telecom and what their behaviour has been since privatisation.

... and just found this graph from Te Ara on the history of NZ mail volumes:


At 30/1/13 7:52 pm, Blogger Nitrium said...

These rises are driving customers away, making a bad situation worse. The strong signals NZPost is sending to customers in this market is to stop using the mail service! Is it really any surprise if they do? Anyone else been hit with a 40% rise in a product cost over the last two years and not found an alternative?

I suspect you have it exactly backwards. Chicken and the egg type deal. I suspect they've been driving up the prices in an attempt to stave off redundancies - i.e. they are trying to increase margins specifically to retain the existing workforce despite ever decreasing number of letters (this is exactly the opposite of your viewpoint). Perhaps it has backfired and has merely served to further decreased volumes, I don't know. You obviously think that if they decreased prices to say 50c (or maybe even 20c, 10c, 5c...?) then the volume of letters would increase such that NZ Post would once again become profitable and no redundancies would be necessary. I humbly suggest you are very, very much mistaken. Even if sending a letter was FREE, it would still be MORE expensive (due to cost of envelope and paper) AND much slower than an email. Think about it.

At 30/1/13 8:22 pm, Blogger Nitrium said...

Just to hammer my point home, there is a very good analogous industry that got killed for exactly the same reason: photography.
You would argue, I presume, that it was due to greedy film companies (e.g. Kodak, Fujifilm) and photo developers (our local chemists) that caused the destruction of the physical film photography industry, and all the redundancies it undoubtedly caused. I argue that they were destroyed because they turned out to be more expensive than the digital alternative which is FREE.

At 30/1/13 10:33 pm, Blogger frances jane said...

snails & wofs are sacred & should be left alone
if it ain't broke.....


Post a Comment

<< Home