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Australia Post Can Rescue 2009 Price War

15 Jul 2009

David Docherty, director of D&D Mailing Services, has always championed the cause for an equitable outcome in relation to postal price hikes and their impact on publishers. His recent overview of the current situation and future direction sent to Publishing Edge states:


"The recent price rise and notification process that Australia Post has recently implemented has caused a unanimous and unprecedented cry from Publishers throughout Australia.


On June 1 I received notification from Australia Post that the PrintPost service was to increase by 3.6% and that Line haul charges were also being increased by 3.1%. This notification advised that these increases were to take effect as from 6 July (5 weeks notice). The overall impact of both of these increases to the majority of Publishers throughout Australia is approximately 4.6%.


Australia Post had heeded the call from Publishers that they would prefer to be hit with a smaller, annual increase rather than incurring larger increases every two or three years. This had been proposed by Publishers as it is simply easier to manage budgets with a regular increase than being hit with "catch up" increases on an ad-hoc basis by Australia Post.


The problem with the 2009 increase is that it comes 9 months since the last "annual" increase and at a time where the world is in its worst economic crisis since the great depression.


It hits Publishers at a time where our Prime Minister has warned of difficult times and has called upon businesses within Australia to pull together to see our nation through these hard times. The Government is introducing stimulus packages to keep industry afloat and fighting off scandals from opposition spokesmen with regards to favouritism to various industries such as the Car industry claiming crisis and job losses.


The PrintPost service is a non reserved service and as such does not require ACCC approval. This leaves the industries that use this service without any review process. Publishers face the prospect of reducing print and distribution quantities along with cutting staff to cope with further increases in costs - notwithstanding the latest increase in PrintPost Distribution prices.


Cutting quantities is not in the best interest of Publishers or the industries that serve them and it certainly is not in the best interest of Australia Post. Reducing the volume of publications throughout the Postal Network is cutting off and ignoring the flow on effect of additional mailings to Australia Post and pushing more publication resources on to the web.


Australia Post did discuss these increases with the relevant representative bodies within the industry under a confidentiality agreement which did not allow the bodies to discuss these increases with their own members or make any matters discussed in these meetings public. One major representative body signed the agreement, understood the date of effect and the quantum of the price hike and did not oppose the increase, obviously without speaking to its members.


It was D&D Mailing Services, through my letter to our clients (and subsequently released by Publishers to the media) that any real exposure was given to this price increase. A copy of that letter and a summary of customer comments can be read by clicking here.


Australia Post is currently talking to numerous industry bodies about the proposed increase to "Standard & Large Letters" and its subsequent services (under the same confidentiality agreements and restrictions) which will require ACCC approval which will further impact Publishers budgets.


The question must be asked that if the ACCC rejects this proposal on grounds of the current economic crisis, then will the increase to non reserved services such as PrintPost be reviewed?


I understand that Australia Post has internal cost pressures and are committed to strong "Enterprise Bargaining Agreements and are compelled to pass these salary increases on to employees along with higher provisional allocations to their balance sheet but these are internal costs and require strong economic management to handle this rather than simply putting prices up for external revenues to pay for it.


Australia Post, at recent meetings with Publishers also claimed that the PrintPost service is a non reserved service and is therefore open to competition.


On one hand it is technically correct but in reality there is no real competition when it comes to delivering fully addressed publications.


Whilst the local Scout Group is able to form an expansive distribution network which covers a range of approximately 3 kilometres or until little Johnny loses his way as he has forgotten how to use his compass from week one of his training for his first Merit badge, it is not what you would call "a competitor".


Even the wide ranging band of Newsagents can't really provide a reliable distribution network as it is not their core business and are simply not interested as there is no money in it for them to do anything different. ACPINetwork attempted these only 2 years ago - and failed.


The so called competitive distributors only provide "a real" service for unaddressed mail.


Australia Post is without doubt the best Postal service in the world and does a remarkable job with distribution covering an enormous amount of kilometers servicing a relatively small population.


However, it must recognise the current economic crisis and assist the publishing industry and associated industries and put a "hold" on prices.


Both Australia Post and Publishers' future growth is reliant on each other and together we should look at ways to improve and build each other's business.


It doesn't have to be a war, we can actually work together to build each other's business!"



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