ACCC allows Australia Post to raise business prices

The Australian Competition and Consumer Commission (ACCC) has allowed Australia Post to raise the prices on a number of its business monopoly mail letter services from 4 July 2011.

The price increase includes PreSort services which reward businesses that mail in bulk and take the time to sort and barcode parcels before lodging them. The 60 cents basic postage rate on ordinary letters is not being increased.

“Informing this view, the ACCC notes Australia Post is expecting to incur losses on its monopoly services,” said Graeme Samuel, chairman of the ACCC. “The ACCC has also taken into account the benefits of the revised proposal, including the changes to Off-Peak Services.

“Beyond this price notification, the current approach to assessing prices, including the allocation of costs, needs to be re-examined given the environment of declining demand for traditional letter services,” Samuel said. “The ACCC and Australia Post have agreed to re-examine the current approach before any future major price notifications.”

Australia Post has also made changes to ‘off peak’ letter services to make them more attractive to bulk mailing business customers, which are anticipated to result in reducing the delivery window from four business days to two. The initial pricing proposal has also been changed to include smaller increases to off-peak business and mail services. Small regular letters will increase from 42.7 cents to 45,7 cents and off-peak letters from 41.6 cents to 41.9 cents.

“We think it’s a modest price increase that is fair and reasonable given the current pressures facing us,” said Jim Marshall, executive general manager of postal services. “Every year we are increasing our delivery points by 200,000 new addresses and predict that in 10 years it will be the equivalent of another Queensland being added to our delivery network. At the same time, costs keep increasing, and letter volumes continue to decline, with our letters business losing over $170m last financial year.”

For businesses that send 2,000 letters a year, Australia Post estimates that the price increase will result in an extra cost of around $30 a year.

“While the increase will vary, we predict the average increase for business customers will be around 3.8 percent,” Marshall said.

Following the recent introduction of fuel surcharges by some transport companies, Australia Post will also be introducing a fuel surcharge in July. The surcharge will equate to a 1% increase in price, but will not apply to domestic letters or the 60 cent stamp.