By RICHARD BRADDELL
New Zealand Post has become the model for postal services from South Africa to Trinidad and Tobago. So much so that they have hired it to smarten up their own organisations.
But for a world-class organisation, its profitability has been decidedly ho-hum in the past two or three years. From the mid-nineties, when it routinely earned more than $70 million, profit has slumped to little more than $20 million.
And now, in April, it is in loss, supposedly because letter volumes were down by about 6 per cent on April last year.
But according to chief executive Elmer Toime, the position is worse than that. Volumes were down 6 per cent, but that is on budget.
Overall, they were down 19 per cent while NZ Post's courier business was also down 2 or 3 per cent on budget.
Lower volumes were no surprise since Easter and Anzac day fell on working days this year, while the impact of Inland Revenue's move to do away with IR5 tax returns was expected, as was the one-off nature of several big financial sector mailouts last year.
But poor business confidence is also to blame, resulting in a drop in advertising mailouts as businesses slash discretionary spending.
May is shaping up better.
Actual volumes are down a mere 6 per cent on last year, and that might be accounted for by the same factors that were forecast to hurt in April.
While NZ Post may be unhappy, its newly arrived competitors in the deregulated market claim business is booming.
Even so, they might be handling between them 3040 million items annually; a tiny amount beside NZ Post's 1.5 billion.
NZ Post's solution has been to slash overtime and send staff on leave.
But there is some suggestion that the ease with which NZ Post's bad news found its way into the public domain may have been less than accidental.
NZ Post's gripe is that standard letters too often reach their destinations in other towns faster than the two- to three-day limit.
Perhaps if customers knew they would take longer, they would be more inclined to use Fastpost at double the cost.
Overtime cuts and sending people on leave might also be a useful signal in the new employment relations environment.
Mr Toime dismisses any Machiavellian motivations. But he still has to do something.
While last year's lacklustre profit was not helped by some sizeable one-off costs, the decision to drop the standard letter rate from 45c to 40c "to meet the new competitive environment" has been a much bigger drag on profit.
The SOE is in the process of drafting its three-year business plan and a rise in the standard letter rate is not part of it.
But for how long is another thing.
<i>Between the lines:</i> Making stamp but not at home
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