Posties, a point of view by a printing company. Industry going postal over bulk mail price hikes 6 Mar 2014 | Nic White | Comment now Printers and mail houses are increasingly angry about the Australia Post bulk mail price rises coming on March 31, and are fearful it will prompt direct mail advertisers to slash print volume to stay within budget. Australia Post is planning price increases for bulk mail of more than 13 per cent for the types of mail most critical for direct mail campaigns many printers rely on for revenue. BlueStar print and direct mail general manager Matt Aitken says Australia’s third biggest printer continues to be disappointed with Australia Post’s behaviour and its effect on print business. “They continue to put prices up and we continue to see a reduction in client budgets and spending – clients are not going to increase their budgets so they will lower volumes which will continue to put pressure on the industry,” he says. “There is every indication that they will continue to raise prices, as they did in July and April last year.” [Related: More Australia Post news] Lamson Paragon general manager Rodney Frost says one of his big advertisers is switching to exclusively electronic catalogues in 2015 as a result of rising mail costs. “Advertisers and transactional mailers are not going to increase their pre-signed-off budgets and so will simply lower volume and incentivise their recipients to receive correspondence by non-physical means,” he says. “I’ll be surprised if this doesn’t accelerate the decline of mail volumes and the switch to non-physical delivery – and naturally if volume declines, printing demands will also feel the pain.” Other industry sources fear Australia Post is trying to get rid of its mail business by pricing it out of the market, getting to a point where there is not much difference between presort bulk mail and normal letters so it can reduce the margins for private mail houses. One industry figure says: “When you’ve got Communication Minister Malcolm Turnbull saying everyone should get digital letterboxes, you can’t see much motivation for Australia Post to grow printed mail, it’s going to push digital instead. [Related: More direct mail and marketing news] The Mailing House director Lindsay May says many years ago Australia Post did have to seek ACCC approval for bulk mail price rises and tended to raise them by 10 per cent every three years in line with CPI. When the industry complained these were too much to handle at once, the Major Mail Users of Australia (MMUA) and Australia Post came to a gentlemen’s agreement to increase prices by three per cent every year without needing ACCC approval. Now that the MMUA is defunct, May says Australia Post is now abusing the agreement and given the industry less than a month of consultation for a massive price gouge. “Although no one likes an increase this agreement has now been debased with a 13 per cent hike in our main product line of regular delivery mail,” he says. Others believe Australia Post is losing money because of gross inefficiencies in its operation, with too many trucks carrying not enough mail, but it is too heavily unionised to downsize staff. However, it is very difficult to analyse Australia Post’s business as its books are exempt from Freedom of Information requests. Unlike the PIAA, Aitken, Hay and others in the industry believe the stamp price rise to 70c does not go far enough and needs to be moved up to $1 as soon as feasible to improve the discount of bulk mail. May says: “The stamp increase was well overdue, but now business yet again has to prop up letters.” May also suggests Australia Post cease competing with its customers in the mail house market, reduce mail delivery to three times a week, and impose taxes or tariffs on overseas parcel deliveries, which can be as cheap as $1.50 for a parcel arriving from China. Otherwise “the business sector that covers more of the fixed costs than any other, will follow the downward spiral of Australia Post and the cost to the economy will be significant,” he says. “Australia Post needs a healthy business mail sector and that could be achieved by encouraging the use of direct mail, because it works.”
Posted on: Thu, 06 Mar 2014 10:05:28 +0000
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