Our online retail obsession won’t save Australia Post

Australia Post boss Paul Graham says the boom in e-commerce and parcels is not enough to save the ailing business burdened with ballooning losses in its letters business, with the fixed costs associated with delivering mail daily too high to be sustainable.

Graham told an audience at an event for the American Chamber of Commerce in Australia on Thursday that the postal service was at a crossroads as it spent more and more money to deliver fewer letters to Australians, while foot traffic was declining across its post office network.

Australia Post has been a beneficiary of the nation’s growing obsession with online shopping, with the group delivering over 500 million parcels in the 2022 financial year. But Graham said the boost wasn’t enough to counter the mounting costs of fulfilling Australia Post’s obligations to deliver paper mail across the country.

“We have a fixed cost network, we have community service obligation [on] which we spend $348 million, primarily focused on the mail business. Our whole organisation is geared towards meeting that 98.5 per cent on-time mail delivery,” he said.

“It sucks up a lot of resources, we are delivering to ever single community, every single day. We have 15,000 street posting boxes that have to be cleared every single day. A lot of those boxes are empty because people aren’t posting stuff.”

Australia Post is careening towards a loss for this financial year after losses from delivering letters increased to $189.7 million over the past six months.

The future sustainability of the carrier is the subject of a government review and a discussion paper on the modernisation of Australia Post. Submissions on the discussion paper close at midnight on Thursday.

The review will put a range of significant changes to postal services on the table, including raising the price of stamps and reducing the frequency of delivery.

One key issue up for discussion is whether requirements set out for Australia Post in 1989’s Australian Postal Corporation Act are fit for purpose in a world where households are sending less and less paper mail.