NZ Post plans for holiday parcel boom
"Uniquely this year, the usual slowdown postchristmas didn't happen as more and more people shopped online." Chief executive David Walsh, left
New Zealand Post is preparing for a massive surge in Christmas parcels, as the decline in letter volumes accelerates.
The state-owned postal company reported a rise in profits from continuing operations to $27 million for the year to June 30, up from $10m in 2016.
But the performance of the core postal business is one of increasing contrast.
Letter volumes, which have been sliding for years, dropped by 11 per cent, an increase from a drop of 8 per cent in 2016.
David Walsh, who became chief executive of NZ Post in May, admitted the company did not know whether the fall in letter volumes would increase in speed, or stabilise if bulk senders, which make up the majority of volume, continued at current levels.
Parcel volumes meanwhile continue to break records.
NZ Post said overall parcel volumes jumped 8.5 per cent to 70 million for the year. Volumes had surged into the Christmas period, without falling off into the new year.
‘‘Uniquely this year, the usual slowdown post-christmas didn’t happen as more and more people shopped online,’’ Walsh said.
‘‘The positive effects of lower costs across the organisation and revenue growth in parcels has more than offset the impact of letter mail decline.’’
Christmas 2017 is expected to be even bigger, with NZ Post expecting growth of 25 per cent to 30 per cent on last year.
‘‘We’re asking some of our customers what they’re expecting; we’re looking at some of the global trends. These are the sorts of volumes we’re planning for.’’
While Walsh said the company was confident it could cope with the increase, the price of failure would be high.
A team was established in February to identify where the business could be vulnerable to breakdown, from operational capacity, to IT stability and call centre capacity.
The move to online shopping meant volumes were likely to continue to increase in future years, Walsh said. ‘‘It’s a systemic change that we have to plan for now.’’
NZ Post’s international parcel volumes now generate revenue of about $160m, which is more than 17 per cent of group revenue.
The number of customers signed up to its parcel-forwarding business Youshop, which allows customers to buy from websites that don’t ship direct to New Zealand, is now 245,000, an increase of more than 50,000 in a year.
NZ Post maintained profitability largely due to cost-cutting, with group expenditure falling 9 per cent, or $88m, to $887m.
Walsh said some of the costcutting projects are not yet completed, meaning costs would continue to fall in the current financial year.