Post Office ‘unlikely’ to trouble sector’s market share
The South African Post Office’s dire financial position continues to cast doubt on its future sustainability or its ability to successfully take on the courier industry.
In 2018, the Post Office claimed that it had the exclusive rights to deliver packages weighing 1kg and less based on the Postal Services Act. This assertion was strengthened by a 2019 Icasa order which held that courier company PostNet was in contravention of the Postal Services Act. The local courier and express parcel industry, together with e-commerce stakeholders, has previously warned that this could spell disaster for both the courier industry and e-commerce players.
However, in early 2023 the Post Office was placed in provisional liquidation with cabinet subsequently approving that it be placed under voluntary business rescue. Prior to the Covid-19 pandemic there were about 1,300 Post Office branches around the country. Since then, more than 300 branches have closed.
The organisation has not made a profit since 2004. Its business rescue practitioners have said the Post Office’s lack of investment into its IT and data centre infrastructure, inefficient mail processing equipment and unreliable logistics fleet make it difficult for it to meet the needs of customers.
In December 2023, a business rescue plan was approved by the majority of creditors. The plan includes reducing the number of Post Office branches to about 600, cutting staff numbers and repurposing the state-owned entity but makes no mention of delivering packages weighing 1kg and less.
Garry Marshall, CEO of the SA Express Parcels Association (Saepa), says it is unlikely that the Post Office’s business rescue practitioners will be fighting for the Post Office to get a share of the courier industry’s market. “The matter is in something of a holding pattern for now,” he says.
The Covid period proved the value of the courier industry. “While the Post Office closed down during the pandemic, the courier industry continued to provide a much-needed service during the period,” he says.
THE PLAN INCLUDES REDUCING THE NUMBER OF POST OFFICE BRANCHES TO ABOUT 600