Companies to face Post Office in court
One of the biggest potential threats facing the local courier industry is a dispute with the South African Post Office (Sapo) which claims that it has the exclusive right to deliver small packages weighing 1kg and less.
The dispute started several years ago when Icasa’s Complaints and Compliance Commission ruled that the Post Office had the exclusive right to carry packages weighing 1kg and less as they were deemed “reserved postal services”.
In 2019 a court found that courier company PostNet was in contravention of the Postal Services Act. PostNet secured an interdict which meant it could continue to deliver packages under 1kg until the case is heard in the Gauteng High Court. Industry body the South African Express Parcel Association (Saepa) and online retailer Takealot, the latter which operates its own courier to deliver packages, have subsequently also joined the litigation.
It's no secret that the Post Office is technically insolvent, running up billions in losses each year. During his annual budget speech in February finance minister Enoch Godongwana announced that the Post Office had been allocated R2.4bn to close numerous branches and retrench 6,000 workers over the coming months. SA Post Office CEO Nomkhita Mina has also been reported as saying that the utility is looking to reduce it working hours and retrench employees in a bid to cut its wage bill.
The dire state of the Post
Office as a business certainly does not inspire confidence that it has the capability to assume responsibility for express deliveries weighing less than 1kg, particularly given that only 68% of the Post Office’s mail got delivered in 2022.
As Saepa CEO Garry Marshall points out, the outcome of the case — which is still awaiting a court date — has significant implications for the entire express delivery industry.
“Most businesses would be reluctant to send sensitive business documents or other high-value items via the utility when they have the option of sending it via an express delivery logistics provider who is able to deliver the package by a specified time and can provide trackability of the package and proof of delivery,” says Marshall.
The Post Office has alluded to a system where private courier companies can act as its agents and deliver parcels under 1kg for a fee. Marshall says the industry would not be in favour of this scheme given that it essentially amounts to an additional tax on the industry.
“We believe there is a role for the Post Office but we don’t believe we are in the same business as it is. Added to this, we don’t believe the Post Office has the capacity to provide the same level of service as the courier industry or that it can compete with the reliability provided by the industry.”
Marshall says the industry would welcome the Post Office challenging it on a level playing field, but will vehemently resist any efforts by the postal utility to hide behind legislation.