It's back to business for our couriers. But it's not quite back to normal business just yet.
This month we expect to return to 90-100% of our normal freight volumes for the businesses we operate; New Zealand Couriers, Post Haste Couriers and Castle Parcels. Not two or three times the volume, as some might think.
Our businesses suffered a significant drop in courier volumes during the lockdown period. Volumes plummeted, falling 65%, then levelled out at around 50% of our regular volumes for the month of April up until the 27th when the country entered Alert Level 3.
I'll go into why it's not busier than normal later. First, I want to clear up some of the misconceptions around courier payments.
We have worked very hard to keep all our couriers engaged with our businesses, despite the downturn in volumes. We have been supporting them in a number of ways, including providing top-up payments over and above the standard earnings for services provided.
Let me explain.
Our couriers are independent contractors. Like any other self-employed person who suffered a loss in revenue over any of the relevant months, they were entitled to apply for the Government's wage subsidy. The courier companies didn't apply for the wage subsidy, receive it directly, take it from contractors or spend it on their behalf.
During the seven-week lockdown period, our couriers were paid in full for every item they picked up or delivered.
Two days into the lockdown when volumes had dropped to 35%, New Zealand Couriers provided an additional top up to their couriers over and above their standard earnings, and in addition to the Government's wage subsidy (where they applied for it).
The courier company ran some modelling and made some calculations in an effort to come up with a fair supplementary payment to help its couriers during a particularly challenging time. Top up payments were also supplied if a courier didn't operate on a given day but was rostered to work during the month.
The communication to couriers on this was admittedly somewhat clumsy in our haste to get these measures in place and the calculations weren't explained very well, but the intent was honest, generous and in good faith, resulting in extra top up payments made by the company to couriers in April, in addition to the full payments for their pickups and deliveries.
This calculation benefited nearly all of our couriers; however we are now aware of an issue where we made the wrong calculation in a handful of cases (by including their linehaul payments) and we are fixing this issue with our contractors now.
Throughout April and late March, our couriers delivered mostly essential items; PPE gear, Covid-19 tests, education packs and emergency food packages for families. We delivered charity items including emergency food packages for families (at cost) to put courier income
in the hands of our contractors, leaving no margin to contribute to depots, aircraft, staff, IT and so on.
Big changes in freight volumes
With many people continuing to work and shop from home, we have seen the demand for home deliveries increase while business deliveries (formerly 80% of our volume) have fallen, especially during the lockdown period. Items delivered to residential addresses are slower
to do and therefore more expensive to perform than business deliveries.
But we've also been delivering largely on time – not perfect - but 98% of New Zealand Couriers deliveries are completed within two business days.
The model of a courier driver being a business owner and a contractor has worked well for more than 50 years. Today, it delivers average courier earnings of $103k per annum. We have made many positive steps to keep increasing this income. It allows contractors to leverage their van as a work and private vehicle. It allows them to take time off by sharing the run with another driver; a spouse, son, daughter, cousin or friend.
For many, it is as much about being in business as it is about a lifestyle choice and we support these choices.
- Mark Troughear is chief executive of courier company Freightways.