NZ Post transitioning to commercially sustainable prices for mail
Last year the government committed to providing $130 million over three years to NZ Post as part of a mail Contract for Services to cover projected financial losses from mail. This allowed us to continue to provide nationwide coverage for mail delivery at current service levels and with price increases lower than what they otherwise would have needed to be.
However, mail volumes have continued to decline. Our world has changed dramatically, with online communications increasingly taking the place of letters. Twenty years ago, we delivered over 1 billion mail items annually, which has been rapidly decreasing year on year – at the moment we deliver about 250 million items and this is continuing to drop. This is not unique to New Zealand, mail decline is happening across the world as more people communicate online.
As a result, NZ Post’s mail service remains commercially challenging while managing the large fixed costs of a mail service, and as well as continuing to address costs, we will need to move towards more commercially sustainable prices for mail.
This means that NZ Post will need to increase the price of sending letters by more than usual next year and in the few years following.
We’re still working through the exact price changes for different services, and we’ll communicate the new prices to customers in early 2022.
Importantly, there will not be any changes to the Deed of Understanding, which regulates such matters as delivery frequency, at this time.