Australia Post heads towards the red

Australia Post has announced that its profit for the first six months of 2014/15 has dropped by over 50% thanks to mounting losses in the letters business. The decline in domestic letter volumes is well documented and comparable to the decline in many other developed countries.Australia Post is likely to return a loss for the full financial year for the first time in 30 years. On the back of these results, Australia Post is renewing its call for changes to the letters service.The proposed changes relate to delivery speed and pricing freedom. Australia Post is pushing for a two-speed delivery service, where it would be free to set prices for the "priority" service, while the pricing for the slower "regular" service would remain regulated by the ACCC.Australia Post has not provided detailed information on how the pricing differences would affect mail volumes and in particular stamp sales and bulk mail revenues at LPOs. POAAL is very aware of the importance of stamp sales and bulk mail to LPOs and wants to ensure that Australia Post does not damage the letters business at LPOs.POAAL understands that Australia Post is not proposing any changes to delivery frequency.POAAL supports the concept of postal reform. It is obvious that without changes to the letters service Australia Post will incur greater and greater losses.If Australia Post starts to consistently record losses, this could diminish its ability to invest in new technology and infrastructure to remain competitive in markets such as parcels, banking, trusted services and bill payments.While the post office network may have been founded on letter delivery, its future lies in having diversified income sources with potential for growth.Regardless of the proposal to reform the letters service, these latest results show that it is urgent that new business streams are found. And any new transactions must be available at all LPOs across Australia.POAAL has repeatedly stated that Australia Post must transform its business to become relevant to 21st Century Australia. Australia Post must seek out new business streams that will benefit Licensees and their customers. Digital services such as the Digital Mailbox are all well and good, but where does that leave the bricks-and-mortar post office?Sales teams must look for new business, instead of transferring customers away from LPOs to corporate outlets. That’s not how to grow a business. Ultimately, Australia Post needs to focus on finding new customers and new revenue streams.