Are we in for another postal hike?

We put this question - and others  - to NZ Post’s GM Mail, Matt Geor. His full interview is below, but the main points were:   

  • There will be another price increase, announced Feb/March 2020.
  • Geor's not sure yet on the size of the increase, but has given us a range to work with. 
  • There will be no MPA discounts, but NZ Post will give free database cleansing and SOA to MPA members to help them improve address data quality and keep costs down that way. 

So, are we in for another price hike next year?

Yes, unfortunately there will be another price increase in 2020. Mail continues to struggle financially due to the ongoing volume decline, which is continuing to track at around -15% pa.  This is a global issue for postal organisations..

While $70-80M+ pa has already been taken out of the mail delivery business, it is largely a fixed-cost business with a need to support nationwide delivery regardless of volumes. So, further cost reduction opportunities are challenging without making significant changes to the mail service, which we are trying to avoid due to the impact on customers.  

This leaves price increases as the primary option to minimise the financial losses.

Can you give us an idea of how much?

We’re planning for a late Feb/early March announcement (similar to last year).  This is the earliest we can announce changes to the market and provide sufficient time for the pricing review process (noting we currently only have 4 months of data to work with following the July 2019 changes), communications planning and implementation.   

It always feels dangerous to even hint at the likely price increase before it's confirmed, as many factors can influence the final outcome between now and the formal announcement (some have even surfaced while I've been writing these responses!).  The last increase was circa 12% for most publishers.  This will be a good place to start with your planning.  The "good day" scenario might be high single digits, and the "bad day" scenario might see it heading up into the teens.

MPA members are good NZ Post customers, and we used to get a healthy discount. Any chance we’ll see that again?    

No sorry.  Bulk mail (this is what the large volumes of mail you lodge are classified as) discounts will not be returning in the foreseeable future for any customers in any industry.  These were removed across all customers/industries because:

There were so many customers receiving discounts that most bulk mail volume was discounted. So discounts were just adding unnecessary complexity to all our financial processes - it had effectively become a two-step rate card.
The Bulk mail rate card already recognises volume with significant discounts over standard rate mail prices (averaging more than 50% in most cases).

Removing the discounts enabled us to simplify our pricing and financial processes to reduce administration and management costs.

These postal increases are tough for our members. Is there anything they can do?

The best thing is to get your address data quality as high as possible.  There is always a strong focus on address quality at NZ Post as poor addressing results in significant additional work through both processing/sorting and delivery.  Expect some changes to be announced in the new year that will place greater emphasis on address quality via the SOA (Statement of Accuracy) process - don't worry, there will be sufficient notice for any significant changes.

Will you offer MPA members free database cleansing and SOA again this year?

Yes, we will.  And please make the most of it.  Our team have helped MPA members make significant improvements in the address quality of their databases over the last couple of years.  We will work with the MPA to distribute details of this in the new year.

Last year you bought in zonal pricing on Volume Post, which our members often use for subscription renewal letters. Are we going to see more of this approach?

Zonal pricing was introduced on some bulk mail products July this year.  It charges different prices for deliveries to four different pricing zones throughout NZ.  There are lower prices for deliveries to metro/urban areas and higher prices for deliveries to provincial/rural areas, reflecting the differences in actual delivery costs.

We are not currently planning to introduce Zonal Pricing on PrintPost in 2020.