New Zealand Post is looking at cutting back its delivery services from six to three days a week and reducing staff numbers as it seeks to weather a sharp and "irreversible" downturn in postal revenue.
A letter from NZ Post chairman Michael Cullen to State Owned Enterprises minister Tony Ryall shows the board wants to make fundamental changes to core postal operations.
It is seeking urgent changes to a 1998 deed requiring the state owned agency to run a six-day-a-week postal service for 95 per cent of New Zealanders.
In his letter to Mr Ryall, Mr Cullen said NZ Post had reached the point where it could no longer cut costs and launch new products to counter falling postal revenue.
The board had virtually exhausted all "short term fixes" and needed to start making fundamental change to its operations this year, he said.
NZ Post chief executive Brian Roche told Radio New Zealand the agency was considering cutting deliveries to three days a week.
The service was unsustainable as people increasingly used email for immediate communication, he said.
"That's very sad but it's inescapable."
Dropping the number of delivery days would see cuts in staff numbers, Mr Roche said.
"That's, again, it's incredibly sad but it's unavoidable."
An NZ Post statement said mail volumes were expected to drop about 40 per cent to just over 600 million a year in 2018.
The agency had endured the fastest ever decline in total mail volumes this year and would start losing money from 2015 if no changes were made, it said.
"There is no turning back from this decline - every developed country in the world is facing year-on-year falls in mail volumes of five per cent.
"If New Zealand Post did nothing to change its processing and delivery systems, those postal losses would start at $10 million, balloon to over $20 million the next year and keep on growing."
Profits from Kiwibank and growing parcel delivery services were offsetting revenue losses from traditional post, an NZ Post spokesman said.
However, they could not be used to offset postal losses without degrading the business and cutting off investment opportunities, he said.By Hayden Donnell Email Hayden