Australia Post flags fewer letter deliveries as mail volumes plunge and parcels boom

Australian letter deliveries will continue to decline as Australia Post tries to balance its booming parcels business against plummeting mail volumes.

Packages and services revenue hit a record $8.01 billion in the year to June 30, while losses from sending letters fell to $63.2 million from a $230 million hit the year before.

Cutting letter deliveries to every second day, a nearly 15 per cent fall in letter volumes to 1.42 billion and a stamp price increase to $1.70 helped soften the blow.

The new delivery model alone saved the company $188.3 million over the 12 months.

While AusPost was targeting even fewer mail shipments, there were no immediate plans to follow Denmark in ending letter sending altogether, chief executive Paul Graham said.

“We’ll continue to deliver letters until the last letter needs to be delivered,” Graham said.

“What we want to continue to do is to reflect a delivery frequency that reflects the decline in mail.”

Mail would eventually be delivered once every three days and ultimately once per week, but it was unclear when.

The postage carrier handed down a pre-tax profit of $31.8 million, up from $18.8 million the year before.

The figure would have been a $107.6 million loss without $140 million in property divestment returns.

Despite booming parcel revenues, margins were tight and integrated ecommerce platforms like Amazon continued to grow their local presence.

“We are seeing margins squeezed by global competitors ... and the entrance of new competitors who are targeting our metropolitan volume and doing so at very low costs,” Graham said.

“We’re investing in our network heavily to ensure we can provide Australian retailers with the best chance to compete against global platform players.”

Australia Post built 14 new parcel facilities over the course of the year, including 10 outlets in regional and remote locations.