The financial year 2013-14 has been seen as a turning point for Australia Post. Over the period January to June 2014, Australia Post booked its first ever half-year loss since becoming a government owned enterprise in 1989. This was a direct result of heavy losses occurring in Australia Post’s mail business, losses that were in excess of profits generated across the rest of its operations.
Losses in Australia Post's mail business, driven by declining mail volumes as people and organisations switch from traditional letters mail to digital alternatives, is having a major impact on the financial viability of Australia Post. There are also substantial costs associated with meeting Australia Post’s Community Service Obligations (CSOs) that govern delivery frequency, delivery timetables, public access, and pricing. Remarkably, Australia Post’s CSO requirements were last reviewed 16 years ago, well before the acceleration of digital transformation across the services sector.
To offset these losses, Australia Post has been looking to grow its business in the developing digital environment, including through opportunities presented by the growth in e-commerce, and through strategies that make strategic use of Australia Post’s extensive network of retail outlets. It has also asked the Government for new tools to reduce the scale of the losses in the letters business, including the freedom to set more cost-reflective prices and more freedom in scheduling deliveries.